The Week that was…
01
st
April to 05
th
April
2
Indian Economy
• The Monetary Policy Committee (MPC) in its first bi-monthly monetary policy review for
FY20, lowered key policy repo rate by 25 bps to 6.00% from 6.25%. Subsequently, the
reverse repo stands adjusted at 5.75% while the marginal standing facility rate and the
bank rate stood at 6.25%. However, the MPC decided to continue with its neutral stance
on its monetary policy.
• The Nikkei India Manufacturing Purchasing Managers' Index (PMI) fell to 52.6 in Mar 2019
from 54.3 in Feb 2019. This marked six-months low. Though increase in new orders was
solid, it was slowest in six months. Also, increase in production, input buying and
employment were soft.
• The Nikkei India Services Purchasing Managers' Index (PMI) fell to 52.0 in Mar 2019 from
52.5 in Feb 2019. This marked a six-month low on account of slower expansion in new
work. Additionally, the pace of staff hiring was weakest since Sep 2018. However,
optimism regarding the year-ahead outlook for business activity strengthened for the
second consecutive month. Seasonally-adjusted Nikkei India Composite PMI Output Index
fell to 52.7 in Mar 2019 from 53.8 in Feb 2019.
• Government data showed that eight core sectors grew 2.1% in Feb 2019 as against
downwardly revised growth of 1.5% (1.8% growth originally reported) in the previous
month and 5.4% in the same month of the previous year. The upside on month on month
basis reflects growth in coal sector of 7.3% as against growth of 1.7% in Jan 2019.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
05-Apr-19
1 Week Return
YTD Return
S&P BSE Sensex
38,862.23 0.49% 7.75%
Nifty 50
11,665.95 0.36% 7.40%
S&P BSE Mid
-Cap 15,509.36 0.19% 0.46%
S&P BSE Small
-Cap 15,045.87 0.12% 2.31%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
01-Apr-19 1,303 557 2.34
02-Apr-19 835 948 0.88
03-Apr-19 620 1,219 0.51
04-Apr-19 696 1,109 0.63
05-Apr-19 1,148 641 1.79
Source: NSE
• Indian equity markets closed with
modest gains in the week ended Apr 5,
2019. Positive global cues following
U.S. and China making progress in
their trade talks lifted markets. Upbeat
manufacturing data from China and the
U.S. for Mar 2019 strengthened
investor confidence.
• Strong foreign fund inflows supported
buying interest. Further, hopes of a rate
cut by MPC ahead of first bi-monthly
policy meeting for FY20 led to gains.
However, gains got restricted after
MPC maintained its “neutral” stance.
Markets had already factored in a 25-
basis point cut. RBI lowered the growth
forecast for FY20, thereby weighing on
market sentiment. Further, decline in
Nikkei India Manufacturing PMI for Mar
2019 took a toll over investor sentiment
which was followed by fall in Nikkei
India Services PMI.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
27.99 29.12 31.13 -168.2
P/B
3.15 3.72 2.66 2.28
Dividend Yield
1.14 1.13 0.95 0.88
Source: BSE, NSE Value as on Apr 05, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
19,327.86 2.67% -0.91%
S&P BSE
Bankex
33,752.23
-1.14%
9.27%
S&P BSE CD
23,456.09
-1.68%
6.53%
S&P BSE CG
18,363.20
-0.59%
4.75%
S&P BSE FMCG
11,628.20
-0.97%
0.98%
S&P BSE HC
14,331.26
-0.53%
2.23%
S&P BSE IT
15,554.87 1.80% 2.15%
S&P BSE Metal
11,708.93 3.12% 4.45%
S&P BSE Oil & Gas
14,840.75
-2.81%
3.63%
S&P BSE Realty
2,139.03 2.98% 16.80%
Source: Thomson Reuters Eikon
*Value as on Apr 05, 2019
• On the BSE sectoral front, indices closed
modestly higher. S&P BSE Metal was the
major gainer, up 3.12% followed by S&P BSE
Realty that grew 2.98%. Positive updates on
trade talks between U.S. and China led to
gains for the metal sector. Meanwhile, gains
in one of the realty major stocks after it
delivered strong quarterly sales in Q4FY19
boosted realty sector.
• However, S&P BSE Oil & Gas was the major
loser and fell 2.81% followed by S&P BSE
Consumer Durables that fell 1.68%. S&P
BSE Bankex and S&P BSE FMCG fell 1.14%
and 0.97%, respectively.
Indian Derivatives Market Review
• Nifty Apr 2019 Futures were at 11,760.75, a premium of 94.80 points, above the spot
closing of 11,665.95. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 52.43 lakh crore as against Rs. 64.92 lakh crore for the week to Mar 29.
• The Put-Call ratio remained unchanged at 0.96 compared with the previous week’s close.
• The Nifty Put-Call ratio stood at 1.61 against the previous week’s close of 1.49.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
5.98 8.49 6.15 6.41
91 Day T
-Bill
6.21 6.12 6.40 6.93
07.32% 2024, (5 Yr GOI)
7.05 6.93 7.05 --
07.26% 2029, (10 Yr GOI)
7.35 7.35 7.38 --
Source: Thomson Reuters Eikon
Value as on Apr 05
, 2019
• Bond yields fell initially on
expectations that MPC will lower key
policy repo rate in its first bi-monthly
monetary policy review for FY20,
which was due on Apr 4, 2019.
• However, the trend reversed sharply,
and all gains were neutralized after
MPC maintained its neutral stance on
its monetary policy even though it
lowered key policy repo rate as
expected. Lack of clarity regarding
liquidity management also weighed
on market sentiments.
• Yields on the 10-year benchmark
paper (7.26% GS 2029) closed
unchanged at 7.35% after trading in
the range of 7.23% to 7.36%.
• Data from RBI showed that India’s
foreign exchange reserves for the
week ended Mar 29 grew $5.24
billion to $411.91 billion from $406.67
billion in the previous week.
7.25
7.29
7.33
7.37
2-Apr 3-Apr 4-Apr 5-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 6.54 8.11 157
3 Year 6.99 7.94 95
5 Year 7.18 8.33 116
10 Year 7.49 8.58 109
Source: Thomson Reuters Eikon
Value as on Apr 05
, 2019
• Yields on gilt securities increased across the
maturities by up to 22 bps barring 12-year
paper that closed steady.
• Corporate bond yields rose across the
maturities in the range of 3 to 6 bps barring
2 to 4-year paper that fell by up to 13 bps.
• Difference in spread between AAA corporate
bond and gilt contracted on 2 to 7-year
maturities by up to 31 bps, expanded on 1
and 10-year paper by 4 and 2 bps
respectively and closed steady on 15-year
paper.
0
5
10
15
5.80
6.50
7.20
7.90
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 05-Apr-19 29-Mar-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The scope for the banks to lend to commercial sector and individuals would increase as the
Reserve Bank of India (RBI) tweaked mandatory bond holding requirements. At the first bi-
monthly policy meeting for FY20, RBI announced that at least 2% of bond holdings could be
used for mandatory liquidity coverage ratio (LCR). The central bank has allowed the banks
to reckon an additional 2% of government securities within the mandatory statutory liquidity
ratio (SLR) requirement as the Facility to Avail Liquidity for Liquidity Coverage Ratio
(FALLCR) for the purpose of computing LCR. This would be implemented in a phased
manner between Apr 2019 to Apr 2020.
• RBI revised the disclosure norms for banks on material divergences on provisioning. Now,
the banks will have to disclose their provisions if the divergence found is more than 10% of
the bank’s profit before provisioning and contingencies. However, earlier, banks had to
disclose additional provisioning requirements if divergences exceeded 15% of the published
net profits after tax. No changes to the norms on divergence on gross non-performing
assets have been made.
• The RBI has made changes to the disclosure norms for banks on material divergences on
provisioning. Now, the banks will have to disclose their provisions if the divergence found is
more than 10% of the bank’s profit before provisioning and contingencies. However, earlier,
banks had to disclose additional provisioning requirements if divergences exceeded 15% of
the published net profits after tax.
Regulatory Updates in India (contd..)
9
• RBI proposed new rules for securitisation of mortgages and to improve their marketability.
This is expected to make it easy for home financiers and para banks to access cash,
thereby adding momentum to India’s corporate loans market. Also, it would aid in availability
of additional liquidity to non-banking finance companies (NBFC) that have a substantial
share in overall credit disbursement.
• RBI will again swap up to $5 billion to infuse durable liquidity in the system. This will take
place in the next auction of 3-year tenure that will be held on Apr 23, 2019. This comes one
month after the first swap saw a huge response from banks. In the auction held on Mar 26,
2019, $16.31 billion were offered by the market participants against the notified amount of
$5 billion.
• The Central Board of Indirect Taxes and Customs (CBIC) allowed the real estate firms one-
time option till May 10, 2019, within which they have to communicate to their respective
jurisdictional officers whether they want to continue with the old GST rates with input tax
credit. If they fail to do so then they will be supposed to have migrated to new tax rates. In
Mar 2019, real estate companies were given the option to either choose for old rates of
12% in case of residential and 8% in case of affordable housing with input tax credit (ITC)
benefits or the new tax rates of 5% for residential units and 1% for affordable housing
without the benefit of adjusting the credit on inputs used during construction.
Global News/Economy
• According to the Labor Department, U.S. non-farm payroll employment rose by 196,000 jobs
in Mar 2019, better than forecast and revised rise by 33,000 jobs (20,000 jobs originally
reported) in Feb 2019. Notable job gains were seen in the healthcare and professional and
technical services sectors. However, unemployment rate remained steady at 3.8% in Mar
2019 compared with the previous month. Average hourly employee earnings rose 3.2% YoY
in Mar 2019, slower than 3.4% in Feb 2019.
• A report from the IHS Markit showed that CIPS U.K services Purchasing Managers' Index
(PMI) missed market expectations and fell to 48.9 in Mar 2019 from 51.3 in Feb 2019.
Meanwhile, the composite PMI fell to 50 in Mar 2019 as against 51.4 in Feb 2019.
• According to a report from the IHS Markit, Caixin China services PMI grew to 54.4 in Mar
2019 as against a reading of 51.1 in Feb 2019. This marked the strongest reading since Jan
2018. The Caixin composite PMI grew to 52.9 in Mar 2019 as against 50.7 in Feb 2019. This
marked the highest reading in nine months.
• Data from the U.S. Commerce Department showed that durable goods orders in U.S. fell
1.6% in Feb 2019 after increasing by a downwardly revised 0.1% (0.3% increase originally
reported for the previous month) in Jan 2019.
10
Global Equity Markets
11
Global Indices
Indices
05-Apr-19
1-Week
Return
YTD
Return
Dow Jones
26,424.99 1.91% 13.28%
Nasdaq 100
7,578.84 2.71% 19.73%
FTSE 100
7,446.87 2.30% 10.68%
DAX Index
12,009.75 4.20% 13.74%
Nikkei Average
21,807.50 2.84% 8.96%
Straits Times
3,322.64 3.42% 8.27%
Source: Thomson Reuters Eikon
Value as on
Apr 05, 2019
U.S.
• U.S. markets ended the week in the
green amid continued indications of
progress in U.S.-China trade talks.
According to the Chinese Vice Premier,
both the nations have conducted fruitful
consultations.
• Investors also reacted positively to a
report from Labor Department that
showed significant reacceleration in the
pace of U.S. job growth in Mar 2019.
Europe
• European markets reflected gains in the Wall Street with investor sentiments buoyed by
upbeat U.S. jobs data and on continued optimism about U.S.-China trade talks. However,
the uptrend was capped by concerns about euro zone economy.
Asia
• Asian markets followed its global counterparts to end the week on a positive note. Gains
are largely led by optimism about U.S.-China trade talks. Investor sentiments boosted
following media reports that the U.S. and China have resolved most of the outstanding
issues and are drawing closer to a final trade agreement. This helped investors shrug off
concerns surrounding Brexit.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond grew 9 bps to close at 2.50%
compared with the previous close of
2.41%.
• U.S. Treasury prices fell following U.S.
and China’s upbeat manufacturing PMI
data for Mar 2019. Further, hopes for a
trade deal between China and the U.S.
reduced the safe haven appeal of U.S.
Treasuries.
• However, renewed worries over Brexit
restricted the losses. Decline in U.S.
retail sales and durable goods orders
also boosted the safe haven appeal of
the U.S. Treasuries.
• Moreover, U.S. wage growth slowed in
Mar 2019 even as employers added
more workers, that indicated inflation
remained soft.
2.45
2.48
2.51
2.54
1-Apr 3-Apr 5-Apr
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)
70.52 68.52
Gold ($/Oz)
1,291.30 1,291.90
Gold (Rs/10 gm)
31,615 31,601
Silver ($/Oz)
15.08 15.14
Silver (Rs/Kg)
37,561 37,270
Source: Thomson Reuters Eikon *
Value as on Apr 05, 2019
Gold
• Gold prices fell following reports
suggesting significant development in
U.S.-China trade deal, with the two
economies talking positively of their
progress. Additionally, substantial rise in
U.S. non-farm payroll data in Mar 2019
dented the safe-haven appeal of the
metal.
Brent Crude
• Brent crude prices remained strong after
U.S. officials said additional sanctions will
be imposed on Iran. OPEC-led supply
cuts and production stoppage at a key
crude terminal in Venezuela also helped
gains. Reports revealing significant
development in Sino-U.S. trade deal
further supported sentiment.
Baltic Dry Index
• The Baltic Dry Index grew on the back of
improved capesize and panamax
activities.
9.50
10.00
10.50
11.00
11.50
5-Mar-19 15-Mar-19 25-Mar-19 4-Apr-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
2.92%
-0.05%
-0.36%
5-Apr-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
69.20 69.17
Pound Sterling
90.64 90.48
EURO
77.73 77.70
100 Yen
61.96 62.52
Source: RBI Figures in INR , *
Value as on Apr 05, 2019
Rupee
• The Indian rupee fell against the U.S.
dollar after MPC maintained “neutral”
stance in first policy meeting for FY20.
Euro
• Euro fell against the greenback following
upbeat U.S. non-farm payroll
employment in Mar 2019 and decline in
German industrial order in Feb 2019.
Pound
• Sterling initially rose against the
greenback on hopes of a trade
agreement between European Union and
Britain. However, renewed concerns that
there could delay in Brexit, neutralized
most of the gains.
Yen
• Yen weakened against the U.S. dollar
amid hopes of a trade deal between the
U.S. and China. Increase in U.S.
manufacturing activity in Mar 2019
further weighed on yen.
9.50
9.60
9.70
9.80
9.90
10.00
10.10
5-Mar-19 15-Mar-19 25-Mar-19 4-Apr-19
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
0.18%
0.04%
0.04%
-0.90%
5-Apr-19
15
The Week that was…
01
st
April to 05
th
April
The Week that was (Apr 01 – Apr 05)
16
Date Events
Present
Value
Previous
Value
Monday,
April 1, 2019
•
Japan Nikkei PMI Manufacturing (Mar F) 49.2 48.9
•
Eurozone Unemployment Rate (Feb) 7.8% 7.8%
•
Eurozone Consumer Price Index Estimate (YoY) (Mar) 1.4% 1.5%
•
U.S. ISM Manufacturing (Mar) 55.3 54.2
•
China Caixin PMI Mfg (Mar) 50.8 49.9
Tuesday,
April 2, 2019
•
U.S. Durable Goods Orders (Feb P) -1.6% 0.1%
•
Eurozone Producer Price Index (YoY) (Feb) 3.0% 2.9%
•
U.K. Markit/CIPS Construction PMI (Mar) 49.7 49.5
Wednesday,
April 3, 2019
•
Japan Nikkei PMI Composite (Mar) 50.4 50.7
•
U.K. Markit/CIPS Services PMI (Mar) 48.9 51.3
•
U.S. ISM Non-Manufacturing/Services Composite (Mar) 56.1 59.7
•
China Caixin PMI Services (Mar) 54.4 51.1
Thursday,
April 4, 2019
•
German Factory Orders n.s.a. (YoY) (Feb) -8.4% -3.9%
•
Japan Overall Household Spending (YoY) (Feb) 1.7% 2.0%
Friday,
April 5, 2019
•
German Industrial Production (YoY) (Feb) -0.4% -2.7%
•
U.S. Change in Non-farm Payrolls (Mar) 196K 28k
•
U.S. Unemployment Rate (Mar) 3.8% 3.8%
17
The Week Ahead
8
th
April to 12
th
April
18
The Week Ahead
Day Event
Monday,
April 8, 2019
•
Japan Consumer Confidence Index (Mar)
•
U.S. Factory Orders (Feb)
•
U.S. Durable Goods Orders (Feb F)
•
Eurozone German Trade Balance (Feb)
Tuesday,
April 9, 2019
•
Japan Machine Orders (YoY) (Feb)
Wednesday,
April 10, 2019
•
China New Yuan Loans China (Mar)
•
U.K. Industrial Production (YoY) (Feb)
•
European Central Bank Rate Decision
•
U.S. Consumer Price Index (YoY) (Mar)
•
U.K. Gross Domestic Product (MoM) (Feb)
Thursday,
April 11, 2019
•
China Consumer Price Index (YoY) (Mar)
•
China Producer Price Index (YoY) (Mar)
•
German Consumer Price Index (YoY) (Mar F)
Friday,
April 12, 2019
•
China Trade Balance (Mar)
•
U.S. University of Michigan Sentiment (Apr P)
•
Eurozone Industrial Production (YoY) (Feb)
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19
