Key Highlights:
·With a 100 billion infusion through OMO, the liquidity condition in the banking system has improved significantly.
·The Repo-WACR differential has now increased to 15 bps in first week of January, 2019, which was negative in the last week of December.
·10-year US sovereign yield stands 2.69%, which is just 20 bps higher during the said period as compared to the previous year. However, in the past one year, Fed rate has increased by almost 100 bps.
·AAA Corporate bond yield reached 8.57% in first week of January as the secondary market is witnessing weaker demand.
Liquidity
With a Rs. 100 billion infusion through OMO, the liquidity condition in the banking system has improved. The Repo-WACR differential has increased to 15 bps in first week of January, 2019, which was negative in the last week of December. The credit deposit ratio as a result - still remains high at 78.6%, which is putting pressure on the lending side. On the international front, 3 months USD LIBOR rate stands at 110 bps higher, compared to a year earlier. This also gives a sense of tightening liquidity conditions in the global financial market.
Capital Market:
In the global capital market, 10-year US sovereign bond yield stands 2.69%, which is just 20 bps higher in the said period as compared to the previous year. However, in the past one year, Fed rate (money market rate) has increased by almost 100 bps. During this time, there is a higher demand for long term American financial instruments that is supressing their long term yields. It is therefore understood that currently financial factors are weighing in on economic factors in the capital market. As a result, yield curve are flattening.
From the domestic market perspective, the 10-year G-Sec yield increased by 4 bps in a week to 7.45%. AAA rated corporate bond yield, on the other hand, increased by 9 bps in a week to 8.57%. Over the last six months, corporate bond market is witnessing weak demand.
Currency Trend:
Over recent weeks, currencies of emerging economies seem to be less volatile. This is because of lower mobility in capital, both in debt as well as equity market. Market is therefore understood to be in a wait and watch mode as positive developments in US-China trade agreement are foreseen.
Interest rates and ratio
Interest Rate |
Jan.05, 2018 |
Dec.07, 2018 |
Dec.14, 2018 |
Dec.21, 2018 |
Dec.28, 2018 |
Jan.04, 2019 |
Policy Repo Rate |
6.00 |
6.5 |
6.5 |
6.5 |
6.50 |
6.50 |
Call Money Rate (WA) |
5.87 |
6.36 |
6.44 |
6.49 |
6.57 |
6.35 |
364-Day Treasury Bill Yield |
6.49 |
7.15 |
7.04 |
6.97 |
6.42 |
6.91 |
2-Yr Indian G-Sec |
6.74 |
7.18 |
7.05 |
7.04 |
7.08 |
6.99 |
10-Yr Indian G-Sec |
7.08 |
7.41 |
7.41 |
7.26 |
7.41 |
7.45 |
10-Yr US G-Sec |
2.47 |
2.89 |
2.78 |
2.71 |
2.64 |
2.69 |
Spread in bps (10Yr Indian-10Yr US) |
461 |
452 |
463 |
455 |
477 |
476 |
AAA Indian Corporate |
7.93 |
8.63 |
8.63 |
8.65 |
8.48 |
8.57 |
AA Indian Corporate |
8.51 |
-- |
- |
- |
9.35 |
8.93 |
Spread AAA to10 YR Indian bond |
119 |
122 |
85 |
139 |
107 |
112 |
Credit/Deposit Ratio |
74.64 |
77.44 |
- |
78.59 |
- |
- |
USD LIBOR |
1.70 |
2.80 |
2.82 |
2.82 |
2.79 |
2.80 |
Source: RBI, Investing.com
|
Deposit (In Rs. Lakh cr) |
Bank Credit (In Rs. Lakh cr) |
As on Dec 21, 2018 |
118.18 |
92.88 |
As on Dec 07, 2018 |
118.85 |
92.06 |
As on Dec 21, 2018 |
108.21 |
80.68 |
YTD (% change) |
-0.56% |
0.89% |
YoY (% change) |
9.22% |
15.11% |
Source: RBI
Commercial Paper (Fortnight): |
Outstanding (In Rs. Lakh cr) |
Amount issued (In Rs. Lakh cr) |
31-Dec-18 |
4.99 |
0.96 |
30-Nov-18 |
5.61 |
1.30 |
31-Dec-17 |
4.09 |
0.92 |
% Change (MoM) |
-11.04% |
-26.36% |
% Change (YoY) |
21.92% |
4.56% |
Source: RBI
Indices
|
11-Jan-18 |
21-Dec-18 |
28-Dec-18 |
04-Jan-2019 |
11-Jan-19 |
NSE Index |
10,530.70 |
10754 |
10,859.90 |
10,727.35 |
10,794.95 |
NSE Index Return |
2.97 |
-1.81 |
0.74 |
0.52 |
-0.25 |
BSE Index |
34,056.83 |
35742.07 |
36,076.7 |
35,695.10 |
36,009.84 |
BSE Index Return |
2.74 |
-1.89 |
0.94 |
0.51 |
-0.27 |