News U Can Use
April 6, 2018
The Week that was???
2
nd
April to 6
th
April
2
Indian Economy
???
The Monetary
Policy Committee
(MPC) in
its first
bi-monthly
policy review
for 2018-19 kept
key
policy repo
rate
unchanged at
6.0% and retained
its ???neutral???
stance. Consequently,
the
reverse
repo rate
stood unaltered
at 5.75%,
and the marginal
standing
facility (MSF) rate
and
bank
rate remained
at 6.25%,
each. Out
of five members
of the
MPC, five policymakers
were
in favour
of the
monetary policy
decision and
one advocated
for a
policy rate increase
of 25
bps.
???
The Nikkei
India Manufacturing
Purchasing Managers'
Index (PMI) fell
to 51.0
in Mar
2018
from
52.1 in Feb
2018. This
marked the weakest
pace of
rise in
the last
five months.
The
downside
reflected drop
in new
work
and output and
a fall in
employment for
the first
time in
eight months.
???
The seasonally
adjusted Nikkei
India Services
Business Activity Index
improved from
47.8 in
Feb
2018 to 50.3
in Mar 2018
driven
by greater inflows
of new work. Meanwhile,
the headline
seasonally
adjusted Nikkei
India Composite
PMI Output Index,
rose from
49.7 in
Feb to
50.8
in Mar,
driven by growth
in both the manufacturing
and service
sectors.
???
Government
data showed
that the index
of eight core
industries grew
5.3% in
Feb 2018 as
against
6.1% in Jan
2018 (6.7% originally
reported) and
0.6% in
Feb 2017.
The month
on
month
slowdown
in pace
of growth
reflects
2.4% and
1.5% decline in
crude oil and
natural
gas
products respectively.
Meanwhile, cement witnessed
maximum growth
of 22.9%.
Growth
for
Apr to Feb 2018 slowed to 4.3% from
4.7% in the same period of the
previous year.
3
Indian Equity Market
4
Domestic Equity
Market Indices
Indices
06-Apr-18
1 Week Return
YTD Return
S&P BSE Sensex
33,626.97
2.00% -0.55%
Nifty 50
10,331.60
2.15% -1.00%
S&P BSE Mid-Cap
16,596.57
3.97% -6.95%
S&P BSE Small-Cap
17,882.99
5.23% -7.25%
Source: MFI Explorer
NSE Advance/Decline
Ratio
Date
Advances Declines
Advance/Decline Ratio
02-Apr-18
1,493 312 4.79
03-Apr-18
1,351 446 3.03
04-Apr-18
736 1,064 0.69
05-Apr-18
1,528 290 5.27
06-Apr-18
1,099 699 1.57
Source: NSE
???
Indian equity
markets
closed in
the
green
amid positive
impact of
monetary
policy wherein
the MPC
lowered
inflation expectations
for the
fourth
quarter
of FY18
and first
and
second halves
of FY19.
???
Meanwhile, Reserve
Bank of India
(RBI)
permitting banks to
spread their
bond
trading losses
over four
quarters
and
jump in
big auto companies???
Mar
2018
vehicle sales
further supported
buying
interest. Expansion in
the
Indian
services sector
in Mar
2018
added to
the gains.
???
However, trade
war
tensions between
the
U.S. and China
and expansion of
India???s
manufacturing sector
in Mar
2018
at the
weakest pace in
5 months
capped
the gains.
Persisting
concerns
over
the Indian
banking sector
also
weighed
on the market sentiment.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
23.24
25.65 38.52 102.61
P/B
3.09
3.55 2.91 2.59
Dividend Yield
1.15
1.24 0.86 0.64
Source: BSE, NSE
Value as
on Apr 06
, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last
Returns (in %)
Closing*
1-Wk 1-Mth
S&P BSE Auto
25,409.26
5.62% 5.43%
S&P BSE Bankex
27,855.60
2.42% 1.10%
S&P BSE CD
22,192.97
-0.31% 5.11%
S&P BSE CG
18,799.74
1.75% 1.11%
S&P BSE FMCG
10,552.42
2.55% 2.68%
S&P BSE HC
13,685.66
4.01% -0.76%
S&P BSE IT
12,233.40
1.10% -0.93%
S&P BSE Metal
13,631.13
2.32% -6.06%
S&P BSE Oil & Gas
14,823.03
1.43% -2.70%
Source: Thomson Reuters
Eikon
*Value as on Apr 06
, 2018
???
On the BSE
sectoral front,
indices closed on
a
positive
note. S&P
BSE Auto (5.62%)
stood
as the
major gainer
followed
by S&P
BSE
Healthcare (4.01%),
S&P BSE
Power
(3.17%), and
S&P BSE Realty (2.90%).
???
Gains in
auto stocks
reflect
solid auto
sales
numbers.
S&P BSE
FMCG and S&P
BSE
Bankex
gained 2.55%
and 2.42%,
respectively.
S&P BSE Consumer
Durables
was
only loser and
fell 0.31%.
Indian Derivatives
Market Review
???
Nifty Apr 2018
Futures were
at 10,352.85
points, a
premium of 21.25
points, over
the spot
closing of
10,331.60.
The turnover
on NSE???s Futures and Options segment stood at Rs. 34.44
lakh crore against
Rs. 35.09 lakh crore on Mar 28.
???
The Put-Call ratio stood
unchanged from the previous
week???s close
at 0.91.
???
The Nifty Put-Call ratio
stood at 1.45 compared
with the previous week???s
close of 1.10.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value*
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.89
7.57 5.87 5.85
91 Day T-Bill
6.10
6.12 6.30 6.07
7.80% 2021, (5
Yr GOI)
6.94
7.09 7.22 6.56
7.17% 2028, (10
Yr GOI)
7.17
7.40 7.77 --
Source: Thomson Reuters
Eikon
*
Value as on Apr 06, 2018
???
Bond yields
plunged after
the MPC in
its
bi-monthly monetary
policy review
lowered
its inflation rate
projections for
the first
and second half of FY19.
???
Forecast by
a private weather
agency
of
normal monsoon
rainfall this
year
also
eased inflation concern
that
further
boosted bond market.
???
News that
the RBI permitted
banks to
spread
provisions
made for mark-to-
market
losses on their
bond portfolios
also
supported the
domestic bond
market.
???
Yield
on the
10-year benchmark
paper
(7.17%
GS 2028) fell
23 bps to
close
at
7.17% from
the previous
week???s
close
of 7.40%,
after trading
in a
range
of 7.12% to
7.37%.
7.05
7.15
7.25
7.35
3-Apr
4-Apr 5-Apr
6-Apr
Yield in %
10 -Yr Benchmark
Bond ( % )
Source: CCIL
Domestic Debt Market (Spread
Analysis)
7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year
6.45
7.54
108
3 Year
6.94
7.74
80
5 Year
7.10
7.89
79
10 Year
7.18
8.14
96
Source: Thomson Reuters
Eikon
Value as on Apr 06, 2018
???
Yields
on gilt
securities fell
across
all
maturities
in the
range of
11 bps
to 45
bps.
Maximum decrease
was witnessed
on
11-year
paper while
minimum was
witnessed on 1- and 2-year papers.
???
Corporate bond
yields fell
across the
maturities
in the range of
4 bps to 19 bps.
???
Spread between
AAA corporate bond
and
gilt
expanded across
all maturities by
up
to
39 bps, barring
4- and 6-
year
maturities
that contracted
by up to
5 bps
and
1-year paper
that remained
unchanged.
-30
-15
0
5.80
6.90
8.00
3 Mths
6 Mths 1 Yr
5 Yrs 10 Yrs 20 Yrs
30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps
06-Apr-18 28-Mar-18
Yield in %
Change
in
bps
Source: Thomson Reuters
Eikon
Regulatory
Updates in India
8
???
The RBI
has modified its
rigid position
on provisioning
norms for
banks suffering
losses
from
bonds
trading. RBI
has permitted
lenders to scatter
their trading
losses over
four quarters so
that
arranging funds
to meet provisioning
norms
on bankrupt cases
is not
difficult.
Also, the
central
bank has stated
that banks
should create an
Investment Fluctuation
Reserve, which
could be used
in case it is
required to provide for
bond losses in the future.
???
Securities and
Exchange Board
of India
(SEBI) announced that
it has
brought in
a new
system
for
depositories. The
new system
that
will
be effective
from May
1, 2018, would
be used to
monitor the foreign
investment limits in listed
Indian companies. This
new system
has been set
up
in consultation
with
the RBI, thereby
helping the
companies to ensure
compliance with
various foreign
investment limits.
???
SEBI has
raised the
limit to
process up to
100 orders per
second by a
user
for algorithm
trading
from the
existing limit
of 20
orders per
second. This
comes on
the wake
of relaxing
algorithm
trading norms at
commodity derivatives
exchanges. The
decision was
taken after
receiving representations from exchanges along
with
views
of Commodity Derivatives Advisory
Committee.
???
RBI has appointed
the Financial Benchmark
India Pvt Ltd
(FBIL) for
valuation of
portfolios of
government
securities. This
was earlier
done by
the Fixed
Income
Money Market and
Derivatives
Association
of India
(FIMMDA). According
to the directive
issued
by RBI, FIMMDA
has stopped
publishing prices/yield of government
securities effective Mar 31,
2018.
Regulatory Updates in India (contd..)
???
Insolvency and
Bankruptcy panel
has recommended
changes to
the insolvency resolution
framework
in its
report that
was released
by the ministry
of corporate affairs.
It has
suggested
changes
to the insolvency
resolution framework
to make
it flexible
for resolution
professionals
to raise interim finance.
To facilitate this,
it has
recommended that interest should
be calculated
till one year after
the liquidation date or repayment whichever
is earlier. Currently, the
interest
is
calculated only
till the liquidation date.
???
RBI has deferred
implementation of two
key regulatory
policies. The
regulator deferred
the
execution of
the Indian Accounting Standards (Ind
AS) by
one year. Also, countercyclical
buffer
related provisioning requirements have been postponed. Ind AS
is a global
accounting practice
that
is compulsory for
lenders to adopt
that
may lead
to initial
credit losses.
RBI stated
that
Ind
AS
was to
be effectively
implemented from
2018. Meanwhile, banks
were
being asked to
submit half
yearly balance sheets based
on the Ind AS formats as a part
of the preparedness.
???
The agriculture
ministry has
allowed states to
set up their
own
insurance companies
for
implementing
the
Pradhan Mantri
Fasal Bima Yojana
(PMFBY).
For proper
implementation
of
the
old crop insurance schemes
which
have now been
merged with
PMFBY,
states had
placed
several
requests with
the centre.
The Comptroller
and Auditor General
in its
2017 report
had
made observations
that these schemes
were poorly implemented during 2011-2016.
9
Global News/Economy
???
According to
the Labor Department,
U.S. non-farm payroll
employment rose
much less
than
expected
by 103,000
jobs in
Mar 2018 after
jumping by
an upwardly
revised 326,000
jobs
(313,00
jobs originally reported) in Feb 2018.
The less than expected
job growth
came as rise
in
employment
in the
manufacturing,
healthcare, and
mining sectors
were
partly offset
by job
losses in
the construction
and retail
sectors. The
unemployment rate
stood at 4.1%
in Mar 2018,
unchanged
from the
five previous
months. Meanwhile,
annual rate
of growth
in average
hourly
employee earnings rose 2.7%
in Mar 2018 from 2.6%
in Feb 2018.
???
According to
the Institute for
Supply Management, U.S.
manufacturing Purchasing
Managers
Index
(PMI) fell to
59.3 in
Mar 2018
from 60.8 in
Feb 2018. The
more than expected
fall was
due to slowdown
in the pace of job
growth and new orders in
the manufacturing sector.
???
According to
data from
IHS Markit,
eurozone???s service
PMI fell
to 54.9 in
Mar 2018 from
56.2 in
Feb
2018. Similarly,
eurozone???s
composite PMI
fell to
55.2
in Mar
from
57.1 in
Feb as rates
of
growth slowed
in both manufacturing and
services sectors.
???
According to
survey data
from IHS
Markit, U.K.???s
PMI fell more
than expected
to 51.7 in
Mar
2018
from 54.5
in Feb
2018 due to
snow
disruption and
unusually bad weather
conditions in
Mar 2018.
???
As per survey
results
from IHS
Markit,
China???s manufacturing
PMI fell
unexpectedly to
51.0 in
Mar
2018 from 51.6
in Feb
2018. The
unexpected fall was
driven by
slowdown
in production
and new orders.
10
Global Equity Markets
11
Global Indices
Indices
06-Apr-18
1-Week
Return
YTD
Return
Dow Jones
23,932.76
-0.71% -3.59%
Nasdaq 100
6,433.21
-2.25%
-1.20%
FTSE 100
7,183.64
1.80% -6.07%
DAX Index
12,241.27
1.19% -4.90%
Nikkei Average
21,567.52
0.53% -8.25%
Straits Times
3,442.50
0.42% 1.16%
Source: Thomson Reuters
Eikon
U.S.
???
U.S. markets
came under
pressure as
concerns
over trade
war
reignited
following
China???s
announcement of
tariff
hike
on certain goods
imported from
the
U.S.
???
Losses were
extended after
U.S.
job
growth
slowed
by much
more than
anticipated
in Mar 2018.
Europe
???
European markets
closed on a
positive note
on optimism
over a
resolution of
trade tensions
between
the U.S.
and China. Gains
were
capped as
final data
of a
private survey
showed
that
Mar euro
zone private
sector expanded
in Mar
2018 at the
weakest pace
since the
start
of
2017. Meanwhile,
euro zone retail
sales increased
at a slower
than expected
pace in
Feb
after falling in
the previous two
months.
Asia
???
Asian markets
witnessed a
mixed trend.
Optimism over negotiations
between
the U.S. and
China
to resolve the
escalating trade
tensions provided
initial support
to the bourses.
Gains
were
capped as
worries about a
global trade
war intensified
amid reports
of U.S. President's
plan to impose
additional tariffs on Chinese imports.
Global Debt (U.S.)
12
???
Yield
on the
10-year
U.S. Treasury
bond
rose
4 bps to
close
at 2.78%
from the
previous week???s
close of 2.74%.
???
U.S. Treasury
prices rose initially
as its
safe
haven appeal improved
after the
Institute
for Supply Management
reported
that
the index of
factory
activity for
U.S.
fell in
Mar 2018.
???
However,
the trend
reversed,
amid
reports
that the
U.S. is
looking to resolve
a trade
dispute with
China.
???
Further losses
were restricted
at the end
of the
week after the U.S. nonfarm payroll
employment
for Mar
2018 came
below
market
expectations and
grew at
the
slowest rate
in the last six
months.
2.70
2.77
2.84
2-Apr
3-Apr 4-Apr
5-Apr 6-Apr
Yield in %
US 10-
Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance
of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
65.70
68.21
Gold ($/Oz)
1,332.89
1,324.00
Gold (Rs/10 gm)
30,396
30,630
Silver ($/Oz)
16.35
16.32
Silver (Rs/Kg)*
37,884
38,325
Source: Thomson Reuters
Eikon
*Value as on Apr 06, 2018
Gold
???
Gold prices
inched up as
investors
remained
worried of
a potential
global
trade
war as
China announced tariff
hike
on
certain goods imported
from the
U.S.
in
retaliation
to U.S.???
move of imposing
tariff
on steel and aluminum.
Crude
???
Brent crude
prices moved
down as
concerns
over supply glut
weighed on
sentiment
after Russia
reported an
increase in
production in Mar 2018.
???
However, the
downside was
limited after
U.S.
crude inventories
fell by 4.617
million
barrels for
the week
ended Mar
30.
Baltic Dry Index
???
The Baltic
Dry Index
fell on
the back
of
lower
capesize and panamax activities.
9.60
10.10
10.60
7-Mar-18
22-Mar-18
6-Apr-18
Global Commodity Movement
Gold Spot ($/Oz)
Silver Spot ($/Oz)
Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source:
Thomson Reuters
Eikon
-3.68%
0.67%
0.18%
Currencies Markets
14
Movement of Rupee vs
Other Currencies
Currency
Last Closing* 1-Wk Ago
US Dollar
64.99
65.04
Pound Sterling
90.96
92.28
EURO
79.51
80.62
100 JPY
60.54
61.54
Source: RBI
Figures in
INR , *Value as on Apr 06, 2018
Rupee
???
The Indian
rupee rose against
the
greenback
after
MPC in
its bi-monthly
monetary
policy review cut
its inflation
projections
for FY19.
Euro
???
Euro weakened
against the greenback
after
the euro
zone composite
output
index fell
in Mar 2018.
Pound
???
Pound initially
weakened against
the
greenback
after
the U.K.
services
PMI for
Mar
2018 came
below market
expectations.
However,
the trend reversed
after
the U.S. nonfarm
payroll employment
for
Mar missed
market
expectations and
grew
at the slowest
pace
in the
past six
months.
Yen
???
Yen
weakened against
the greenback as
its
safe haven
appeal dampened
amid
reports
that the United
States is
looking to
resolve a trade dispute
with
China.
9.80
9.90
10.00
10.10
10.20
10.30
7-Mar-18
22-Mar-18 6-Apr-18
USD
GBP Euro
JPY
Source: RBI
Currency
Prices ( in terms
of INR)
Rebased to 10
Currency Movement
- 0.09%
-1.44%
-1.38%
-1.62%
15
The Week that was???
2
nd
April to 6
th
April
The Week that
was (Apr
2 ???
Apr 6)
16
Date
Events
Present
Value
Previous
Value
Monday,
April
2, 2018
??? India's eight core industries
data (Feb) 5.30%
6.10%
??? U.S. ISM Manufacturing (Mar)
59.3 60.8
??? U.S. ISM Employment (Mar)
57.3 59.7
Tuesday,
April 3, 2018
??? India???s
Nikkei Manufacturing PMI (Mar)
51.00 52.1
??? Germany Retail Sales (YoY)
(Feb) 1.30%
2.50%
??? U.K. Markit
Manufacturing PMI
(Mar) 55.1
55
Wednesday,
April 4, 2018
??? Eurozone Consumer Price Index Estimate
(YoY) (Mar)
1.40%
1.10%
??? U.S. ISM Non-Manufacturing/Services
Composite (Mar)
58.8
59.5
??? Japan Nikkei Composite PMI (Mar)
51.3 52.2
??? China
Caixin Composite PMI (Mar)
51.8 53.3
??? U.S. Durable Goods Orders (Feb F)
3.00%
3.10%
Thursday,
April 5, 2018
??? India???s Monetary Policy Committee???s Interest
Rate Decision
6.00%
6.00%
??? India???s Nikkei Services PMI
(Mar) 50.3
47.8
??? U.S. Initial Jobless Claims (Mar 31)
242k 218k
??? U.K. Markit/CIPS Composite PMI (Mar)
55.2 55.3
Friday,
April
6, 2018
??? U.S. Change in Non-farm Payrolls (Mar)
103k 326k
??? Germany
Industrial Production (YoY)
(Feb) 2.60%
6.30%
17
The Week Ahead
9
th
April to 13
th
April
18
The Week Ahead
Day
Event
Monday,
April 9, 2018
??? Euro Zone
Sentix Investor Confidence (Apr)
??? U.K. Halifax House Prices
(MoM) (Mar)
??? Japan Consumer Confidence Index (Mar)
??? Japan Eco Watchers Survey Current (Mar)
Tuesday,
April 10, 2018
??? China
New Yuan Loans CNY
(Mar)
??? Japan Machine Tool Orders (YoY)
(Mar P)
??? U.K. NIESR GDP Estimate (3M) (Mar)
Wednesday,
April 11, 2018
??? China Consumer Price Index
(YoY)
(Mar)
??? U.S. Consumer Price Index (YoY)
(Mar)
??? U.K. Trade
Balance (Feb)
???
U.K. Manufacturing Production (YoY)
(Feb)
Thursday,
April 12, 2018
??? India Consumer Price Index (Mar 18)
??? India Index
of Industrial Production (Feb 18)
??? Eurozone Industrial Production (YoY)
(Feb)
??? U.S. Initial Jobless Claims
(Apr 7)
??? U.S. Export Price Index (YoY)
(Mar)
Friday,
April 13, 2018
??? U.S. University of Michigan Sentiment (Apr P)
??? China Trade Balance
CNY (Mar)
??? Germany Consumer Price Index (YoY)
(Mar F)
Disclaimer
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information herein is
meant only
for general
reading purposes
and contains
all factual
and statistical
information pertaining
to Industry
and markets which
have
been obtained
from independent
third party
sources and
which are deemed
to be reliable.
The information provided
cannot be
considered as
guidelines,
recommendations
or as a
professional
guide for
the readers.
It may
be noted
that since
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Life
Asset Management
Company Limited
(RNLAM)
(formerly
Reliance Capital Asset
Management
Limited)
has not independently
verified
the accuracy
or authenticity of
such information
or data,
or for
that
matter
the
reasonableness
of the assumptions
upon which
such data
and information
has been
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or arrive data;
RNLAM does not
in any
manner assures
the
accuracy
or authenticity of
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Some of
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& assertions
contained in
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may reflect
RNLAM???s views
or opinions,
which
in turn may
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formed on the
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19
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