Mutual Fund News of the Week 9th Apr’18 to 13th Apr’18

News U Can Use

April 13, 2018

The Week that was…

April to 13

April

Indian Economy

• The Consumer Price Index (CPI)-based inflation or retail inflation grew 4.28% in Mar 2018,

down from 4.44% in the previous month and up from 3.89% in the same month of the

previous year. CPI inflation eased for the third consecutive month and marked a 5-month low,

reflecting decline in prices of pulses and products, sugar and confectionery and spices by

13.41%, 1.61% and 0.07%, respectively. The Consumer Food Price Index also grew 2.81% in

Mar 2018, down from 3.26% in the previous month and up from 2.01% in the same month of

the previous year.

• India’s Index of Industrial Production (IIP) grew 7.1% in Feb 2018 as against downwardly

revised growth of 7.4% (7.5% originally reported) in Jan 2018 and 1.2% in the same period of

the previous year. The manufacturing sector surged 8.7% in Feb from 0.7% growth in the

same period of the previous year. However, IIP growth for the Apr 2017-Feb 2018 period

slowed to 4.3% from 4.7% in the same period of the previous fiscal.

• India’s export during the month of Mar 2018 fell 0.66% YoY to $29.11 billion from $29.30

billion in Mar 2017. Meanwhile, import grew 7.51% YoY to $42.80 billion in Mar 2018 from

$39.95 billion in the same period of the previous year. Trade deficit widened to $13.69 billion

in Mar 2018 as against $10.65 billion in Mar 2017 and $12.0 billion in Feb 2018.

• The Reserve Bank of India (RBI) increased the debt investment limits for foreign portfolio

investors (FPIs) to buy Indian government and corporate bonds amid rising global investor

interest for domestic debt papers. The FPI limit for Central government securities would be

increased 0.5% to 5.5% of outstanding stock of securities in FY19 and 6% of outstanding

stock of securities in FY20.

Indian Equity Market

Domestic Equity Market Indices

Indices 13-Apr-18 1 Week Return YTD Return

S&P BSE Sensex 34,192.65 1.68% 1.12%

Nifty 50 10,480.6 1.44% 0.43%

S&P BSE Mid-Cap 16,677.76 0.49% -6.49%

S&P BSE Small-Cap 17,981.99 0.55% -6.73%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines

Advance/Decline Ratio

09-Apr-18 1092 715 1.53

10-Apr-18 851 952 0.89

11-Apr-18 732 1058 0.69

12-Apr-18 741 1042 0.71

13-Apr-18 881 926 0.95

Source: NSE

• Indian equity markets closed in the

green amid optimism over the health

of the domestic economy, backed by

strong macro-economic numbers.

Strong buying interest in an Indian

conglomerate major, post-acquisition

of artificial intelligence-based

education platform, and gains in

banking stocks in one of the sessions

after chief executive of a major private-

sector bank announced to step down

further boosted the indices.

• Buying interest found further support

from easing concerns over trade war

between U.S. and China as Chinese

President promised to lower import

tariffs on products including cars and

further liberalise the nation’s economy.

However, gains were restricted as U.S.

President’s latest comment cast a

shadow of uncertainty regarding the

timing of U.S. military strike on Syria.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

23.53 26.01 38.54 102.72

P/B

3.12 3.60 2.91 2.60

Dividend Yield

1.14 1.22 0.86 0.64

Source: BSE, NSE Value as on

Apr 13, 2018

Indian Equity Market (contd.)

Sectoral Indices

Indices

Last Returns (in %)

Closing 1-Wk 1-Mth

S&P BSE Auto

25,453.6 0.17% 3.29%

S&P BSE Bankex

28,302.5 1.60% 1.42%

S&P BSE CD

22,846.6 2.95% 5.19%

S&P BSE CG

19,134.7 1.78% 2.27%

S&P BSE FMCG

10,631.3 0.75% 1.28%

S&P BSE HC

13,679.5 -0.04% -0.02%

S&P BSE IT

12,781.6 4.48% 3.20%

S&P BSE Metal

14,095.9 3.41% -2.06%

S&P BSE Oil & Gas

14,666.7 -1.05% -6.12%

Source: Thomson Reuters

Eikon Value as on Apr 13, 2018

• On the BSE sectoral front, indices closed on

a positive note. S&P BSE Information

Technology (4.48%) stood as the major

gainer followed by S&P BSE Metal (3.41%),

S&P BSE Teck (3.33%), and S&P BSE

Consumer Durables (2.95%). S&P BSE Oil

& Gas (-1.05%) stood as the major loser

followed by S&P BSE Realty (-0.58%) and

S&P BSE Healthcare (-0.04%).

• Decline in S&P BSE Oil & Gas stocks came

in amid media reports that India’s state-run

oil retailers have been asked to absorb a

part of the losses amid recent recovery in

global crude oil and not raise retail diesel

and petrol prices.

Indian Derivatives Market Review

• Nifty Apr 2018 Futures were at 10,490.4 points, a premium of 9.80 points, over the spot

closing of 10,480.60. The turnover on NSE’s Futures and Options segment stood at Rs. 36.83

lakh crore against Rs. 34.44 lakh crore on Apr 6.

• The Put-Call ratio stood at 1.00 compared with the previous week’s close of 0.91.

• The Nifty Put-Call ratio stood at 1.63 compared with the previous week’s close of 1.45.

Domestic Debt Market

Debt Indicators

(%)

Current

Value

1-Wk

Ago

1-Mth

Ago

6-Mth

Ago

Call Rate

5.86 5.89 5.86 5.83

91 Day T-Bill

6.08 6.10 6.21 6.08

7.80% 2021, (5 Yr GOI)

7.15 6.94 7.20 6.55

7.17% 2028, (10 Yr GOI)

7.43 7.17 7.65 --

Source: Thomson Reuters

Eikon

Value as on Apr 13, 2018

• Bond yields surged following lower

than expected increase in limits for

foreign investment in government

securities and fresh supply from the

auction of state development loans.

• Rise in crude oil prices and subdued

demand for long-tenure papers further

weighed on the domestic bond market.

However, value buying by investors

restricted the losses.

• The Reserve Bank of India (RBI)

conducted the auction of state

development loans of 13 state

governments for a notified amount of

Rs. 19,700 crore for which Rs.

18,778.1 crore was accepted. The cut-

off yield stood in the range of 7.55% to

8.00%. Andhra Pradesh and Haryana

accepted partial amount of Rs. 1,553.1

crore and Rs. 525 crore, respectively.

7.10

7.20

7.30

7.40

7.50

7.60

9-Apr 10-Apr 11-Apr 12-Apr 13-Apr

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

Domestic Debt Market (Spread Analysis)

Maturity

G-Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 6.69 7.58 90

3 Year 7.21 7.82 61

5 Year 7.49 8.13 64

10 Year 7.72 8.25 53

Source: Thomson Reuters

Eikon Value as on Apr 13, 2018

• Yields on gilt securities increased across

the maturities in the range of 9 bps to 32

bps. The maximum expansion was

witnessed on 7-year paper and the

minimum on 1-year paper.

• Corporate bond yields increased across

the maturities in the range of 4 bps to 27

bps. The maximum expansion was

witnessed on 6-year paper and the

minimum on 2-year paper.

• Spread between AAA corporate bond and

gilt contracted across the maturities by up

to 18 bps, barring 6-year paper that

expanded 9 bps.

-8

5.90

6.60

7.30

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 13-Apr-18 06-Apr-18

Yield in %

Change in

bps

Source: Thomson Reuters Eikon

Regulatory Updates in India

• According to new rules laid down by the Ministry of Finance, before issuing a formal notice to

the businesses, customs officials will now hold consultations with assesses and inform them

about outstanding taxes and interest. They would be given 15 days to respond to the

communication of pre-notice consultation and submit response to the tax officer.

• The Securities and Exchange Board of India (SEBI) clarified the investment limit for foreign

portfolio investors owned by foreign governments. According to SEBI, two or more foreign

government-related entities coming from the same jurisdiction will be considered as a single

FPI and they will be able to invest up to 10% in a company listed on the stock exchange.

However, if the Indian government enters into agreements with other sovereign governments

where the agreement gives distinct or separate recognition to certain entities then SEBI will

recognize the said entities as distinct or separate subject to the conditions as specified by

SEBI.

• Capital market regulator SEBI announced that physical settlement of equity derivatives will be

made compulsory in a phased manner. Currently, equity derivatives are settled through cash

payments (entry price minus exit price). In physical settlement, traders need to accept the

delivery of physical shares on the settlement day against the derivatives positions. According

to brokers and analysts, the move would revive the stock lending and borrowing market,

however it could impact futures and options activities.

Regulatory Updates in India (contd..)

• The government permitted start-ups to avail tax concession only if total investment including

funding from angel investors does not exceed Rs. 100 million. According to a notification by the

commerce and industry ministry, an angel investor investing in a start-up should have a

minimum net worth of Rs. 20 million or on an average has returned income of more than Rs.

2.5 million in the preceding three financial years.

• As an effort to boost inflows from overseas investors, SEBI decided to raise the investment

limit for foreign portfolio investors (FPIs) in central government securities and corporate bonds.

The limit will be enhanced in two tranches.

• Accelerating the process involved, Cabinet Committee on Economic Affairs (CCEA)

announced that finance and petroleum ministers are now permitted to award oil and gas

exploration blocks to successful bidders. Currently, CCEA’s approval is required for awarding

blocks under the Hydrocarbon Exploration Licensing Policy (HELP).

Global News/Economy

• Minutes of FOMC’s Mar meeting showed that the U.S. Federal Reserve (Fed) has looked into

the need to slow the economy down. Some members stated that “monetary policy eventually

would likely gradually move from an accommodative stance to being a neutral or restraining

factor for economic activity.” The Fed had raised interest rates by a quarter percentage point to

between 1.5%-1.75% in Mar 2018.

• U.S. consumer price index inched down 0.1% in Mar 2018 as against a gain of 0.2% in Feb

2018. Core consumer price index (excluding food and energy prices) grew 0.2% in Mar as

against Feb.

• Industrial production in the eurozone unexpectedly dropped 0.8% MoM in Feb 2018, better than

0.6% fall in Jan 2018. It was the third straight fall in output. Among sectors, capital goods output

plunged 3.6%, followed by a 2.1% drop in durable consumer goods output. Annually, industrial

output grew 2.9%, slower than 3.7% in Jan 2018.

• Germany's consumer price inflation rose to 1.6% in Mar 2018, in line with market expectations,

from 1.4% in Feb 2018. On a monthly basis, the consumer price index rose 0.4% in Mar, slower

than 0.5% increase in Feb.

• China’s consumer price inflation came in at 2.1% in Mar 2018 as against an increase of 2.9% in

Feb 2018. Food as well as non-food prices grew 2.1% in Mar. Consumer prices fell 1.1% MoM

as against an increase of 1.2% in Feb.

Global Equity Markets

Global Indices

Indices

13-Apr-18

1-Week

Return

YTD

Return

Dow Jones

24,360.14 1.79% -1.87%

Nasdaq 100

6,628.34 3.03% 1.80%

FTSE 100

7,264.56 1.13% -5.01%

DAX Index

12,442.40 1.64% -3.33%

Nikkei Average

21,778.74 0.98% -7.35%

Straits Times

3,501.30 1.71% 2.89%

Source: Thomson Reuters Eikon

Value as on Apr 13, 2018

U.S.

• U.S. markets rose amid easing

concerns over trade war with China

after it promised to lower import tariffs

on products including cars and take

necessary steps to further liberalise the

world's second-largest economy.

• Market rose further after media reports

stated that the U.S. President has asked

his advisor to reconsider joining a major

Trans-Pacific trade deal after first pulling

out of the agreement last year.

Europe

• European markets went up cues after Chinese President eased trade war tension by lifting

limits of foreign investment in manufacturing and financial sectors. Further, he outlined

various measures to liberalise the nation’s economy. Buying interest found additional

support from official data showing recovery in France’s industrial production in Feb.

Asia

• Asian markets too witnessed gains amid receding worries over trade war between U.S.

and China following a host of initiatives announced by Chinese President to liberalise the

nation’s trade and economy. Buying interest found additional support as Japan's consumer

confidence data remained steady at the end of the first quarter.

Global Debt (U.S.)

• Yield on the 10-year U.S. Treasury bond

rose 5 bps to close at 2.83% from the

previous week’s close of 2.78%.

• U.S. Treasury prices fell initially as

market sentiment improved to some

extent on hopes that the U.S. will take

steps to resolve its ongoing trade

conflict with China. U.S. Treasury prices

fell further after U.S. producer prices

increased more than expected in Mar

2018.

• Losses retreated amid geopolitical

concerns after the U.S. President

warned of possible military action

against Syria following a suspected

poison gas attack.

• Prices fell again after the U.S. President

indicated that a possible attack on Syria

may not be imminent, contrary to what

he signaled earlier.

2.76

2.81

2.86

9-Apr 10-Apr 11-Apr 12-Apr 13-Apr

US 10-Year Treasury Yield Movement

Source: Thomson Reuters Eikon

Commodities Market

Performance of various commodities

Commodities

Last Closing 1-Week Ago

Brent Crude($/Barrel)

73.62 65.70

Gold ($/Oz)

1,345.01 1332.89

Gold (Rs/10 gm)*

30,874 30396

Silver ($/Oz)

16.62 16.35

Silver (Rs/Kg)*

38,485 37884

Source: Thomson Reuters

Eikon Value as on Apr 13, 2018

Gold

• Gold prices rose amid heightened

tensions between U.S. and Russia. In

the wake of a recent chemical attack on

civilians in Syria, U.S. suspects Russia’s

role in the same and assured of a quick

decision on how to react to the attack.

However, the upside was limited as

minutes of the U.S. Fed’s Mar policy

review indicated that the U.S. inflation

will rise towards the 2% target in the

coming months.

Crude

• Brent crude prices surged amid growing

concerns over U.S. military activity in

Syria, which may hamper oil supplies

from the region. News that U.S. could

renew sanctions against Iran also

supported prices.

Baltic Dry Index

• The Baltic Dry Index rose 6.96% on the

back of improved capesize and

panamax activities.

9.50

10.20

10.90

11.60

14-Mar-18 24-Mar-18 3-Apr-18 13-Apr-18

Global Commodity Movement

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

Global Commodity Prices

Rebased to 10

Source: Thomson Reuters Eikon

12.05%

0.91%

1.65%

Currencies Markets

Movement of Rupee vs Other Currencies

Currency Last Closing 1-Wk Ago

US Dollar

65.22 64.99

Pound Sterling

92.77 90.96

EURO

80.34 79.51

100 JPY

60.64 60.54

Source: RBI Figures in INR , Value as on Apr 13, 2018

Rupee

• The Indian rupee weakened against the

U.S. dollar as demand for greenback

from importers grew following rise in

global crude oil prices.

Euro

• Euro surged against the U.S. dollar as

risk appetite improved after the Chinese

President’s promise to cut import tariffs,

eased concerns over a global trade

conflict.

Pound

• Sterling rose against the U.S. dollar as

Britain’s house prices grew in Mar 2018

and after a policymaker of the Bank of

England suggested an interest rate hike

to control inflation.

Yen

• Yen fell against the U.S. dollar as risk

appetite improved after the Chinese

President’s promise to cut import tariffs,

eased concerns over global trade

tension.

9.60

9.90

10.20

10.50

14-Mar-18 24-Mar-18 3-Apr-18 13-Apr-18

USD GBP Euro JPY

Source: RBI

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

0.36%

2.00%

1.04%

0.17%

The Week that was…

April to 13

April

The Week that was (Apr 09 – Apr 13)

Date Events Present Value Previous Value

Monday,

Apr 9, 2018

• Japan Consumer Confidence Index (Mar) 44.3 44.3

• Germany Trade Balance (Feb) 18.4b 17.4b

Tuesday,

Apr 10, 2018

• Japan Machine Tool Orders (YoY) (Mar P) 28.1% 39.5%

• Japan Machine Orders (YoY) (Feb) 2.4% 2.9%

Wednesday,

Apr 11, 2018

• China Consumer Price Index (YoY) (Mar) 2.1% 2.9%

• U.S. Consumer Price Index (YoY) (Mar) 2.4% 2.2%

• U.K. Trade Balance (Feb) -£965 -£2949

• U.K. Industrial Production (YoY) (Feb) 2.2% 1.2%

• U.K. Manufacturing Production (YoY) (Feb) 2.5% 2.2%

Thursday,

Apr 12, 2018

• India Consumer Price Index (Mar) 4.28% 4.44%

• India Index of Industrial Production (Feb) 7.1% 7.4%

• U.S. Initial Jobless Claims (Apr 7) 233k 242k

• U.S. Export Price Index (YoY) (Mar) 3.4% 3.2%

• China Foreign Direct Investment (YoY) (Mar) 0.4% 0.8%

• Eurozone Industrial Production (YoY) (Feb) 2.9% 3.7%

Friday,

Apr 13, 2018

• India Trade Deficit (Mar) -$13.69B -$12.00B

• China Trade Balance CNY (Mar) -29.78B 222.92B

• U.S. University of Michigan Sentiment (Apr P) 97.8 101.4

The Week Ahead

April to 20

April

The Week Ahead

Day Event

Monday,

April 16, 2018

• India Wholesale Price Index (Mar)

• U.S. Retail Sales Advance (MoM) (Mar)

Tuesday,

April 17, 2018

• China Gross Domestic Product (YoY) (1Q)

• Germany ZEW Survey Expectations (Apr)

• China Retail Sales YTD (YoY) (Mar)

• China Industrial Production (YoY) (Mar)

• U.S. Industrial Production (MoM) (Mar)

• Japan Trade Balance (Mar)

• U.K. ILO Unemployment Rate 3Mths (Feb)

• U.S. Housing Starts (MoM) (Mar)

Wednesday,

April 18, 2018

• U.K. Consumer Price Index (YoY) (Mar)

• Eurozone Consumer Price Index (YoY) (Mar F)

Thursday,

April 19, 2018

• Japan National Consumer Price Index (YoY) (Mar)

• U.K. Retail Sales Ex Auto Fuel (YoY) (Mar)

• U.S. Initial Jobless Claims (Apr 14)

Friday,

April 20, 2018

• Japan Tertiary Industry Index (MoM) (Feb)

• Eurozone Consumer Confidence (Apr A)

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