Key Highlights:
Liquidity
The weighted average call money rate has reduced to 5.72% during the second week of June 2019. With this, the WACR stands 3bps lower than the repo rate after the second week of rate cut. During this week, consequently, net liquidity absorption from the system was (-) Rs. 35,000 crore on a daily basis. However, the domestic liquidity condition is expected to remain tight during last two weeks of this month due to GST filing for Q1, FY20. Talking from the international perspective, the LIBOR rate and forex reserves are indicating improvements in global liquidity.
Capital Market
On the global capital market front, the 10-year US sovereign bond yield remains stable at close to 2% during the second week of June 2019. The lower yield is the result of concern pertaining to a weak global economic outlook. In the Indian market, the 10-year Indian G-Sec yield has subsided to below 6.9%. With a benign inflation outlook as well as a defanged US Fed, internal and external pressures on yields is not foreseeable. By the end of Q2 FY20 10 year GSec yields may hit a low of 6.5% given the prevalent situation. However, as a caveat, middle east tensions along with higher central Government issuances in H1 may be seen as a threat to this hypothesis.
Currency Trend
In the global currency market, the currency of emerging markets are continue to strengthen against the US Dollar. The currencies highly appreciating against the USD are South African Rand (ZAR), Turkey Lira (TRY) and Russian Rubble (RUB). Indian rupee, on the other hand, has marginally depreciated against the USD during the week.
Interest rates and ratio:
Interest Rate |
June 15 |
May 17 |
May 24 |
May 31 |
June 7 |
June 14 |
2018 |
2019 |
2019 |
2019 |
2019 |
2019 |
|
Policy Repo Rate |
6.25 |
6.00 |
6.00 |
6.00 |
5.75 |
5.75 |
Call Money Rate (WA) |
6.09 |
5.95 |
5.93 |
5.90 |
5.81 |
5.72 |
364-Day Treasury Bill Yield |
7.09 |
6.47 |
6.41 |
6.30 |
6.19 |
6.13 |
2-Yr Indian G-Sec |
7.43 |
6.50 |
6.40 |
6.27 |
6.21 |
6.22 |
10-Yr Indian G-Sec |
7.89 |
7.41 |
7.27 |
7.07 |
7.04 |
6.99 |
10-Yr US G-Sec |
2.90 |
2.32 |
2.13 |
2.08 |
2.08 |
2.06 |
AAA (Indian corporate) |
8.57 |
8.41 |
8.42 |
8.11 |
8.11 |
8.27 |
Spread in bps (10Yr Indian-10Yr US) |
499 |
509 |
514 |
499 |
496 |
493 |
Credit/Deposit Ratio |
75.40 |
- |
76.98 |
- |
76.97 |
- |
USD LIBOR (3 month) |
1.9356 |
2.3558 |
2.3563 |
2.3545 |
2.346 |
2.3466 |
Acuité Portfolio Debt Instrument Benchmark Estimates (as on 28th June
2019):
Category |
10-Yr Corporate Yield to Maturity |
AAA |
NA |
AA+ |
8.04% |
AA |
8.65% |
|
Deposit (In Rs. Lakh cr) |
Bank Credit (In Rs. Lakh cr) |
As on June 07, 2019 |
125.40 |
96.52 |
As on May 10,2019 |
125.17 |
96.26 |
As on June 08,2018 |
114.08 |
85.94 |
YTD (% change) |
0.18% |
0.27% |
YoY (% change) |
9.92% |
12.31% |
Money Market
Performance
Commercial Paper (Fortnight): |
Outstanding (In Rs. Lakh cr) |
Amount issued (In Rs. Lakh cr) |
31-Mar-2019 |
4,830.8 |
1013.0 |
28-Feb-2019 |
5,208.1 |
900.8 |
31-Mar-2018 |
3,725.8 |
999.2 |
% Change (MoM) |
-7.24% |
12.45% |
% Change (YoY) |
29.66% |
1.38% |
Indices
|
22-Jun-18 |
31-May-19 |
07-Jun-19 |
14-Jun-19 |
21-Jun-19 |
NSE Index |
10,821.85 |
11,922.80 |
11,870.65 |
11,823.00 |
11,724.10 |
NSE Index Return |
0.04 |
0.66 |
-0.44 |
-0.4 |
-0.84 |
BSE Index |
35,689.60 |
39,714.20 |
39,615.90 |
39,452.07 |
39,194.49 |
BSE Index Return |
0.19 |
0.71 |
-0.25 |
-0.41 |
-0.65 |
Liquidity Operation by RBI
Source: RBI, Acuité Research; Note: Net injection (+) and Net absorption (-)
Corporate debt (in Rs. Lakh Cr)
Net Debt Issuance by Centre and State Government (Rs. Billion)
Commodity Price Index (3 Month Moving Average)
Commodity Price Movement (3 Month Moving Average)
USD-INR Movement
Source: RBI, Acuité Research