News U Can Use
April 20, 2018
The Week that was…
16
th
April to 20
th
April
2
Indian Economy
• Minutes of the Monetary Policy Committee’s (MPC) meeting held in Mar 2018 showed that
MPC may adopt a more hawkish stance moving forward even though domestic inflationary
pressure have eased. MPC identified several aspects namely increase in minimum support
prices for farmers and high global crude oil prices that may lead to an increase in retail
inflation.
• Government data showed that India’s Wholesale Price Index-based inflation (WPI) slowed
to an eight-month low of 2.47% in Mar 2018 from a 2.48% in the previous month and
5.11% in Mar 2017. Wholesale inflation grew at a slower pace due to decline in prices of
pulses and fibre. The WPI Food Index stood at -0.07% in Mar 2018 compared with 0.07%
in Feb 2018.
• The India Meteorological Department (IMD) expects 97% normal monsoon for 2018-19.
According to IMD, this is expected to be the third year in a row with very low chances of
rain deficit. The announcement is positive for the rural economy.
• The International Monetary Fund (IMF) maintained its growth projections for the Indian
economy at 7.4% for 2018 and 7.8% for 2019. This is higher than that of China for which
IMF projected a growth of 6.6% in 2018 and 6.4% in 2019. According to IMF, structural
reforms, pick up in private investments, implementation of the Goods and Services Tax
(GST) and fading impact of demonetization will lend support to the growth prospects of the
domestic economy. However, IMF expressed concerns regarding corporate debt overhang
and bad loans in the banking sector.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 20-Apr-18 1 Week Return YTD Return
S&P BSE Sensex 34,415.58 0.65% 1.78%
Nifty 50 10,564.05 0.80% 1.23%
S&P BSE Mid-Cap 16,798.94 0.73% -5.81%
S&P BSE Small-Cap 18,178.03 1.09% -5.72%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
16-Apr-18 865 954 0.91
17-Apr-18 963 841 1.15
18-Apr-18 999 805 1.24
19-Apr-18 697 1,110 0.63
20-Apr-18 745 1,048 0.71
Source: NSE
• Indian equity markets closed in the
green after India’s WPI-based
inflation eased to an eight-month low
in Mar 2018. The IMD’s statement
that India is expected to receive
normal monsoon for the third year in
a row also boosted investor
sentiment.
• Announcement by International
Monetary Fund that India could grow
at 7.4% in 2018 and 7.8% in 2019,
surpassing China, supported buying
interest.
• Gains were restricted after the
minutes of MPC’s latest monetary
policy meeting showed that the
committee could adhere to a more
hawkish stance beginning Jun 2018.
Additionally, tension between the
U.S. and Russia over Syria weighed
on market sentiment.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
23.59 26.22 38.69 103.36
P/B
3.13 3.63 2.92 2.62
Dividend Yield
1.14 1.21 0.85 0.64
Source: BSE, NSE Value as on Apr 20
, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
25,436.61 -0.07% 5.34%
S&P BSE Bankex
27,855.37 -1.58% 2.43%
S&P BSE CD
22,569.73 -1.21% 5.23%
S&P BSE CG
19,191.05 0.29% 4.14%
S&P BSE FMCG
11,068.48 4.11% 7.85%
S&P BSE HC
13,823.40 1.05% 2.82%
S&P BSE IT
13,335.13 4.33% 9.04%
S&P BSE Metal
14,731.96 4.51% 9.22%
S&P BSE Oil & Gas
14,333.81 -2.27% -1.94%
Source: Thomson Reuters
Eikon *Value as on Apr
20, 2018
• On the BSE sectoral front, indices closed
on a modestly higher note. S&P BSE Metal
(4.51%) stood as the major gainer followed
by S&P BSE Information Technology
(4.33%), S&P BSE FMCG (4.11%) and
S&P BSE Teck (3.73%).
• Gains in information technology stocks
came in after an Indian IT major posted
better than expected results for the quarter
ended Mar 2018 and announced 1:1
bonus. Meanwhile, gains in S&P BSE
Metal reflected soaring global aluminium
prices.
Indian Derivatives Market Review
• Nifty Apr 2018 Futures were at 10,585.5 points, a premium of 21.45 points, over the spot
closing of 10,564.05. The turnover on NSE’s Futures and Options segment stood at Rs.
37.00 lakh crore as against Rs. 36.83 lakh crore on Apr 13.
• The Put-Call ratio stood at 0.98 compared with the previous week’s close of 1.00.
• The Nifty Put-Call ratio stood at 1.62 compared with the previous week’s close of 1.63.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.97 5.86 5.92 5.97
91 Day T-Bill
6.15 6.08 6.13 6.10
7.80% 2021, (5 Yr GOI)
7.36 7.15 7.16 6.65
7.17% 2028, (10 Yr GOI)
7.72 7.43 7.62 --
Source: Thomson Reuters
Eikon
Value as on Apr 20, 2018
• Bond yields rose following surge in
global crude oil prices. Losses in the
domestic currency against the
greenback and persisting geopolitical
tensions too dampened the risk
appetite of market participants.
• Yields rose further after the minutes
of the MPC’s latest meeting showed
that it may adopt more hawkish
stance in future.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) rose 29 bps
to close at 7.72% from the previous
week’s close of 7.43%.
• Data from the Reserve Bank of India
showed that India's foreign exchange
reserves rose to $426.08 billion as on
Apr 13, 2018, from $424.86 billion in
the previous week.
7.30
7.55
7.80
16-Apr 17-Apr 18-Apr 19-Apr 20-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 6.65 7.84 119
3 Year 7.36 8.25 89
5 Year 7.64 8.42 78
10 Year 7.72 8.49 77
Source: Thomson Reuters
Eikon Value as on Apr 20, 2018
• Yields on gilt securities increased across
maturities in the range of 11 bps to 35
bps. The lowest increase was witnessed
on 1-year paper and the highest
increase was witnessed on 12-year
paper.
• Corporate bond yields increased across
maturities in the range of 23 bps to 46
bps.
• Spread between AAA corporate bond
and gilt expanded across the maturities
by up to 25 bps barring 6-, 8- and 10-
year maturities that contracted in the
range of 3 bps to 10 bps.
0
17
34
5.70
6.90
8.10
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 20-Apr-18 13-Apr-18
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• According to the Employees' Provident Fund Organisation’s (EPFO), subscribers will get an
option to increase or decrease investments of their provident fund into stocks through
exchange trade funds (ETF) in the current financial year.
• The Securities and Exchange Board of India (SEBI) published detailed guidelines for
handling and maintaining records, transfer of securities, and payment of dividend by
registrar and share transfer agents. SEBI stated that the documents that are prescribed
have to be preserved for period not less than eight years post completion of the relevant
transactions by bankers to an issue, issuer companies or by registrar and share transfer
agents (RTA) on behalf of such firms. As per the norms, issuer companies will have to
strictly monitor the activities of their RTAs.
• According to the government, e-way bill will be required for intra-state movement of goods
in 5 states that included Gujarat and Kerala, effective from Apr 15, 2018. E-way bill
requirement for inter-state movement was rolled out on Apr 1, 2018. Starting at midnight Apr
15 till 5 p.m. of the same day, approximately 2.4 lakh inter-state and intra-state e-bill were
generated on the portal.
• According to the new guidelines issued by the Personnel Ministry, government employees
shall be allowed to go abroad during the child care leave. Also, during this period, the
employees they would be allowed to take the advantage of Leave Travel Concession (LTC).
Regulatory Updates in India (contd..)
• The Association of Mutual Funds in India (AMFI) directed distributors to submit the annual
declaration of self-certification (DSC) for FY18 to the Computer Age Management Services
(CAMS) by Jun 30, in accordance with the code of conduct prescribed by AMFI. If the same
is not submitted within due date, the distributor shall stop receiving the brokerage from Jul
2018 onwards. Distributors who registered themselves with AMFI after Oct 1, 2017, are
exempted from submitting the DSC for FY18.
• The finance ministry announced that bank account details and mobile numbers have been
made compulsory for subscribers of National Pension Scheme (NPS) by pension fund
regulator Pension Fund Regulatory and Development Authority (PFRDA). Also, the pension
fund regulator has made Foreign Account Tax Compliance Act and Central Registry of
Securitization Asset Reconstruction and Security Interest compulsory for new and existing
subscribers. This comes in compliance with the Prevention of Money Laundering Act
guidelines.
• According to media reports, the government is considering launching a natural gas trading
hub by Oct 2018 and creating an Indian gas benchmark. The Petroleum and Natural Gas
Regulatory Board is planning to set up a regulatory framework for bringing into operation
the gas trading/exchange hub. Presently, the Indian government fixes the price of the bulk
of domestically produced natural gas.
9
Global News/Economy
• According to the Commerce Department, U.S. retail sales grew 0.6% in Mar 2018 following
0.1% decline in Feb 2018. More than expected increase in retail sales was primarily due to
rebound in sales by motor vehicle and parts dealers.
• Data from the U.S. Commerce Department showed that U.S. housing starts grew 1.9% to an
annual rate of 1.319 million in Mar 2018 after it fell 3.3% to a revised 1.295 million in Feb
2018 (1.236 million originally reported). Building permits also grew 2.5% to an annual rate of
1.354 million in Mar 2018.
• Data from the Office for National Statistics showed that inflation in the U.K. slowed to 1-year
low in Mar 2018. Consumer prices grew 2.5% on a yearly basis in Mar 2018, slower than the
2.7% increase in the previous month. This was the weakest pace since Mar 2017, when
prices gained 2.3%.
• Final data from Eurostat showed that euro zone’s inflation accelerated in Mar 2018. Euro
zone inflation grew 1.3% in Mar 2018 from downwardly revised growth of 1.1% (from 1.4%)
in Feb 2018. Core inflation however remained steady at 1%.
• According to data from the National Bureau of Statistics, gross domestic product (GDP) of
China grew 6.8% YoY in first quarter of 2018, the same pace of growth as seen in the fourth
quarter of 2017. However, on a quarterly basis, GDP rose 1.4% in the first quarter of 2018,
slower than 1.6% in the previous three months.
10
Global Equity Markets
11
Global Indices
Indices
20-Apr-18
1-Week
Return
YTD
Return
Dow Jones
24,462.94 0.42% -1.45%
Nasdaq 100
6,667.75 0.59% 2.40%
FTSE 100
7,368.17 1.43% -3.66%
DAX Index
12,540.50 0.79% -2.57%
Nikkei Average
22,162.24 1.76% -2.65%
Straits Times
3,573.38 2.06% 5.01%
Source: Thomson Reuters Eikon
Value as on Apr 20, 2018
U.S.
• U.S. markets moved up over the week
amid mixed quarterly earnings of a few
major companies. Better than expected
economic data for Mar 2018 further
buoyed sentiment.
• However, the upside was limited on
uncertainty over tension between the
U.S. and Russia and in the Middle East.
Europe
• European markets traded up following strong quarterly earnings of a few major companies
and upbeat economic data for Mar 2018. Easing tension in the Korean Peninsula further
helped sentiment as the U.S. President indicated that the summit with North Korea would
be successful.
Asia
• Asian markets traded mixed as investors remained cautious over developments in Syria.
However, market sentiment received support after meeting between Japanese Prime
Minister and U.S. President concluded on a positive note. Easing tension in the Korean
Peninsula also helped sentiment.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
rose 12 bps to close at 2.95% from the
previous week’s close of 2.83%.
• U.S. Treasury prices began the week on
a flattish note amid reports that the U.S.
President will nominate one of the
renowned American economist as U.S.
Federal Reserve vice chairman who
was viewed not be either too hawkish or
too dovish.
• However, more than expected increase
in U.S. homebuilding and strong retail
sales data for Mar 2018 led to the
decline in U.S. Treasury prices.
• Prices remained low on growing
possibility that the U.S Federal Reserve
will continue to raise interest rates in
2018.
2.80
2.90
3.00
16-Apr 17-Apr 18-Apr 19-Apr 20-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)
75.36 73.62
Gold ($/Oz)
1334.72 1345.01
Gold (Rs/10 gm)
31,298 30,874
Silver ($/Oz)
17.11 16.62
Silver (Rs/Kg)*
40,106 38,485
Source: Thomson Reuters
Eikon *Value as on Apr 20, 2018
Gold
• Gold prices moved down on easing
tension in the Korean Peninsula.
Additionally, meeting between Japanese
Prime Minister and the U.S. President
concluded on a positive note. Better
than expected U.S. economic data for
Mar 2018 also weighed on bullion
prices.
Crude
• Brent crude prices rose following decline
in U.S. crude oil production. Additionally,
prices got support on expectations that
the Organization of the Petroleum
Exporting Countries (OPEC) and non-
OPEC countries would continue
production cuts in 2019.
Baltic Dry Index
• The Baltic Dry Index rose on the back of
improved capesize and panamax
activities.
9.50
10.35
11.20
21-Mar-18 31-Mar-18 10-Apr-18 20-Apr-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
2.36%
- 0.77%
2.96%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
66.02 65.22
Pound Sterling
92.73 92.77
EURO
81.46 80.34
100 JPY
61.40 60.64
Source: RBI Figures in INR , *Value as on Apr 20, 2018
Rupee
• The Indian rupee weakened against the
greenback following increase in global
crude oil prices and growing possibility
that the MPC may adopt a more hawkish
stance moving forward, which may lead
to foreign fund outflow from the Indian
economy.
Euro
• Euro weakened against the greenback
on concerns over more rate hikes from
the U.S. Federal Reserve in 2018.
Pound
• Pound weakened against the greenback
after the Bank of England chief indicated
that the central bank may not raise
interest rates in May 2018 due to mixed
economic data.
Yen
• Yen weakened against the greenback on
concerns that the U.S. Federal Reserve
would raise interest rates further in 2018.
9.80
10.00
10.20
10.40
21-Mar-18 31-Mar-18 10-Apr-18 20-Apr-18
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
1.22%
-0.05%
1.39%
1.25%
15
The Week that was…
16
th
April to 20
th
April
The Week that was (Apr 16 – Apr 20)
16
Date Events Present Value Previous Value
Monday,
Apr 16, 2018
• India Wholesale Price Index (Mar 18) 2.47% 2.48%
• U.S. Retail Sales Advance (MoM) (Mar) 0.60% -0.10%
Tuesday,
Apr 17, 2018
• China Gross Domestic Product (YoY) (1Q)
6.80% 6.80%
• Germany ZEW Survey Expectations (Apr)
-820.0% 510.0%
• China Retail Sales YTD (YoY) (Mar)
9.80% 9.70%
• China Industrial Production (YoY) (Mar)
6.00% 6.20%
• U.S. Industrial Production (MoM) (Mar)
0.50% 1.00%
• Japan Trade Balance (Mar)
¥797.30b ¥3.40b
• U.K. ILO Unemployment Rate 3Mths (Feb)
4.20% 4.30%
• U.S. Housing Starts (MoM) (Mar)
1.90% -3.30%
Wednesday,
Apr 18, 2018
• U.K. Consumer Price Index (YoY) (Mar)
2.50% 2.70%
• Eurozone Consumer Price Index (YoY) (Mar F)
1.30% 1.40%
Thursday,
Apr 19, 2018
• Japan National Consumer Price Index (YoY) (Mar)
1.10% 1.50%
• U.K. Retail Sales Ex Auto Fuel (YoY) (Mar)
1.10% 1.20%
• U.S. Initial Jobless Claims (Apr 14)
232k 233k
Friday,
Apr 20, 2018
• Japan Tertiary Industry Index (MoM) (Feb)
0.00% -0.40%
• Eurozone Consumer Confidence (Apr A) 0.40 0.10
17
The Week Ahead
23
rd
April to 27
th
April
18
The Week Ahead
Day Event
Monday,
April 23, 2018
• Japan Nikkei Japan PMI Manufacturing (Apr P)
• Euro zone Markit Eurozone Composite PMI (Apr P)
• U.S. Markit US Composite PMI (Apr P)
• U.S. Existing Home Sales (Mar)
Tuesday,
April 24, 2018
• Euro zone German IFO Current Assessment (Apr)
• U.K. Public Sector Net Borrowing (Mar)
• U.S. New Home Sales (Mar)
• U.S. Consumer Confidence Index (Apr)
Wednesday,
April 25, 2018
• Japan All Industry Activity Index (MoM) (Feb)
Thursday,
April 26, 2018
• Euro zone European Central Bank Rate Decision
• U.S. Durable Goods Orders (Mar P)
• U.S. Wholesale Inventories (MoM) (Mar P)
• Japan Industrial Production (YoY) (Mar P)
Friday,
April 27, 2018
• Bank of Japan Rate Decision
• U.K. Gross Domestic Product (YoY) (1Q A)
• U.S. Gross Domestic Product Annualized (QoQ) (1Q A)
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19
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