Corporate bond issuances have surged 8% year-on-year to Rs 6.3 lakh crore till October this fiscal. This growth highlights robust activity in the financial markets. The increase from Rs 5.8 lakh crore in the same period last year signals strong investor confidence. Commercial papers also saw a significant rise of 13% YoY to Rs 9.8 lakh crore. This uptick reflects broader market dynamism and corporate funding needs.
All scheduled commercial banks reported a 16% YoY credit growth during FY26 till October. On a year-to-date basis, credit growth stands at 6.3%. These figures underscore the expanding lending landscape. Deposit growth, however, shows a YoY increase of 2.6% and a YTD rise of 7.1%. This divergence calls for careful liquidity management.
Bank credit growth hit 11.3% for the fortnight ended October 31. Deposit growth climbed to 9.7% from 9.5% in the same period. The green shoots in credit against slower deposit growth necessitate proactive strategies. This scenario emphasizes the need for balanced financial oversight.
The spread between the 10-year AAA corporate bond and government securities has been declining since August. For the 5-year bond, the spread with G-sec actually increased in October. These movements indicate shifting investor preferences and market conditions. They reflect nuanced responses to economic indicators.
The gap between the Repo rate and the weighted average rate of Commercial Paper was negative in FY21. It rose to 114 bps in FY25 and now stands at 90 bps in October. Similarly, the spread with 3-month Certificates of Deposit increased to about 83 bps in FY25 and is now 45 bps. These changes highlight evolving monetary dynamics.
Mutual funds experienced a significant inflow of Rs 1.33 lakh crore in short-term instruments last month. This marks a reversal from outflows in September and a negative August. The trend suggests a preference for short-term investments among investors. It points to cautious yet active capital movement.
FPIs have shown caution towards emerging markets due to recent volatility. However, debt segment flows have remained positive for most months. This stability underscores trust in India’s macroeconomic fundamentals and ongoing reforms. The confidence in corporate bond and other instruments is palpable.
As the Q2 earnings season concludes, domestic indicators will drive market sentiment. Services PMI, infrastructure output data, and political developments are key factors. The NDA’s government formation in Bihar post landslide victory adds to the positive outlook. These elements collectively shape investor expectations.
Globally, U.S. economic releases and FOMC meeting minutes will influence market mood. The volatility in AI-linked stocks is another critical factor to monitor. These external elements can sway broader market sentiment significantly. Investors are keeping a close watch on these trends.
Domestic indices staged a strong rebound this week, ending firmly in the green. Despite later session volatility from global developments, sentiment remained positive. Positive domestic cues bolstered this optimism throughout the period. The recovery was broad-based and encouraging.
India’s retail inflation dropped sharply to 0.25% in October from 1.44% in September. Lower GST rates and falling food prices contributed to this decline. Wholesale inflation also turned negative, falling 1.21% due to softer crude oil and non-food items. These improvements greatly boosted investor confidence.
Strong macro indicators provided additional support. Net direct tax collections rose 7% YoY to over Rs 12.92 lakh crore. This reflects healthy corporate profitability and steady income growth. Expectations of an NDA win in Bihar elections further enhanced risk appetite.
Benchmark indices gained over one and a half per cent, with Nifty at 25,910.05 and Sensex at 84,562.78. IT, pharmaceutical, and auto stocks led the recovery. Sectoral performance stayed positive due to declining inflation and steady demand. The overall market environment was supportive.
The banking index set a new record high, highlighting sector strength. Real estate was the only industry to finish slightly lower, likely due to profit booking. The India VIX dropped 4.94% to 11.9375, indicating reduced volatility. This stability fosters a conducive setting for future growth.
Corporate bond issuances continue to play a vital role in market liquidity. The steady rise in these instruments supports economic expansion. Investors remain attentive to both domestic and global cues. The financial landscape is evolving with promising trends.