India Daily Briefing

August US CPI came in hotter than expected, lifting Fed funds futures pricing of a September hike to 91% (Mint Markets reported 85-91% across various models). Oil above $107 amplifies the inflation signal. For Indian markets, this matters in three ways: first, FII flows will remain under pressure as US risk-free rates stay elevated, squeezing the India-US yield differential further; second, INR faces renewed depreciation pressure toward 84+; third, Nifty's valuation premium over EM peers erodes if earnings growth misses consensus. The DII absorption seen today buys time but doesn't eliminate the structural outflow risk if the Fed signals another hike in November.

NSE revised its long-awaited IPO downward — fewer OFS shares at a revised price band targeting ₹21,494 to ₹22,569 Crore (Economic Times Markets reported). Subscription opens September 17-19. For retail and HNI investors this is the most consequential IPO in years: NSE's business model is structural winner regardless of market direction (it takes fees on notional, not prices), and at this size it will be India's second-largest IPO ever. Grey market premiums will be visible by Monday; QIB oversubscription on Day 1 will be the signal. Long-term, listing of NSE at exchange-level P/E multiples validates the exchange-infrastructure theme and may catalyse BSE's re-rating too.

The Reserve Bank of India will sell government bonds worth ₹1 lakh crore (approximately US$10.5 billion) this month to drain excess liquidity after VRRR reverse-repo auctions attracted insufficient demand, Economic Times Markets and Business Times Singapore both reported. Governor Sanjay Malhotra confirmed use of multiple tools to manage the surplus — likely signalling OMOs (open market operations) through September. The move is mildly bearish for bond prices (yields up marginally) but constructive for banking sector NIMs: excess liquidity compression keeps overnight rates from falling below repo, supporting the rate transmission banks depend on. Watch the cut-off yield at next week's bond auction as a benchmark for 10-year G-Sec direction.