The Indian equity market valuation has been moving in tandem with the US 10-year treasury yield. While the benchmark US bond yield has witnessed a nearly 70 basis point decline since the end of October this year, dropping from 4.93 per cent to 4.23 per cent on Friday, the Sensex earnings yield has slipped by nearly 45 basis points - from 4.5 per cent to 4.05 per cent. Previously, Indian equities' earnings yields rose in sync with the US bond yields.
At interactions last week with senior officials from the Reserve Bank of India, select banks gave feedback on two key bond market concerns, namely, recent volatility in the rupee-dollar exchange rate and heavy losses incurred on floating rate government bonds due to a demand-supply mismatch, sources told Business Standard. The discussions were held ahead of the RBI's next monetary policy statement, scheduled on August 5. Indian banks are large holders of government securities because of a regulatory mandate to set aside a certain percentage of deposits in sovereign bonds.
From the Sensex firms, Bajaj Finance, HDFC, HDFC Bank, Bajaj Finserv, Asian Paint, State Bank of India, Tata Consultancy Services, Bharti Airtel, Reliance Industries and Tata Steel were the biggest gainers. HDFC climbed 2.59 per cent after the housing finance major on Thursday reported a 20 per cent growth in standalone net profit to Rs 4,425 crore for the quarter ending March 2023 on the back of higher interest income. IndusInd Bank, Nestle, Power Grid, ITC, Tata Motors and Mahindra & Mahindra were the major laggards.
The rupee depreciated 31 paise to an all-time low of 80.15 against the US dollar in early trade on Monday tracking the strength of the American currency and firm crude oil prices. At the interbank foreign exchange, the rupee opened at 80.10 against the dollar, then lost ground to quote at 80.15, registering a fall of 31 paise from the last close. On Friday, the rupee closed at 79.84 against the dollar.
The collapse of Silvergate Bank, Silicon Valley Bank (SVB) and Signature Bank in the US might create temporary liquidity issues but will not have any significant impact on the Indian crypto market in the long run, officials from several exchanges told Business Standard. All three banks are considered crypto-friendly. SVB offered services such as cryptocurrency custody and lending.
ITC was the top loser in the Sensex pack, shedding nearly 3 per cent, followed by Bajaj Finance, Kotak Bank, Bharti Airtel and Reliance Industries. Nifty fell 43.35 points to 17,324.90.
After rallying over 300 points, the 30-share BSE Sensex ended 169.14 points, or 0.42 per cent, higher at 40,581.71. Similarly, the broader NSE Nifty settled 61.65 points, or 0.52 per cent, higher at 11,971.80.
In 2022, gold emerged as the top performer among all conventional asset classes with over 14 per cent returns mainly owing to the depreciation of the rupee.
Automobile (auto) retail sales in India grew by an impressive 14 per cent in July compared to the same period last year, driven by a surge in the rural economy, good product availability, and product launches. While passenger vehicles (PVs) saw a 10 per cent increase during this period, inventory levels have surged to a historic high of 67-72 days in PVs, equating to Rs 73,000 crore worth of stock, according to the Federation of Automobile Dealers Associations (Fada). This poses a risk to dealer sustainability. Inventory levels in July 2023 were only 50-55 days, equating to a stock worth Rs 49,833 crore. In June 2024, inventory was between 62 and 67 days, with a stock value of Rs 60,000 crore.
Global funds, according to Christopher Wood, global head of equity strategy at Jefferies, are now beginning to pay more attention to India with the market now offering 30 companies with a market capitalisation over $25 billion.
With concern on food inflation ebbing with the monsoon progressing well, the Reserve Bank of India (RBI) is warming up to the idea of a change in stance to "neutral" from "withdrawal of accommodation", according to economists. In his speech on Thursday during the annual event of the Federation of Indian Chambers of Commerce and Industry-Indian Banks' Association, RBI Governor Shaktikanta Das said: "The balance between inflation and growth is well-poised."
'We emphasise the importance of not basing investment decisions solely on electoral outcomes.' 'Instead, focusing on investing in high-quality businesses capable of prospering regardless of the political landscape is paramount.'
'.. if you do not want to take the asset allocation call.'' 'This category of funds can offer optimum risk-adjusted returns.'
Equity markets rallied after softer-than-expected inflation data in the US and UK rekindled hopes of the end of the rate-hiking cycle by major central banks. The soft inflation reading drove down bond yields and the US dollar, whetting the appetite for risky assets. The 10-year US bond yield fell below 4.5 per cent after topping 5 per cent less than a month ago.
Benchmark Sensex pared early losses to close 242 points higher while Nifty settled above the 18,000-mark on Wednesday following gains in IT, oil and select banking stocks amid mixed global trends. Extending gains for a second day, the 30-share BSE Sensex advanced 242.83 points or 0.40 per cent to close at 61,275.09 with 20 of its constituents ending in the green. The index opened lower at 60,990.05 but later regained foot to touch a high of 61,352.55 in day trade.
Eleven companies have launched their initial public offerings (IPOs) in December 2023, making this month the second-best December for public offerings since 1996. Collectively, they are raising Rs 8,182.7 crore this month. In December 2021, 11 companies raised Rs 9,534 crore. However, excluding December 2021, this month marks the best December for IPOs since 1996.
Several Aam Aadmi Party leaders, including Manish Sisodia and Sanjay Singh, hit out at the BJP government at the Centre, saying agencies are targeting those who raised their voice against the ruling party.
tailwinds of a remarkable year and handsome investor returns, Indian equities are set for an eventful journey in 2024, with a slew of local and global cues -- varying from interest rates to Lok Sabha polls to geopolitical happenings. Analysts are of the view that the bull run in the domestic equity market will continue, and over the next 3-6 months, the benchmark indices -- Sensex and Nifty -- could climb up to 7 per cent. In 2023, the 30-share BSE Sensex jumped 11,399.52 points or 18.73 per cent, and the NSE Nifty climbed 3,626.1 points or 20 per cent.
Even though the NIA claims that more than 90 per cent of cases charge-sheeted have ended in conviction, the figure is likely misleading. To date, very few cases investigated by the NIA have resulted in a completed trial, points out former CBI joint director Navneet Rajan Wasan.
'Continue with your SIPs to get the benefit of lower average prices in this challenging market environment.'
While gold added Rs 310 to hit the record level, silver rose by Rs 800 to Rs 62,000 per kilogram.
Government is also will also enter into an agreement with Japan for a $50 billion swap.
JP Morgan's decision last week to include Indian government bonds in its Government Bond Index-Emerging Markets (GBI-EM) index and the index suite from June 2024 may be a sort of blessing for India, as the move is estimated to result in an inflow of $25 billion of foreign portfolio investments into the country. The development comes at a time when the spread between the benchmark 10-year government of India bond and the 10-year US government bond has declined to its lowest level in more than 17 years. Low yield spreads make Indian bonds less attractive to foreign portfolio investors (FPIs).
Domestic exporters on Monday expressed concerns over the crisis in Bangladesh and said the developments in the neighbouring country would have implications on bilateral trade. However, exporters expect that the situation may normalise soon. According to exporters, they are already facing disruptions in exports to Bangladesh due to a shortage of foreign exchange in that country.
The rate hike in the future is set to be 'calibrated and cautious'.
It has been a choppy calendar year 2022 (CY22) for global financial markets amid the spectre of rising inflation that led most central banks, especially the US Federal Reserve (US Fed), to tighten their monetary policy. Most equity indices across the globe have seen a sharp fall from their respective peak levels in this backdrop. FTSE India, for instance, has corrected 16 per cent from its October peak.
'Investors should hold equity assets for 3 to 5 years.'
The Sensex pull-back was mainly staged by constant selloffs in banking shares, led by ICICI Bank, Axis Bank and IndusInd Bank. Of the Sensex constituents, 19 shares suffered losses.
The state government said these bills had been pending with the governor for as long as about two years and his action "subverted" the functioning of the state legislature, rendering its very existence "ineffective and otiose".
Domestic equity investors' wealth eroded by more than Rs 4.43 lakh crore on Monday as fears of a financial contagion triggered by one of the biggest bank failures in the US roiled market sentiments. After a strong opening, Indian stocks went into a tailspin with the benchmark 30-share BSE Sensex tumbling nearly 900 points to close at 58,237.85 points -- sliding for the third straight trading session. The NSE Nifty too declined 258.60 points to end at 17,154.30 points.
Fed rate hike 'makes sense,' says US reserve bank president.
'If rate cuts happen, bond yields will come down and investors will make mark-to-market capital gains on them.'
Among Sensex shares, HDFC Bank fell the most by 2.58 per cent, followed by SBI (2.12 per cent), HDFC (2.09 per cent), and IndusInd Bank (2.02 per cent). Axis Bank, Bajaj Finserv, M&M, L&T, Reliance, Infosys and TCS were among the major losers. In contrast, Tata Motors, Maruti, NTPC, Sun Pharma, Power Grid and Titan were among the gainers.
A weak dollar in overseas market in view of the Federal Reserve's cautious stance on interest rate strengthened the rupee value.
Observing that US' economic recovery is proceeding at a moderate pace, US Federal Reserve Board chairman Ben Bernanke said on Wednesday the central bank might need to intervene if policymakers enact short-term spending cuts that hurt growth.
When the Centre tries to encroach upon the subjects that are under the prerogative of the state, or where the centre tries to evade from any responsibility guaranteed to a state through a constitutional provision/obligation, it poses a threat to federalism.
'Unlike in the sporting arena, where sports federations moved from partisan to impartial referees, in Indian democracy's biggest festival, it appears we are moving backward from unbiased and objective to one-sided and partisan,' observes Nilanjan Mukhopadhyay.
A day after the RBI raised the benchmark lending rate by 35 basis points, Kotak Mahindra Bank Managing Director Uday Kotak on Thursday said the central bank may go for one more rate hike to bring inflation below its upper tolerance level of 6 per cent. Yesterday, the RBI indicated that it wants inflation to be within the band first and then move towards the target of 4 per cent, Kotak said at the CII Global Economic Policy Summit 2022. "My sense is that there could be one more rate hike and that may be the time for thinking about a pivot, but we got to watch very closely the data, and maybe around 6.5 per cent as it looks today, subject to what happens to the world, subject to what happens to oil, subject to what happens to many other things," he said.
The apex bank also noted that manufacturing activities slowed down in certain parts of the country.
