The Week that was…
5
th
August to 9
th
August
2
Indian Economy
• The Monetary Policy Committee (MPC) lowered key policy repo rate by 35 bps from 5.75%
to a nine-year low of 5.40% in its third bi-monthly monetary policy review and decided to
maintain its accommodative stance on the monetary policy. This is the fourth consecutive
rate cut by the MPC in 2019 till date and the third in this fiscal till Aug 2019.
• The seasonally adjusted Nikkei India Services Business Activity Index rose to 53.8 in Jul
2019 from 49.6 in Jun 2019, thereby marking a 12-year high. The seasonally adjusted
Nikkei India Composite PMI Output Index that considers both the manufacturing sector
and the services sector came in at 53.9 in Jul against 50.8 in Jun. New business inflows
rise at fastest pace since Oct 2016.
• Media reports showed the tax department has sent notices to GST-registered businesses
that have reported 20% or more decline in annual revenue. Notices related to mismatch in
declaration between GSTR-3B (summary return) and GSTR-1 (outward supplies detail)
have been a mainstay but now the department is comparing firms’ earnings under GST
with that of erstwhile service and excise regime.
• Under the PM-Kisan scheme, the government is aiming to cover as many as 10 crore
farmers in 2019. Thus, Rs. 6,000 will be disbursed annually in three equal instalments,
agriculture minister said. Around 5.88 crore small farmers have received the first tranche of
Rs. 2,000 each under the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) and 3.40 crore
peasants have got the second instalment as well, he said.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
09
-Aug-
19
1 Week Return
YTD Return
S&P BSE Sensex
37,581.91 1.25% 4.20%
Nifty 50
11,109.65 1.02% 2.27%
S&P BSE Mid
-Cap 13,670.05 0.91% -11.45%
S&P BSE Small
-
Cap
12,699.50 1.63% -13.65%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline
Ratio
05-Aug-19 497 1354 0.37
06-Aug-19 1329 498 2.67
07-Aug-19 854 974 0.88
08-Aug-19 1057 742 1.42
09-Aug-19 1170 633 1.85
Source: NSE
• Indian equity markets gained in the week
ended Aug 9, 2019. Investors welcomed
media reports showing the government
could exempt foreign portfolio investors
(FPIs) from an increase in taxes.
• The Reserve Bank of India (RBI) cutting
interest rates by a more than expected
35 basis points and promising liquidity
support to the financial sector at its policy
meet supported sentiment.
• Initially, markets were tensed over trade
war after China devalued its currency to
combat U.S.’ tariff threat and stopped
import of U.S. agricultural products.
• Later, investor expectations of a rate cut
by the Reserve Bank of India at its policy
meet on Aug 7, 2019, lifted the
sentiment. Also, China took steps to
stabilise the yuan after the U.S. labelled
the country as a currency manipulator.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.28 27.41 32.61 33.85
P/B
2.84 3.45 2.31 1.81
Dividend
Yield
1.23 1.33 1.08 1.14
Source: BSE, NSE
Value as on Aug 09,
2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
16,061.92 2.73% -6.25%
S&P BSE Bankex
32,114.92 0.66% -6.57%
S&P BSE CD
22,711.46 0.64% -2.24%
S&P BSE CG
17,301.19 0.16%
-10.10%
S&P BSE FMCG
11,079.77 0.89% -1.41%
S&P BSE HC
12,693.67 1.10% -0.68%
S&P BSE IT
15,906.82 2.42% 5.44%
S&P BSE Metal
8,898.99
-3.03%
-14.32%
S&P BSE Oil & Gas
12,872.94
-1.44%
-9.65%
Source: Thomson Reuters Eikon
*Value as on Aug 09,
2019
• S&P BSE Auto was the major gainer, up
2.73%, followed by S&P BSE IT and S&P
BSE Teck that gained 2.42% and 2.37%,
respectively. Auto sector gained as industry
leaders met the finance minister to voice their
concerns about slowing growth and job
losses. S&P BSE Healthcare and S&P BSE
Realty gained 1.10% and 0.98%,
respectively.
• S&P BSE Metal was the major loser, down
3.03%. The metal sector lost as tensions on
the U.S.-China trade front continued to worry
investors. .
Indian Derivatives Market Review
• Nifty Aug 2019 Futures stood at 11,122.95, a premium of 13.30 points above the spot
closing of 11,109.65. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 51.75 lakh crore as against Rs. 53.03 lakh crore for the week to Aug 2.
• The Put-Call ratio stood at 0.88 compared with the previous week’s close of 0.76.
• The Nifty Put-Call ratio stood at 1.24 against the previous week’s close of 1.18.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
5.32 5.60 5.62 6.35
91 Day T
-Bill
5.42 5.65 5.90 6.38
07.32% 2024, (5 Yr GOI)
6.23 6.25 6.52 7.15
07.26% 2029, (10 Yr GOI)
6.49 6.35 6.59 7.33
Source: Thomson Reuters Eikon
Value as on Aug 09,
2019
• Bond yields rose on account of
ambiguity over future policy rate cuts,
both in terms of quantum and timing,
after the rate-cutting panel trimmed
repo rate by 35 bps in the policy
meet. The RBI governor said future
rate cuts would be data driven.
• Besides, profit booking by investors
and the rising geopolitical worries
over Jammu & Kashmir also weighed
on sentiments. However, softness in
crude prices gave little support to the
domestic debt market.
• Yields on the 10-year benchmark
paper (7.26% GS 2029) surged 14
bps to close at 6.49% compared with
the previous close of 6.35% after
trading in the range of 6.30% to
6.52%.
6.30
6.38
6.46
6.54
5-Aug 6-Aug 7-Aug 8-Aug 9-Aug
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 5.94 7.62 169
3 Year 6.18 7.68 150
5 Year 6.41 7.81 140
10 Year 6.60 8.13 153
Source: Thomson Reuters Eikon
Value as on Aug 09,
2019
• Yields on gilt securities fell across 1 to 7-
year maturities in the range of 2 bps to 11
bps and expanded across the remaining
maturities by up to 15 bps.
• Corporate bond yields contracted on 1-year
paper, 2-year paper and 5 to 7-year
maturities by up to 21 bps. Yields increased
across the remaining maturities in the range
of 3 bps to 27 bps barring 4-year paper
which closed steady.
• Difference in spread between AAA corporate
bond and gilt expanded across the
maturities by up to 26 bps barring 1, 5 and
10-year paper.
-27
-13
1
15
5.30
5.90
6.50
7.10
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 09-Aug-19 02-Aug-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Reserve Bank of India (RBI) has taken two important steps in its policy meet held
recently to make access to credit easier for the crisis-ridden non-banking financial
companies (NBFCs). These are – allowing banks to on-lend to priority sectors through
NBFCs and relaxation in norms in banks’ counter-party exposure limit to single NBFC. So,
now if a bank lends to NBFCs for onward lending to the priority sectors, it will automatically
be considered as priority sector lending for the bank. On-lending through non-banks to
agriculture (investment credit) can be up to Rs. 10 lakh, micro and small enterprises up to
Rs. 20 lakh and housing up to Rs. 20 lakh per borrower. On-lending to these three
categories of NBFCs would be classified as priority sector lending. Detailed guidelines will
be issued by month-end.
• The finance minister said the government has planned steps to improve the economy "fairly
quickly". The government has taken inputs from business leaders. The country is facing a
slowdown in gross domestic product and increasing unemployment, with the jobless rate
rising about 2 percentage points in Jul 2019 compared with a year earlier, according to
private data group.
• The government has proposed guidelines for e-commerce firms to protect consumers'
interest. This includes a 14-day deadline to effect refund request, mandate e-tailers to show
details of sellers supplying goods and services on their websites and moot the procedure to
resolve consumer complaints. The ministry of consumer affairs has requested stakeholder
opinions on the draft e-commerce rules by Sep 16.
Regulatory Updates in India (contd..)
9
• According to media reports, the Ministry of Statistics and Programme Implementation (Mo-
SPI) has set up a working group to revise the factory output – index of industrial production
(IIP) base to 2017-18 from 2011-12 and see if global practices are followed in its estimation.
This comes amid concerns over the credibility of data in recent past.
• A former RBI governor has said that the government should borrow only long-term fund
from the overseas market. He added that the amount should not exceed 1.5% of GDP
under any condition. The former governor said he does not have a negative view about
overseas sovereign borrowing but thinks India does not need to borrow from abroad.
• The Reserve Bank of India (RBI) has penalised 11 banks by imposing fine for non-
compliance with provisions of "Frauds classification and reporting by commercial banks and
select FIs". The penalty ranges from Rs. 1.5 crore to Rs. 50 lakh. The combined penalty is
Rs 8.5 crore.
• Under the Payment System Vision 2021, RBI has proposed to facilitate the creation of a
Central Payment Fraud Registry that will track banking frauds. Payment system participants
will be provided access to this registry for near-real time fraud monitoring. The aggregated
fraud data will be published to educate customers on emerging risks. A detailed framework
in this regard will be put in place by the end of Oct 2019.
Global News/Economy
• Institute for Supply Management (ISM) report showed growth in U.S. services sector activity
unexpectedly slowed in Jul 2019. The ISM non-manufacturing index fell to 53.7 in Jul after
dropping to 55.1 in Jun 2019. A reading above 50 still indicates service sector growth.
• Labor Department report said first-time claims for U.S. unemployment benefits
unexpectedly showed a modest decrease in the week ended Aug 3, 2019. Initial jobless
claims dipped to 209,000, a decrease of 8,000 from the previous week's revised level of
217,000.
• A U.S. Federal Reserve report showed consumer credit rose by less than expected in Jun
2019. Consumer credit rose by $14.6 billion in Jun after climbing by $17.8 billion in May
2019.
• First estimate from the Office for National Statistics showed U.K. economy contracted
unexpectedly in the second quarter. Gross domestic product fell 0.2% sequentially,
reversing first quarter's 0.5% growth. GDP was forecast to remain flat. On an annual basis,
the economy grew at a slower pace of 1.2% after rising 1.8% in the first quarter.
• The Cabinet Office said Japan's gross domestic product gained a seasonally adjusted 0.4%
QoQ in the second quarter of 2019, beating expectations. GDP was up 0.7% in the previous
three months. On an annualized yearly basis, GDP gained 1.8%.
10
Global Equity Markets
11
Global Indices
Indices
09-Aug-19
1-Week
Return
YTD
Return
Russell 3000
1,714.97 -0.48% 16.50%
Nasdaq 100
7,646.27 -0.60% 20.79%
FTSE 100
7,253.85 -2.07% 7.81%
DAX Index
11,693.80 -1.50% 10.75%
Nikkei Average
20,684.82 -1.91% 3.35%
Straits Times
3,168.94 -2.83% 3.26%
Source: Thomson Reuters Eikon
Value as on Aug 09,
2019
U.S.
• Heightened worries over the U.S.-
China trade turf kept U.S. markets
under pressure during the week.
• In the latest development, media
reports stated that the U.S. government
is keeping on hold its decisions about
licenses for U.S. companies to restart
business with one of the Chinese tech
giants.
Europe
• European markets too remained weak amid political uncertainty in Italy. Brexit worries
loomed large with British finance minister announcing its delay of the long-planned review
of public spending due this year ahead of Brexit. This led to speculation that the new
British Prime Minister may go for a snap election post Brexit. .
Asia
• Asian markets were no exception to the weakness in its global peers. Concerns over U.S.-
China trade tensions resurfaced after media reports stated that the U.S. is delaying the
decision about licenses for its companies to restart business with one of the Chinese tech
giants.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond plunged 13 bps to 1.73%
compared with the previous week’s
close of 1.86%.
• U.S Treasury prices plummeted earlier
during the week under review as
escalation in trade tensions between
U.S. and China fuelled concerns of a
global economic slowdown which
boosted its safe haven appeal.
Expectations that the U.S. Federal
Reserve might increase its pace of rate
cuts to counter risks of recession added
to the gains
• U.S. Treasury prices rose further
following breakdown in Italy's governing
coalition and the prospect of new
elections in the region. Unexpected
contraction of the U.K. economy in the
second quarter of 2019 also contributed
to the upside.
1.65
1.70
1.75
1.80
5-Aug 7-Aug 9-Aug
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)
56.51 60.26
Gold ($/Oz)
1496.84 1440.46
Gold (Rs/10 gm)
37270 35341
Silver ($/Oz)
16.94 16.21
Silver (Rs/Kg)
43009 40746
Source: Thomson Reuters Eikon *
Value as on Aug 09,
2019
Gold
• Gold prices edged higher amid
deepening trade worries between the
U.S. and China. Escalating trade tension
worsened global growth outlook, which in
turn, added to the bullion’s safe-haven
appeal. However, the upside was
somewhat restricted by better-than-
expected Chinese export data for Jul.
Brent Crude
• Brent crude prices tumbled with
weakening demand outlook amid
deepening U.S.-China trade worries,
which threatened global growth.
However, reports that the U.S. President
levied sanctions on the Venezuelan
government restricted the downside.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
declining capesize and panamax
activities.
8.20
9.30
10.40
11.50
9-Jul-19 19-Jul-19 29-Jul-19 8-Aug-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-6.22%
3.91%
4.50%
9-Aug-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
70.52 69.40
Pound Sterling
85.61 84.09
EURO
78.91 76.94
100 Yen
66.58 64.82
Source: RBI Figures in INR , *
Value as on Aug 09,
2019
Rupee
• The rupee weakened against the
greenback and witnessed the biggest
weekly fall in eight months as escalation
in trade tensions between U.S. and
China dampened investor risk appetite.
Euro
• The euro rose against the greenback as
escalation in trade tensions between
U.S. and China fuelled hopes of more
rate cuts by the U.S. Federal Reserve.
Pound
• The pound plummeted against the
greenback on growing possibility of a
general election in Britain after the
October Brexit deadline.
Yen
• The yen surged against the greenback
as escalation in trade tensions between
U.S. and China increased concerns of a
global economic slowdown and boosted
its safe haven appeal.
9.50
9.90
10.30
10.70
9-Jul-19 19-Jul-19 29-Jul-19 8-Aug-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
1.81%
1.61%
2.56%
2.72%
9-Aug-19
15
The Week that was…
5
th
August to 9
th
August
The Week that was (August 5 – August 9)
16
Date Events
Present
Value
Previous
Value
Monday,
August 05, 2019
•
India Nikkei Services PMI (Jul) 53.80 49.60
•
U.S. ISM Non-Manufacturing/Services Comp. (Jul) 53.70 55.10
Tuesday,
August 06, 2019
•
Japan Leading Index CI (Jun P) 93.30 94.90
•
German Factory Orders (YoY) (Jun) -3.60% -8.40%
•
Germany Markit Construction PMI (Jul) 49.50 50.00
Wednesday,
August 07, 2019
•
India Bi-monthly Monetary Policy Statement 5.40% 5.75%
•
Germany Industrial Production (YoY) (Jun) -5.20% -3.70%
•
U.S. Consumer Credit (Jun)
$14.596b
$17.793b
•
Japan Housing Loans (YoY) (2Q) 2.20% 2.40%
•
Japan Trade Balance - BOP Basis (Yen) (Jun) ¥759.3b -¥650.9b
Thursday,
August 08, 2019
•
Japan GDP Annualized (QoQ) (2Q P) 1.80% 2.80%
•
China Trade Balance CNY (Jul) 310.26b 345.10b
•
Japan Eco Watchers Survey Current (Jul) 41.20 44.00
•
U.S. Initial Jobless Claims (AUG 3) 209k 217k
Friday,
August 09, 2019
•
China Consumer Price Index (YoY) (Jul) 2.80% 2.70%
•
U.K. Gross Domestic Product (YoY) (2Q P) 1.20% 1.80%
•
U.K. Trade Balance (Jun) £1779m -£2002m
17
The Week Ahead
12
th
August to 16
th
August
18
The Week Ahead
Day Event
Monday,
Aug 12, 2019
•
U.S. Monthly Budget Statement (Jul)
Tuesday,
Aug 13, 2019
•
India Consumer Price Index (Jul)
•
Germany ZEW Survey Expectations (Aug)
•
Eurozone ZEW Survey (Economic Sentiment) (Aug)
•
U.S. Consumer Price Index (YoY) (Jul)
•
Japan Tertiary Industry Index (MoM) (Jun)
Wednesday,
Aug 14, 2019
•
India Wholesale Price Index (Jul)
•
Germany Gross Domestic Product (YoY) (2Q P)
•
U.K. Consumer Price Index (YoY) (Jul)
•
Eurozone Gross Domestic Product (YoY) (2Q P)
Thursday,
Aug 15, 2019
•
U.S. Retail Sales Advance (MoM) (Jul)
•
Japan Industrial Production (YoY) (Jun F)
•
U.S. Initial Jobless Claims (Aug 10)
•
U.S. Business Inventories (Jun)
Friday,
Aug 16, 2019
•
U.S University of Michigan Sentiment (Aug P)
•
U.S. Housing Starts (MoM) (Jul)
Disclaimer
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19
