Weekly Macro Data Coverage May 24, 2019

 Key Highlights:

  • Weighted average call money rate remains 5 bps lower then the repo rate for past two weeks
  • With the end of general election, the M1 to M3 ratio has reduced to 23.13 during first fortnight, May 2019
  • Growth in deposit has improved, whereas credit offtake has subsided in recent weeks
  • 10-year US G-Sec yield has declined by 7 bps over geo-political uncertainty over a week
  • Indian 10-year G-Sec yield has recorded 13 bps fall with a strong demand
  • With the surge in capital inflows, the sovereign bong yield has been declining
  • US dollar continues to remain stronger against the currency of emerging markets
  • Higher capital flows along with softening commodity prices will give edge to the Indian rupee against the US dollar

Liquidity

The liquidity condition in the domestic market remain on the surplus side for past two weeks. The weighted average call money rate remains 5 bps lower then the repo rate. With the end of general election, the M1 to M3 ratio has reduced to 23.13 during the last fortnight. With the fall in currency in circulation, YoY growth in deposit has marginally improved to 10.35% during first fortnight, May 2019, which was expanding at around 9.5% a month earlier. Credit offtake, in contrast, has slowed down to 12.9% from above 14% during the time frame. Moreover, strong capital inflows in recent weeks has been infusing liquidity in the system.

Capital Market

The 10-year US G-Sec yield has declined by 7 bps over geo-political uncertainty over a week. Similarly, Indian 10-year G-Sec yield has recorded 13 bps fall due a strong demand. With the incumbent government returning to power, market can read the government policies clearly. As a result, capital inflows have surged up and supressing sovereign bong yield.

Currency Trend

In the global currency market, the US dollar continues to remain stronger against the currency of emerging markets. However, in Indian rupee, in contrast, has appreciated against the USD on account of higher capital flows. Higher capital flows along with softening commodity prices will give edge to the Indian rupee against the US dollar.

Interest rates and ratio:

Interest Rate

May 18

Apr 19

Apr 26

May 3

May 10

May 17

2018

2019

2019

2019

2019

2019

Policy Repo Rate

6.00

6.00

6.00

6.00

6.00

6.00

Call Money Rate (WA)

5.91

6.05

6.16

6.08

5.95

5.95

364-Day Treasury Bill Yield

6.84

6.45

6.50

6.51

6.54

6.47

2-Yr Indian G-Sec

7.51

6.77

6.76

6.71

6.59

6.50

10-Yr Indian G-Sec

7.79

7.41

7.39

7.41

7.36

7.23

10-Yr US G-Sec

2.93

2.50

2.53

2.47

2.39

2.32

AAA (Indian corporate)

8.46

8.81

8.69

8.65

8.50

8.41

Spread in bps (10Yr Indian-US)

486

491

486

494

494

491

Credit/Deposit Ratio

75.06

 

77.05

 

76.90

 

USD LIBOR (3 month)

1.7060

2.3856

2.4000

2.3731

2.3589

2.3558
Source: RBI, Investing.com


Acuité Portfolio Debt Instrument Benchmark Estimates (as on 10 May 2019):

Category

10-Yr Corporate Yield to Maturity

AAA*

NA

AA+

8.36%

AA

8.87%
Source: Acuité Research; # Discount Factor: 0.063; *Outside Benchmark


 

Deposit (In Rs. Lakh cr)

Bank Credit (In Rs. Lakh cr)

As on May 10, 2019

125.17

96.26

As on Apr 26,2019

124.84

96.21

As on May 11,2018

113.43

85.21

YTD (% change)

0.26%

0.05%

YoY (% change)

10.35%

12.97%
Source: RBI


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%
Source: RBI


Indices

 

25-May-18

03-May-19

10-May-19

17-May-19

24-May-19

NSE Index

10,605.15

11,712.25

11,278.90

11,407.15

11,844.10

NSE Index Return

0.08

-0.36

-3.70

1.14

3.83

BSE Index

34,924.87

38,963.26

37,462.99

37,930.77

39,434.72

BSE Index Return

0.22

-0.27

-3.85

1.25

3.96


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: