It is indeed an end of an era.

Deepak Parekh hung his boots as the Chairman of HDFC Ltd ahead of the merger of the institution with HDFC Bank effective from July 1, which incidentally makes the bank the fourth largest in the world by market capitalization by some estimates. Not just Parekh, the “employee-founder” of the housing finance pioneer in India, but every Indian could feel proud of this landmark. "It is my time to hang my boots with both anticipations and hopes for the future," Parekh, 78, wrote to shareholders. "While this will be my last communication to shareholders of HDFC, rest assured we now stride tall into a very exciting future of growth and prosperity." It is a new beginning for the merged entity and that is coinciding with Indian socks scaling new peaks and US mega technology stocks posting massive gains as the market bets big on generative AI changing the fortunes of these companies.

Apple’s market cap hit $3 trillion on Friday.

In contrast, bonds did not have a good run with continued hawkishness from central bank officials nudging the yields up. Monsoons seem to have hit Mumbai with a vengeance and have left none complaining about the delay or heat. But it is early days to pass a judgment on what monsoon will mean for crop yields or inflation or growth.

Domestic Markets Last Week:

Stocks hit record highs last week, supported by rising US stocks. NIFTY recorded its best week since August and extended gains for the fourth month in a row. The index is expected to reach 20000 points.

Yields rose on Friday and the week. The 10-year yield breached 7.10% after weekly auctions drew lower demand than expected. Sentiment has been poor after central banks in India and the US hinted at steady-to-higher interest rates. A yield of 7.15% on the 10-year now looks imminent.

The rupee held near the 82/$1 mark for most of part of the week despite a rise in the dollar due to continued hawkish comments from Fed chair Jerome Powell. The rupee moved in a very narrow range for most of the week. Strong inflow from foreign funds balanced the impact of demand for dollars from oil companies.

Global Markets Last Week:

US stocks surged, helped by a sharp rise in technology shares. Nasdaq 100 posted a 40% rise and a market cap of $5 trillion in the last six months. Apple hit a market cap of $3 trillion. The resilience of the US economy in the face of the Fed's rate hikes boosted the stocks. Banks rose on Friday as most banks passed the Fed's stress test.

Yields fell on Friday due to soft readings of PCE inflation. However, they closed the week higher. Powell's comments on rate hikes kept up the pressure on yields. For the week, the 2-year yield was up 13 bps, while the 10-year was up 8 bps.

The dollar was largely unchanged for the week after dropping on Friday as a slower rise in PCE inflation sparked expectations that the Fed could go only for one more round of rate hikes.

Corporate Bonds

Secondary Market

Due to an absence of fresh cues and a massive supply of over ₹300 billion worth of NCDs in the primary market this week, secondary market yields were steady and trading was subdued.

Outlook For This Week

Stocks are likely to continue to rise as the market is expected to test 20000 points on the NIFTY. Large caps could rise, led by banks and automobile companies. Yields are expected to ease below 7.10% as US yields fell on Friday but they could test the 7.15% level for the 10-year due to central bank hawkishness. The rupee is likely to be steady near the 82/$1 mark.