News You Can Use Of 30 September 2022

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NEWS U CAN USE

Sep 30, 2022

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The Week that was…

Sep to 30

Sep

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Indian Economy

• Government data showed that the combined index of eight core industries grew 3.3% in Aug

2022, slower than 4.5% rise in Jul 2022 and 12.2% in the year ago period. Core output growth

fell to its lowest level in nine months. Coal, refinery products, steel, cement and electricity

slowed to 7.6%, 7%, 2.2%, 1.8% and 0.9%, respectively in Aug 2022. Core output during April-

August of FY23 rose 9.8% slower than 19.4% a year ago.

• India’s current account balance recorded a deficit of US$ 23.9 billion (2.8% of GDP) in Q1 of

FY23 as against deficit of US$ 13.4 billion (1.5% of GDP) in Q4 FY22 and a surplus of US$ 6.6

billion (0.9% of GDP) in Q1 FY22. The widening of current account deficit in Q1 of FY23 was

mainly due to widening of the merchandise trade deficit and an increase in net outgo of

investment income payments.

• Government data showed that India’s fiscal deficit stood at Rs. 5.42 lakh crore or 32.6% of the

Budget Estimates (BE) from Apr to Aug of FY23. Fiscal deficit was at 31.1% of FY22 target

from Apr to Aug of FY23. Net tax receipts rose to about Rs. 7 lakh crore while total

expenditure was Rs. 13.9 lakh crore, respectively.

• The government has decided to lower borrowing for the current fiscal by Rs. 10,000 crore

than earlier projected for FY23 in the budget. The government has now decided to borrow R.

14.21 trillion in FY23 as against Rs. 14.31 trillion estimated in the budget. However, the

borrowing for the second half will remain the same as earlier estimated at Rs. 5.92 trillion,

which includes Rs. 16,000 crore of its sovereign green bond offering. There will also be Rs.

22,000 crore of Treasury Bills auctions on a weekly basis.

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Domestic Equity Market Indices

Indices 30-Sep-22 1 Week Return YTD Return

S&P BSE Sensex

57,426.92 -1.16% -1.42%

Nifty 50

17,094.35 -1.34% -1.50%

S&P BSE Mid-Cap

24,853.94 -1.65% -0.47%

S&P BSE Small-Cap

28,452.91 -1.25% -3.41%

Source: MFI Explorer;

NSE Advance/Decline Ratio

Date Advances Declines

Advance/Decline Ratio

26-Sep-22 240 2,021 0.12

27-Sep-22 1,160 990 1.17

28-Sep-22 747 1,427 0.52

29-Sep-22 1,193 968 1.23

30-Sep-22 1,553 614 2.53

Source: NSE

• Domestic equity markets fell during the

week under review as domestic headline

indices S&P BSE Sensex and Nifty 50 fell

in excess of 1%. The selling pressure was

widespread as losses were witnessed in

the mid cap segment and the small cap

segment as well.

• Domestic equity markets continued to

remain under pressure as weak global

cues continued to weigh on the market

sentiment. With no respite on the global

front and a resumption of selling from

foreign institutional investors market

participants remained wary due to

global macroeconomic uncertainty and

rising interest rates across the globe.

There were worries that aggressive

monetary policy tightening by key

central banks across the globe may

result in interest rates remaining at

elevated levels for an extended period.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

21.79 20.64 24.92 25.41

P/B

3.22 4.02 2.98 2.75

Dividend Yield

1.27 1.32 1.24 0.94

Source: BSE, NSE

Value as on Sep 30, 2022;

Indian Equity Market

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Sectoral Indices

Indices

Last

Closing*

Returns (in %)

1-Wk 1-Mth

S&P BSE Auto

29,177.76 -2.82% -3.81%

S&P BSE Bankex

44,179.79 -2.43% -2.46%

S&P BSE CD

42,488.99 0.09% -0.52%

S&P BSE CG

31,217.82 -1.51% -3.12%

S&P BSE FMCG

16,180.06 -1.12% 1.42%

S&P BSE HC

23,340.50 1.76% 1.42%

S&P BSE IT

27,488.42 1.30% -4.93%

S&P BSE Metal

18,015.22 -3.59% -6.00%

S&P BSE Oil & Gas

18,559.11 -2.61% -8.53%

Source: Refinitiv

*Value as on Sep 30, 2022

• On the sectoral front, all the sectoral indices

closed in the red barring S&P BSE CD, S&P BSE

Healthcare, S&P BSE IT and S&P BSE Teck.

• The IT sector and the healthcare sector ended in

green over the week as it was supported by the

tailwinds of a weakening rupee.

• The consumer durables sector also rose on

hopes of upbeat demand due to favourable

consumer sentiment in the ongoing festive

season.

Indian Derivatives Market Review

• Nifty Oct 2022 Futures stood at 17,103.20, a premium of 8.85 points above the spot closing

of 17,094.35.

• The total turnover on NSE’s Futures and Options segment for the week stood at Rs. 785.02

lakh crore as against Rs. 755.08 lakh crore for the week to Sep 23.

• The Put-Call ratio stood at 0.85 compared with the previous week’s close at 0.96.

• The Nifty Put-Call ratio stood at 1.22 compared with the previous week’s close of 0.76.

Indian Equity Market (contd.)

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Debt Indicators

(%)

Current

Value

1-Wk

Ago

1-Mth

Ago

6-Mth

Ago

Call Rate

5.98 5.40 5.21 3.56

91 Day T-Bill

6.09 5.90 5.59 3.83

05.63% 2026, (5 Yr GOI)

7.26 7.34 6.92 6.04

06.54% 2032, (10 Yr GOI)

7.40 7.39 7.18 6.78

Source: Refinitiv Value as on Sep 30, 2022

• Bond yields fell initially on hopes that

domestic debt will be included in global

indexes. Multiple foreign brokerages

predicted an announcement to come as

early as Oct 2022.

• However, gains were neutralised amid

reports that domestic debt will be

considered for inclusion in global indexes

in next year as the Indian government

needs to address multiple operational

issues.

• Market sentiments were further

dampened after MPC raised key policy

repo rate by 50 bps even though the

same came along market expectations.

• Yield on the 10-year benchmark paper

(7.26% GS 2032) inched up by 1 bps to

close at 7.40% compared with the

previous week’s close of 7.39%.

Domestic Debt Market

7.18

7.31

7.44

26-Sep 27-Sep 28-Sep 29-Sep 30-Sep

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

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Maturity

G-Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year

6.91 7.24 33

3 Year

7.37 7.73 36

5 Year

7.46 7.88 42

10 Year

7.54 8.02 48

Source: Refinitiv Value as on

Sep 30, 2022

• Yields on gilt securities fell across most of the

maturities by up to 13 bps barring 2, 10, 12, 13

and 30-yr papers which rose by up to 5 bps

while 14 and19-year papers closed steady.

• Corporate bond yields increased across 1 to 6-

year maturities by up to 23 bps and fell across

7 to 15-year maturities in the range of 14 bps

to 127 bps.

• Difference in spread between AAA corporate

bond and gilt expanded across 1 to 6-year

maturities in the range of 2 bps to 35 bps and

contracted on 7, 10 and 15-year maturities in

the range of 13 bps to 127 bps.

Domestic Debt Market (Spread Analysis)

-25

-12

5.60

6.70

7.80

3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs

India Yield Curve Shift (%) (W-o-W)

Change in bps 30-Sep-22 23-Sep-22

Yield in %

Change in bps

Source: Refinitiv

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• The Monetary Policy Committee (MPC) in its bi-monthly monetary policy review raised key

policy repo rate by 50 bps to 5.90%. With this rate hike, the repo rate is now back to pre-

pandemic levels and stand at the highest level since Apr 2019. Thus, MPC has so far raised

the repo rate by 190 bps in this fiscal. This is the fourth consecutive rate hike by the

Committee since it embarked on a policy tightening spree from May this year. It also decided

to remain focused on withdrawal of accommodation to ensure that retail inflation remains

within the target going forward, while supporting growth.

• On the assumption of a normal monsoon in 2022 and average crude oil price (Indian basket)

of US$ 100 per barrel, MPC projected inflation at 6.7% in 2022-23, with Q2 at 7.1%; Q3 at

6.5%; and Q4 at 5.8%. CPI inflation for Q1:2023-24 is projected at 5.0%. According to MPC,

geopolitical uncertainty has marred the domestic inflation outlook. The RBI's enterprise

surveys indicate some easing of input cost and output price pressures across manufacturing,

services and infrastructure firms but the pass-through of input costs to prices is still not

complete.

• According to MPC, the real GDP growth projection for 2022-23 is estimated at 7.0%, with Q2

at 6.3%; Q3 at 4.6%; and Q4 at 4.6%. For Q1:2023-24, it is projected at 7.2%. The

strengthening outlook for agriculture and related activities as well as the recovery in

services sector is expected to boost supply. The outlook for aggregate demand is

favourable, with urban demand projected to improve further with the customary upturn in

the second half of the year, while rural demand is expected to catch up.

Regulatory Updates in India

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• The Indian government extended the existing Foreign Trade Policy (2015-20) by another

six months till Mar 2023. The extension comes on account of currency fluctuations and

volatile global geo-political and economic situation. The current Foreign Trade Policy was

scheduled to expire on Sep 30, after it was extended in Apr 2022.

• The Union Cabinet gave its approval for the release of 4% additional instalment of

Dearness Allowance and Dearness Relief to employees and pensioners of the central

government. The same will be effective from Jul 1, 2022. The combined impact on the

exchequer due to the increase of both Dearness Allowance and Dearness Relief would be

of the order of Rs. 12,852.56 crore per annum and Rs.8,568.36 crore in FY23 (from Jul

2022 to Feb 2023).

• The Union Cabinet gave its approval for extension of Pradhan Mantri Garib Kalyan Anna

Yojana (PMGKAY-Phase VII) for a further period of 3 months from Oct 2022 to Dec 2022.

The move is expected to provide benefit to the poor and vulnerable sections of society for

the upcoming festive season.

• The Union Cabinet gave its approval to Memorandum of Understanding between India and

Bangladesh on withdrawal of up to 153 cusecs of water each by India and Bangladesh

from common border river Kushiyara. Both the countries will set up a joint monitoring

team who will monitor the withdrawal of water by each side during dry season.

Regulatory Updates in India (contd..)

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• The World Bank downgraded its growth projections for the East Asia and the Pacific region

for this fiscal to 3.2% this year from the earlier projection of 5% in Apr 2022. The growth

rate is expected to improve to 4.6% in 2023.

• Data from the U.S. Commerce Department showed that U.S. durable goods orders fell

0.2% in Aug 2022 after coming down by 0.1% in Jul 2022.

• According to the Commerce Department, U.S. real GDP fell 0.6% in the quarter ended Jun

2022, unchanged from the drop reported last month.

• The Bank of England decided to intervene in the U.K. Bond market to restore some

stability. There was significant volatility in the currency and gilt market after the new U.K.

government announced massive tax cuts. Bank of England decided to undertake

temporary purchases of long-term government bonds from Sep 28, 2022. The central bank

also postponed the selling of bonds held under the quantitative easing program to Oct 31,

2022.

• According to the Office for National Statistics, U.K. GDP rose 0.2% QoQ in the second

quarter of 2023, revised up from a first estimate contraction of 0.1%. Nonetheless, the

pace of growth was weaker than the 0.7% expansion posted in the first quarter in 2023.

• The People's Bank of China adopted measures to safeguard the yuan from further

depreciation. The People's Bank of China decided to raise the risk reserve requirement for

banks' forward forex sales to 20% from 0%. The new rate will come into effect from Sep

28, 2022.

Global News/Economy

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Global Indices

Indices

30-Sep-22

1-Week

Return

YTD

Return

Russell 3000 1,682.59 -2.65% -31.04%

Nasdaq 100 10,971.22 -3.01% -32.77%

FTSE 100 6,893.81 -1.78% -6.65%

DAX Index 12,114.36 -1.38% -23.74%

Nikkei Average 25,937.21 -4.48% -9.91%

Straits Times 3,130.24 -3.00% 0.21%

Source: Refinitiv

Value as on Sep 30, 2022;

U.S.

• U.S. equity markets fell on persisting

concerns over continued aggressive

monetary policy tightening by the U.S. Fed

and its adverse impact on the global

economic growth outlook. An acceleration

in the pace of core consumer price growth

in Aug 2022 also weighed on the market

sentiment. However, bargain hunting

restricted further losses. Bank of England's

bond market intervention also provided

support to markets to some extent.

Europe

• European equity markets fell as mounting fears about a global recession and rising interest

rates across the globe weighed on the market sentiment. Turmoil in the foreign currency

market following the new government’s widely condemned fiscal policy announcements

also weighed on the market sentiment. However, further losses were restricted following

Bank of England’s purchase of long dated bonds to stabilize the U.K. bond market.

Asia

• Asian equity markets fell following negative cues from U.S. and European equity markets.

Persisting concerns over a global recession due to rising inflation and continued monetary

policy tightening by key central banks across the globe weighed on the market sentiment.

Global Equity Markets

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• Yields on the 10-year U.S. Treasury rose

10 bps to close at 3.80% as compared to

the previous week’s close of 3.70%.

• U.S. Treasury prices fell during the week

under review amid concerns that central

banks globally will keep tightening

monetary policy to curb stubbornly high

inflation. U.S. Treasury prices fell further

after euro zone inflation hit a record high

in Sep 2022 and U.S. consumer spending

increased faster than expected in Aug

2022 which led to worries that key central

banks across the globe will continue to

raise interest rates.

• However, further losses were restricted

after Bank of England bought British

government bonds to stabilize the U.K.

bond market as the new U.K.

government’s widely condemned fiscal

policy announcements weighed on the

market sentiment.

Global Debt (U.S.)

3.40

3.60

3.80

4.00

26-Sep 27-Sep 28-Sep 29-Sep 30-Sep

US 10-Year Treasury Yield Movement

Source: Refinitiv

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Performance of various commodities

Commodities

Last Closing* 1-Week Ago

Brent Crude($/Barrel)

93.39 89.38

Gold ($/Oz)

1,659.67 1,643.09

Gold (Rs/10 gm)

50,074 49,603

Silver ($/Oz)

19.00 18.84

Silver (Rs/Kg)

56,084 56,549

Source: Refinitiv *Value as on Sep 30, 2022;

Gold

• Gold prices rose on the back of a weaker

dollar. However, gains were capped on

concerns that the U.S. Fed will continue to

tighten its monetary policy at an aggressive

pace to tame rising inflation in U.S.

Brent Crude

• Brent crude oil prices rose on the back of a

weaker dollar. Growing possibility that

OPEC+ will agree to cut crude output when

it meets on Oct 5 also contributed to the

upside. However, gains were capped on

concerns that rising interest rates and a

possible global economic slowdown may

hurt the demand outlook of the

commodity.

Baltic Dry Index

• The index fell due to sluggish capesize and

panamax activities.

Commodities Market

8.00

9.00

10.00

11.00

12.00

31-Aug-22 10-Sep-22 20-Sep-22 30-Sep-22

Global Commodity Movement

Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)

Global Commodity Prices

Rebased to 10

Source: Refinitiv

0.86%

4.49%

1.01%

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Movement of Rupee vs Other Currencies

Currency

Last Closing* 1-Wk Ago

US Dollar

81.55 80.92

Pound Sterling

90.77 90.92

EURO

80.11 79.51

100 Yen

56.44 56.91

Source: Refinitiv Figures in INR , *

Value as on Sep 30, 2022

Rupee

• Rupee weakened against the greenback

following losses in the domestic equity market.

Euro

• Euro rose against the greenback as the

investor risk sentiment improved to some

extent following Bank of England’s

intervention in the U.K. bond market to stem

market volatility.

Pound

• Pound rose against the greenback after Bank

of England bought British government bonds

to stabilize the U.K. bond market.

Yen

• Yen weakened against the greenback on

concerns over aggressive monetary policy

tightening by key central banks across the

globe after euro zone inflation hit a record

high in Sep 2022 and U.S. consumer spending

increased faster than expected in Aug 2022.

Currencies Markets

8.40

8.80

9.20

9.60

10.00

10.40

31-Aug-22 15-Sep-22 30-Sep-22

USD GBP Euro JPY

Source: Refinitiv

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

0.76%

0.79%

-0.16%

-0.83%

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The Week that was…

Sep to 30

Sep

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The Week that was (Sep 26 – Sep 30)

Date Events

Present

Value

Monday,

September 26, 2022

• Germany IFO – Business Climate(Sep) 84.3 88.6

• Germany IFO – Expectations(Sep) 75.2 80.5

Tuesday,

September 27, 2022

• U.S. Durable Goods Orders(Aug) -0.20% -0.10%

• U.S. Housing Price Index (MoM)(Jul) -0.60% 0.10%

• U.S. New Home Sales (MoM)(Aug) 0.685M 0.532M

Wednesday,

September 28, 2022

• Germany Gfk Consumer Confidence Survey(Oct) -42.5 -36.8

• U.S. Pending Home Sales (MoM)(Aug) -2.00% -0.60%

• Japan Coincident Index(Jul) 100.1 100.6

• U.S. Wholesale Inventories(Aug) PREL 1.3% 0.60%

Thursday,

September 29, 2022

• India Current Account (Q2) (USD) -23.9B -13.4B

• U.S. Gross Domestic Product Annualized(Q2) -0.60% -0.60%

• Germany Harmonized Index of Consumer Prices (YoY)(Sep) PREL 10.90% 8.80%

• Eurozone Consumer Confidence(Sep) -28.8 -28.8

Friday,

September 30, 2022

• India Government Budget Value (Aug) (INR) -B5416 -3408B

• India Infrastructure Output YoY (Aug) 3.30% 4.50%

• China Non-Manufacturing PMI (Sep) 50.6 52.6

• U.K. Gross Domestic Product (QoQ)(Q2) 0.20% -0.10%

• Eurozone HICP (YoY)(Sep) PREL 10% 9.10%

• Germany Unemployment Rate (Sep) 5.50% 5.50%

• Japan Unemployment Rate(Aug) 2.50% 2.60%

• U.S. Michigan Consumer Sentiment Index(Sep) 58.6 59.5

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The Week Ahead

Oct to 07

Oct

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Day Event

Monday,

Oct 03, 2022

• India S&P Global Manufacturing PMI (Sep)

• Japan Tankan Large Manufacturing Index(Q3)

• U.S. ISM Manufacturing PMI (Sep)

• Germany S&P Global/BME Manufacturing PMI (Sep)

Tuesday,

Oct 04, 2022

• U.S. Factory Orders (MoM)(Aug)

• Japan Tokyo Consumer Price Index (YoY)(Sep)

Wednesday,

Oct 05, 2022

• U.S. ADP Employment Change (Sep)

• U.S. ISM Services PMI (Sep)

• Germany S&P Global/BME Composite PMI (Sep)

• Eurozone S&P Global Composite PMI (Sep)

• U.K. S&P Global/CIPS Composite PMI (Sep)

Thursday,

Oct 06, 2022

• India S&P Global Services PMI (Sep)

• Eurozone Retail Sales (YoY)(Aug)

• Germany Factory Orders (MoM)(Aug)

Friday,

Oct 07, 2022

• Germany Retail Sales (YoY)(Aug)

• U.S. Nonfarm Payrolls (Sep)

• U.S. Unemployment Rate (Sep)

• Japan Overall Household Spending (YoY)(Aug)

The Week Ahead

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