The Week that was…
22
nd
April to 26
th
April
2
Indian Economy
• According to a report by the World Economic Forum, India may have a huge consumer
demand by 2030 following increased incomes and a billion diverse internet users. The
report mentions that rise in income will upgrade the Indian economy from a bottom-of-the-
pyramid economy to a middle-class led one as consumer expenditure might increase from
$1.5 trillion to around $6 trillion by 2030. The report also mentioned that India will uplift
around 25 million households out of poverty and reduce the share of households below the
poverty line from 15% to 5%.
• As per data from the Reserve Bank of India (RBI), bank credit has increased 14.19% to
Rs. 96.45 lakh crore and deposits grew 10.60% to Rs. 125.30 lakh crore in the fortnight
ended Apr 12, 2019. During the same time a year ago, deposits were at Rs. 113.29 lakh
crore and advances stood at Rs. 84.46 lakh crore. In the fiscal ended Mar 2019, bank
credit rose 13.24% and deposits rose 10.03%.
• According to a major credit rating agency, RBI is the first central bank in the Asia-Pacific
region to begin an explicit interest rate easing cycle buoyed by benign food inflation and
easier global financial condition. The agency further mentioned that from Jan-Apr 2019,
RBI has reduced repo rate twice by 0.25% each to one-year low of 6%. Since the
Monetary Policy Committee (MPC) was formed in late 2016, this was the first consecutive
rate cuts.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
26-Apr-19
1 Week Return
YTD Return
S&P BSE Sensex
39067.33 -0.19% 8.31%
Nifty 50
11754.65 0.02% 8.21%
S&P BSE Mid
-Cap 15063.99 -2.07% -2.43%
S&P BSE Small
-Cap 14813.38 -1.38% 0.73%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
22-Apr-19 418 1418 0.29
23-Apr-19 738 1080 0.68
24-Apr-19 991 797 1.24
25-Apr-19 758 1036 0.73
26-Apr-19 736 1053 0.70
Source: NSE
• Indian equity markets closed in the red
as investors became concerned over
rising crude oil prices. Crude oil prices
moved up after media reports said that
the U.S. could further tighten sanctions
against Iran over oil imports. U.S. had
initially allowed big importers of Iranian
oil, including India and China, some
leeway from the sanctions against the
Gulf country. But now U.S. could ask
them to stop importing from Iran or face
U.S. sanctions. Also, elections and
earnings uncertainty kept markets
under pressure.
• The downside was limited following a
report from the International Energy
Agency that stated the supply in the oil
market is adequate and global spare
production capacity remained at
comfortable levels.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
27.91 29.34 30.18 114.58
P/B
3.07 3.76 2.6 2.14
Dividend Yield
1.18 1.12 0.98 0.89
Source: BSE, NSE Value as on Apr
26,
2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
19,164.75
-5.13%
2.50%
S&P BSE
Bankex
33,741.76
-0.82%
0.90%
S&P BSE CD
23,646.46
0.13% 1.55%
S&P BSE CG
18,172.06
-0.92%
-0.11%
S&P BSE FMCG
11,844.69
-0.31%
2.01%
S&P BSE HC
14,464.70
-
0.11% 1.86%
S&P BSE IT
16,044.75
3.12% 6.82%
S&P BSE Metal
11,349.70
-2.17%
1.99%
S&P BSE Oil & Gas
15,181.43
1.15% 0.10%
Source: Thomson Reuters Eikon
*Value as on Apr 26, 2019
• On the BSE sectoral front, most of the
indices closed in the red barring S&P BSE IT
(3.12%), S&P BSE Teck (2.43%), S&P BSE
Oil & Gas (1.15%) and S&P BSE CD
(0.13%). The IT sector benefitted from the
slide in rupee.
• Meanwhile, S&P BSE Auto (-5.13%) was the
major loser followed by S&P BSE Metal (-
2.17%). Most of the sectors that lost were
impacted by the rise in crude oil prices and
fears that India may no longer be able to
import oil from Iran. Auto sector was weak
after India’s leading automaker forecasted
that sales growth in 2019-20 could slowdown.
Indian Derivatives Market Review
• Nifty Apr 2019 Futures settled at spot closing of 11,641.80. Nifty May 2019 Futures were at
11,813.50, a premium of 58.85 points, above the spot closing of 11,754.65. The total
turnover on NSE’s Futures and Options segment for the week stood at Rs. 67.61 lakh
crore as against Rs. 38.58 lakh crore for the week to Apr 18.
• The Put-Call ratio stood at 0.83 compared with the previous week’s close of 0.88.
• The Nifty Put-Call ratio stood at 1.63 against the previous week’s close of 1.58.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
6.12 6.08 6.15 6.48
91 Day T
-Bill
6.39 6.34 6.29 6.95
07.32% 2024, (5 Yr GOI)
7.33 7.25 6.97 --
07.26% 2029, (10 Yr GOI)
7.41 7.42 7.34 --
Source: Thomson Reuters Eikon
Value as on Apr 26,
2019
• Bond yields rose initially due to surge
in crude oil prices, which escalated
concerns over widening current
account deficit. Also, depreciation in
the local currency weighed on the
bond market sentiment.
• However, the trend reversed after the
Reserve Bank of India announced to
conduct open market operation for
purchasing notes worth Rs. 25,000
crore in May 2019.
• RBI conducted auction of state
development loans of five state
governments for notified amount of
Rs. 3,503 crore, of which the entire
amount was accepted. The cut-off
yield lied in the range of 7.80% to
8.17%, while the tenure was either 3
years or 10 years.
7.40
7.44
7.48
7.52
22-Apr 23-Apr 24-Apr 25-Apr 26-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 6.71 8.21 150
3 Year 7.18 8.18 100
5 Year 7.47 8.53 106
10 Year 7.55 8.64 109
Source: Thomson Reuters Eikon
Value as on Apr 26,
2019
• Yields on gilt securities increased by up to
10 bps on 1- to 6 years’ papers while 11-
year securities remained flat. Yield on
remaining securities fell by up to 4 bps.
• Corporate bond yields increased in the
range of 2 to 10 bps, barring 4- and 5-year
papers fell by up to 2 bps.
• Spread between AAA corporate bond and
gilt contracted in the range of 5 to 9 bps on
3- to 6 years’ papers while remaining
securities expanded in the range of 2 to 7
bps.
-5
0
5
10
6.00
6.50
7.00
7.50
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 26-Apr-19 18-Apr-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Securities Exchange Board of India (SEBI) reduced the minimum subscription
requirement and defined trading lots for Real Estate Investment Trusts (REITs) and
Infrastructure Investment Trusts (InvITs). Currently, the minimum subscription from any
investor in an initial offer and follow-on public offer is not less than Rs. 2 lakh for REITs and
Rs. 10 lakh in case of InvIT. However, SEBI has now reduced the minimum subscription
from any investor in an initial offer and follow-on public offer to Rs. 50,000 for REITs and Rs.
1 lakh for InvIT.
• The Reserve Bank of India (RBI) announced buying government securities worth Rs.
25,000 crore in May 2019 through two auctions of Rs. 12,500 crore each. The first auction
will be conducted on May 2, 2019 and the date of the next auction would be communicated
later.
• RBI sold its entire stake in the National Housing Bank (NHB) and the National Bank for
Agriculture & Rural Development (NABARD) to government for Rs. 1,450 crore and Rs. 20
crore, respectively. Thus, NHB and NABARD became a fully government-owned entity.
Regulatory Updates in India (contd..)
9
• RBI may soon start discussions to stop from the convention of reducing key policy rate by
25 basis points or multiples thereof, say media reports. The discussions will be held with
stakeholders like lenders, domain experts and within the central bank. "There is a need to
consider interest rate adjustments, not necessarily in the conventional way of 25 bps or
multiples thereof. This idea needs further debate and discussion," RBI governor had told the
Monetary Policy Committee earlier this month. RBI could seek comments from banks on
their views and reasons of holding that view with empirical evidence.
Global News/Economy
• According to the Commerce Department, preliminary data showed U.S. real Gross Domestic
Product (GDP) surprisingly surged 3.2% YoY in the Mar quarter of 2019, better than 2.2% in
the previous quarter. Acceleration in GDP growth was attributed to positive contribution from
trade, and faster growth in private inventory investment. Decelerations in consumer
spending and non-residential fixed investment negatively contributed to GDP.
• According to a report from the ifo Institute, Germany’s ifo business climate indicator fell to
99.2 in Apr 2019 from an upwardly revised 99.7 in Mar 2019. This marked the lowest reading
since Apr 2016.
• Bank of Japan kept its monetary policy unchanged and maintained interest rate at -0.1% on
current accounts that financial institutions maintain at the bank. It stated that the interest
rates will remain very low for an extended period, thereby indicating uncertainties concerning
economy and prices, and the impact of the scheduled consumption tax hike. The bank
stated that it will purchase government bonds so that the yield of 10-year JGBs will remain at
around 0%.
• According to a report from the ministry of Internal Affairs and Communications, Japan’s
overall nationwide consumer prices came in line with market expectations and were up 0.5%
on year in Mar 2019 as against a gain of 0.2% in Feb 2019. Meanwhile, core consumer
prices were up 0.8% on year in Mar as against a growth of 0.7% in Feb.
10
Global Equity Markets
11
Global Indices
Indices
26-Apr-19
1-Week
Return
YTD
Return
Dow Jones
26,543.33
-0.06% 13.79%
Nasdaq 100
7,826.68
1.78% 23.64%
FTSE 100
7,428.19
-0.42% 10.40%
DAX Index
12,315.18
0.76% 16.63%
Nikkei Average
22,258.73
0.26% 11.21%
Straits Times
3,356.95
0.28% 9.39%
Source: Thomson Reuters Eikon
Value as on Apr 26,
2019
U.S.
• U.S. markets mostly traded higher on
the back of upbeat earnings news from
major companies and U.S. new home
sales unexpectedly rose to their highest
level on YoY basis in Mar 2019.
• Gains were restricted later as the
positive impact of better than expected
U.S. GDP data for first quarter of 2019
was overshadowed by mixed batch of
quarterly earnings.
Europe
• European markets largely remained weak as investors hardly reacted to the latest batch of
corporate earnings reports. Market sentiment was weighed down by failure of merger talks
between major banks. Investors were also concerned that the steady growth of China’s
GDP on YoY basis may prompt Chinese policymakers to slow the pace of policy easing.
Asia
• Asian markets witnessed a mixed trend during the week. A mixed batch of U.S. earnings
and concerns over probability of China putting policy-easing measures on hold, kept
investors on the sidelines. Some buying interest was seen following Bank of Japan’s
decision to keep interest rates very low for a prolonged period.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond fell 6 bps to 2.50% compared with
the previous week’s close of 2.56%.
• U.S. Treasury prices initially fell in the
week in which $237 billion of new debt
was to be auctioned off and more than a
quarter of S&P 500 companies were to
report first-quarter 2019 earnings.
• However, the trend reversed and the
safe haven appeal of the U.S.
Treasuries improved following
Germany’s weak business confidence
data for Apr 2019 that fell to its lowest
level in three years.
• Reports that Bank of Canada has
lowered its growth forecast for 2019 and
solid demand at auction for $41 billion of
new five-year notes added to the gains.
Gains were extended following surge in
jobless claims for the week ended Apr
20, 2019.
2.44
2.48
2.52
2.56
2.60
22-Apr 23-Apr 24-Apr 25-Apr 26-Apr
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
70.72 70.45
Gold ($/Oz)
1285.85 1275.01
Gold (Rs/10 gm)
31764 31394
Silver ($/Oz)
15.06 14.99
Silver (Rs/Kg)
37532 37191
Source: Thomson Reuters Eikon *
Value as on Apr 26, 2019
Gold
• Gold prices surged as increased tensions
between U.S. and Iran improved the safe
haven appeal of the bullion. Weak
economic data from South Korea and
Germany added to the gains. While South
Korea’s GDP tumbled in the first quarter
of 2019, Germany’s business climate
index fell for Apr 2019.
Brent Crude
• Brent crude prices surged after U.S.
announced its decision of not renewing
waivers to countries that were importing
Iranian oil. This is expected to further
tighten the oil market supply. However,
reports that U.S. President has called the
OPEC and asked them to take action to
tame fuel costs, restricted the gains.
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
27-Mar-19 6-Apr-19 16-Apr-19 26-Apr-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
0.38%
0.85%
0.47%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
70.14 69.42
Pound Sterling
90.53 90.55
EURO
78.13 78.43
100 Yen
62.80 62.04
Source: RBI Figures in INR , *
Value as on Apr 26, 2019
Rupee
• The Indian rupee plunged after crude oil
prices saw a steep surge as U.S.
tightened Iran sanctions.
Euro
• Euro weakened against the greenback
following strong new U.S. single-family
homes sales data and new orders for
U.S.-made capital goods in Mar 2019.
Pound
• Sterling weakened against the
greenback on fading hopes of progress
in Brexit talks. Britain's departure date
from European Union has been pushed
back until end of Oct 2019.
Yen
• Yen strengthened against the greenback
after the Bank of Japan, for the first time,
gave a time frame that it would keep
interest rates at low levels for at least
one more year.
9.80
9.90
10.00
10.10
10.20
10.30
27-Mar-19 6-Apr-19 16-Apr-19 26-Apr-19
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-0.02%
1.05%
-0.39%
1.23%
15
The Week that was…
22
nd
April to 26
th
April
The Week that was (Apr 22 – Apr 26)
16
Date Events Present Value
Previous Value
Monday,
April 22, 2019
•
U.S. Existing Home Sales (MoM) (Mar) -4.9% 11.2%
•
Japan Convenience Store Sales (YoY) (Mar) 0.0% 2.0%
Tuesday,
April 23, 2019
•
U.S. Housing Price Index (MoM) (Feb) 0.3% 0.6%
•
U.S. New Home Sales (MoM) (Mar 4.5% 5.9%
•
Eurozone Consumer Confidence (Apr A) -7.9 -7.2
Wednesday,
April 24, 2019
•
Japan All Industry Activity Index (MoM) (Feb -0.2% -0.2%
•
Japan Leading Economic Index (Feb) 97.1 96.3
•
German IFO Current Assessment (Apr) 103.3 103.9
•
U.K. Public Sector Net Borrowing (Mar) 0.84b -0.5b
Thursday,
April 25, 2019
•
Bank of Japan Interest Rate Decision -0.1% -0.1%
•
U.S. Initial Jobless Claims (Apr 20) 230k 193k
•
U.S. Durable Goods Orders (Mar P) 2.7% -1.1%
•
Japan Unemployment Rate (Mar) 2.5% 2.3%
•
Japan Industrial Production (YoY) (Mar) -4.6% -1.1%
•
Japan Retail Trade (YoY) (Mar) 1.0% 0.6%
Friday,
April 26, 2019
•
U.S. Gross Domestic Product Annualized (Q1) (P) 3.2% 2.2%
•
U.S. Michigan Consumer Sentiment Index (Apr) 97.2 96.9
17
The Week Ahead
29
th
April to 03
rd
May
18
The Week Ahead
Day Event
Monday,
April 29, 2019
•
U.S. PCE Core (YoY) (Mar)
•
U.K. GfK Consumer Confidence (Apr)
Tuesday,
April 30, 2019
•
China Manufacturing PMI (Apr)
•
Eurozone Gross Domestic Product s.a. (YoY) (1Q A)
•
German Consumer Price Index (YoY) (Apr P)
•
Eurozone Unemployment Rate (Mar)
•
U.S. Consumer Confidence Index (Apr)
Wednesday,
May 01, 2019
•
U.S. ISM Manufacturing (Apr)
•
U.S. FOMC Rate Decision
Thursday,
May 02, 2019
•
China Caixin China PMI Mfg (Apr)
•
U.K. Bank of England Bank Rate
Friday,
May 03, 2019
•
Eurozone Consumer Price Index Core (YoY) (Apr A)
•
U.S. Advance Goods Trade Balance (Mar)
•
U.S. Change in Non-farm Payrolls (Apr)
•
U.S. Unemployment Rate (Apr)
•
U.S. ISM Non-Manufacturing/Services Composite (Apr)
Disclaimer
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19
