The Week that was…
12
th
August to 16
th
August
2
Indian Economy
• Government data showed that India’s trade deficit in Jul 2019 narrowed to $13.43 billion
from $18.63 billion a year ago. Trade deficit narrowed as exports rose 2.25% to $26.33
billion in Jul 2019 compared with a year earlier, while imports came 10.43% to $39.76
billion over the same time period. Imports plunged as oil imports fell 22.15% to $9.60
billion in Jul 2019 from $12.33 billion in the same period of the previous year. Gold imports
also declined 42.20% to $1.71 billion in Jul 2019 from $2.96 billion in the year ago period.
Export sectors that witnessed growth in Jul 2019 included chemicals (13.45%), iron ore
(297.93%), electronic goods (51.39%), marine products (3.30%) and pharmaceuticals
(21.74%).
• India’s consumer inflation eased to 3.15% YoY in Jul 2019 from 3.18% in Jun 2019 from
but slowed compared with 4.17% in Jul 2018. Food inflation grew 2.36% in Jul 2019
compared with a revised growth of 2.25% in Jun 2019 (2.17% previously reported) and a
growth of 1.30% in the same month of the previous year. Vegetables inflation softened to
2.82% in Jul against a rise of 4.66% in Jun, while 'pulses and products' inflation went up to
6.82% from 5.68%.
• India’s Wholesale Price Index (WPI) - based inflation slowed down to 1.08% in Jul 2019
from 2.02% in Jun 2019 and 5.27% in Jul 2018. Vegetable inflation came in at 10.67% in
Jul, down from 24.76% in Jun 2019. Inflation for fuel and power fell to -3.64% in Jul from a
fall of -2.20% in Jun. Crude petroleum fell to -15.05% in Jul from a fall of -6.95% in Jun.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 16-Aug-19 1 Week Return YTD Return
S&P BSE Sensex 37,350.33 -0.62% 3.55%
Nifty 50 11,047.80 -0.56% 1.71%
S&P BSE Mid-Cap 13,490.90 -1.31% -12.61%
S&P BSE Small-Cap 12,584.59 -0.90% -14.43%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline
Ratio
13-Aug-19 546 1277 0.43
14-Aug-19 988 817 1.21
16-Aug-19 870 944 0.92
Source: NSE
• Indian equity markets closed on weak
note in the week ended Aug 16, 2019.
Weak global cues amid concerns of
global trade war, Hong Kong protests
and a crash in Argentina's peso currency
weighed on the market sentiment.
Further, investors remained cautious as
U.S. and China gave conflicting
messages on the future path of their
trade relations. However, U.S.’
announcement that it will delay the
implementation of tariffs on certain
Chinese goods soothed investors’
nerves. Back home, uncertainty over
announcement of any revival package by
the government kept the investors wary.
Weakness in rupee against the
greenback added to the woes.
• However, lower than expected wholesale
price index based inflation data for Jul
2019 raised expectations of further
interest rate cuts in the near future,
thereby restricting the losses.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.31 27.33 32.60 34.35
P/B
2.83 3.43 2.28 1.80
Dividend Yield
1.24 1.34 1.10 1.14
Source: BSE, NSE Value as on Aug
16, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
15,745.2 -1.97% -9.72%
S&P BSE Bankex
31,890.2 -0.70% -7.37%
S&P BSE CD
22,593.1 -0.52% -3.23%
S&P BSE CG
16,929.5 -2.15% -9.07%
S&P BSE FMCG
10,980.9 -0.89% -2.05%
S&P BSE HC
12,476.2 -1.71% -5.30%
S&P BSE IT
15,482.6 -2.67% -0.60%
S&P BSE Metal
8,934.8 0.40% -15.90%
S&P BSE Oil & Gas
13,169.9 2.31% -8.09%
Source: Thomson Reuters Eikon
*
Value as on Aug 16, 2019
• S&P BSE Information Technology was the
major loser that fell 2.67%. However, S&P
BSE Oil & Gas was the major gainer and
grew 2.31% followed by S&P BSE Metal that
grew 0.40%.
• One of the Oil & gas sector leader
announced a stake sale in its flagship
chemicals and refining business to a Gulf
major. This will help the Indian company to
pare debt which boosted market sentiments.
Indian Derivatives Market Review
• Nifty Aug 2019 Futures stood at 11,064.65, a premium of 16.85 points above the spot
closing of 11,047.80. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 21.94 lakh crore as against Rs. 51.75 lakh crore for the week to Aug 9.
• The Put-Call ratio stood at 0.82 compared with the previous week’s close of 0.88 .
• The Nifty Put-Call ratio stood at 1.21 against the previous week’s close of 1.24.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.31 5.32 5.54 6.24
91 Day T-Bill
5.48 5.42 5.84 6.37
07.32% 2024, (5 Yr GOI)
6.33 6.23 6.41 7.05
07.26% 2029, (10 Yr GOI)
6.54 6.49 6.43 7.36
Source: Thomson Reuters Eikon
Value as on Aug 16, 2019
• Bond yields rose as rupee
depreciated against the greenback
over escalating trade worries
between the U.S. and China and the
political disturbance in Argentina.
Besides, worries overs economic
slowdown and doubts over sovereign
bond issue also dampened market
sentiment.
• However, the losses were restricted
after a top government official
commented that the government is
not encouraging fiscal sops to boost
the growth of the domestic economy.
This alleviated fears of widening fiscal
deficit, thereby lifting the market
sentiment.
• Yields on the 10-year benchmark
paper (7.26% GS 2029) rose 5 bps to
close at 6.54% compared with the
previous close of 6.49% after trading
in the range of 6.50% to 6.64%.
6.50
6.55
6.60
6.65
13-Aug 14-Aug 16-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 5.90 7.33 143
3 Year 6.22 7.75 153
5 Year 6.53 7.83 130
10 Year 6.64 8.15 151
Source: Thomson Reuters Eikon
Value as on Aug 16, 2019
• Yields on gilt securities increased across the
maturities in the range of 3 bps to 13 bps
barring 1 and 2-year paper which fell 4 bps
and 1 bps respectively.
• Corporate bond yields increased across the
maturities in the range of 5 to 20 bps.
• Difference in spread between AAA corporate
bond and gilt expanded across the
maturities by up to 21 bps barring 4 and 5-
year paper which contracted 4 and 5 bps,
respectively while that of 6-year paper
closed steady.
-4
2
8
14
5.00
5.80
6.60
7.40
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 16-Aug-19 09-Aug-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Reserve Bank of India has said on-lending by registered non-banking financial
companies (NBFCs) towards agriculture, micro and small enterprises (MSEs) and housing
sector up to prescribed limits will be treated as priority sector loans. RBI said this is being
done to boost credit to the segment of borrowers who need it. Under the revised norms, on-
lending by NBFCs for 'term lending' section under agriculture will be allowed up to Rs. 10
lakh per borrower. For MSEs, the limit will be Rs. 20 lakh per borrower. In housing sector,
the limit has been increased from Rs. 10 lakh to Rs. 20 lakh per borrower for classification
of the loan as priority sector lending. Banks can classify only the fresh loans sanctioned by
NBFCs out of bank borrowing, under the revised on-lending model.
• The Reserve Bank of India has permitted startups, banks and financial institutions to set up
regulatory sandbox (RS) for live testing of innovative products. This is being allowed in
areas such as retail payments, digital KYC and wealth management. RS refers to live
testing of new products or services in a controlled/test regulatory setting for which
regulators may or may not permit certain relaxations for the limited purpose of testing.
• The government has notified the scheme of partial credit guarantee for public sector banks
(PSBs) to buy pooled assets of non-banking financial companies up to Rs. 1 lakh crore.
This puts into action the announcement of the Budget 2019-20 made in Jul 2019 to boost
lending to the cash-strapped NBFCs.
Regulatory Updates in India (contd..)
9
• As per media report, the Insurance Regulatory and Development Authority has issued
guidelines for handling the claims of the victims suffered in the floods, which will be
mandatory for all general insurance companies and standalone health insurance companies
to follow. The guidelines ask for guaranteeing instant registration and settlement of entitled
claims of flood-hit insureds by the insurance companies.
• As per media report, the Insurance Regulatory and Development Authority in a circular said
that in the event of the vehicle's total loss (TL), the vehicle's salvation is sold to scrap
dealers across the country without withdrawing the vehicle's Certificate of Registration (RC).
This has been pointed out by enforcement authorities that documents relating to such
vehicles are being misused. Hence, the regulator has asked all insurers to ensure that the
RC of such vehicles get cancelled in case of TL claim settlement.
• As per media report, the Insurance Regulatory and Development Authority through a note
recommended insurance companies to accelerate claim settlement for victims of floods
occurred in Karnataka and parts of Maharashtra. According to the regulator, special camps
will be set up in Karnataka where the recent floods have caused immense loss to property.
The regulator added that all non-life insurers should submit information on claim settlement
so that the magnitude of loss can be measured.
Global News/Economy
• A Commerce Department report showed retail sales in the U.S. increased by much more
than expected in Jul 2019. Retail sales climbed 0.7% in Jul after rising by 0.3% in Jun 2019.
• A Labor Department report showed consumer prices in the U.S. rose in line with estimates
in Jul 2019. The report also showed another bigger than expected increase in core
consumer prices. Consumer price index climbed 0.3% in Jul after inching up 0.1% in both
May and Jun.
• A Labor Department report showed U.S. labor productivity increased by more than
expected in the second quarter. Labor productivity climbed 2.3% in the second quarter after
surging up 3.5% in the first quarter.
• A Federal Reserve report showed industrial production in the U.S. unexpectedly showed a
modest decrease in Jul 2019. The Fed said industrial production edged down 0.2% in Jul
following a 0.2% increase in Jun 2019.
• According to the Office for National Statistics, U.K. retail sales unexpectedly grew in Jul
2019. Retail sales volume grew 0.2% in Jul from Jun 2019, when sales advanced 0.9%.
• The National Bureau of Statistics said China's industrial production grew at the slowest
pace in 17 years in Jul 2019 to 4.8% from 6.3% in Jun 2019. This came as trade disputes
with the U.S. dampened manufacturing activity.
10
Global Equity Markets
11
Global Indices
Indices
16-Aug-19
1-Week
Return
YTD
Return
Russell 3000 1,277.23 -0.79% 20.19%
Nasdaq 100 7,604.11 -0.55% 20.13%
FTSE 100 7,117.15 -1.88% 5.78%
DAX Index 11,562.74 -1.12% 9.51%
Nikkei Average 20,418.81 -1.29% 2.02%
Straits Times 3,115.03 -1.70% 1.51%
Source: Thomson Reuters Eikon
Value as on Aug 16, 2019
U.S.
• U.S. markets came under selling
pressure as initial positive vibes
generated from temporary relief from
the U.S.-China trade war was
overshadowed by concerns about a
potential recession. However, optimism
about the world's central banks
providing aggressive stimulus in order
to prevent a global recession restricted
further losses.
Europe
• Continued concerns over the health of the global economy also kept European markets
under pressure. The euro area government bond yields went into negative territory, which
fueled fears of a global recession. Meanwhile, expectations of further stimulus measures
by central banks across the globe cushioned the fall.
Asia
• Asian markets largely remained weak, following sell-off seen in its global peers amid
concerns about a potential recession after the yield on the benchmark 10-year U.S.
Treasury note fell below the yield on the 2-year U.S. Treasury note. However, further
losses were restricted after China's state planner said it would roll out plan to boost
disposable income this year and in 2020.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond plunged 19 bps to 1.54%
compared with the previous week’s
close of 1.73%.
• U.S. Treasury prices grew amid global
political tensions in Hong Kong and
political uncertainty in Argentina.
Further, persistent worries about global
trade tensions and economic slowdowns
around the world boosted the safe
haven appeal of U.S. Treasuries.
• Concerns that U.S. could be heading for
recession and expectations of central
bank interest rate cuts also added to the
upside.
• However, reports that Germany's
government may do away with its
balanced budget rule and take on new
debt to counter a possible recession
and boost growth capped the gains.
1.50
1.58
1.66
1.74
12-Aug 14-Aug 16-Aug
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) 58.99 56.51
Gold ($/Oz) 1,513.75 1,496.84
Gold (Rs/10 gm) 37,466 37,270
Silver ($/Oz) 17.08 16.94
Silver (Rs/Kg) 43,624 43,009
Source: Thomson Reuters Eikon *Value as on Aug 16, 2019
Gold
• Gold prices moved up as investors
continued to fret over the U.S.-China
trade feud. Besides, the unrest in Hong
Kong, added to the bullion’s safe-haven
appeal. However, the U.S.’s decision to
postpone some tariffs on Chinese imports
and robust U.S. Jul retail sales data
capped gains.
Brent Crude
• Brent crude prices increased as fears of
recession lowered after U.S. Jul retail
sales recorded the highest growth in four
months. Besides, hopes of stimulus by
the European Central Bank and China’s
plan to bolster the country’s disposable
income lifted the commodity’s outlook.
Baltic Dry Index
• The Baltic Dry Index rose on the back of
improved capesize and panamax
activities.
8.10
9.10
10.10
11.10
16-Jul-19 26-Jul-19 5-Aug-19 15-Aug-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
4.39%
1.13%
0.83%
16-Aug-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
71.29 70.52
Pound Sterling
86.33 85.61
EURO
79.15 78.91
100 Yen
67.17 66.58
Source: RBI Figures in INR , *
Value as on Aug 16, 2019
Rupee
• The rupee weakened against the
greenback following losses in the
domestic equity market amid ongoing
protests in Hong Kong and political
uncertainty in Argentina.
Euro
• The euro weakened against the
greenback amid concerns of a looming
global recession. Better-than-expected
U.S. retail sales for Jul 2019 further
weakened the euro.
Pound
• The pound strengthened against the
greenback after opposition parties in
Britain launched plans to block a no-deal
Brexit.
Yen
• The yen weakened against the
greenback after U.S. delayed
implementing tariffs on some Chinese
goods scheduled to begin next month.
9.70
9.95
10.20
10.45
10.70
16-Jul-19 26-Jul-19 5-Aug-19 15-Aug-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of
INR)
Rebased to 10
Currency Movement
1.09%
0.84%
0.30%
0.89%
16-Aug-19
15
The Week that was…
12
th
August to 16
th
August
The Week that was (August 12 – August 16)
16
Date Events
Present
Value
Previous
Value
Monday,
12 August, 2019
• China Money Supply (YoY) (Jul) 8.10% 8.50%
• Japan Producer Price Index (YoY) (Jul) -0.60% -0.10%
Tuesday,
13 August, 2019
• Japan Machinery Orders (YoY) (Jun) 13.90% -7.80%
• U.K. ILO Unemployment Rate (3M) (Jun) 3.90% 3.60%
• U.S. Consumer Price Index (MoM) (Jul) 0.30% 0.10%
• Germany ZEW Survey - Economic Sentiment (Aug) -44.1 -24.5
Wednesday,
14 August, 2019
• Euro Zone Industrial Production s.a. (MoM) (Jun) -1.60% 0.80%
• Euro Zone Gross Domestic Product s.a. (YoY) (Q2) (P) 1.10% 1.10%
• India WPI Inflation (Jul) 1.08% 2.02%
• China Industrial Production (YoY) (Jul) 4.80% 6.30%
• China Retail Sales (YoY) (Jul) 7.60% 9.80%
Thursday,
15 August, 2019
• Japan Industrial Production (YoY) (Jun) -3.8% -4.1%
• U.S. Retail Sales (MoM) (Jul) 0.7% 0.3%
• U.S. Initial Jobless Claims (Aug 9) 220K 211K
• U.S. Industrial Production (MoM) (Jul) -0.2% 0.2%
Friday,
16 August, 2019
• Euro Zone Trade Balance n.s.a. (Jun) €20.6B €22.6B
• U.S. Housing Starts (MoM) (Jul) 1.191M 1.241M
• U.S. Building Permits (MoM) (Jul) 1.336M 1.232M
17
The Week Ahead
19
th
August to 23
rd
August
18
The Week Ahead
Day Event
Monday,
August 19, 2019
• Euro Zone Consumer Price Index (MoM) (Jul)
• Euro Zone Current Account s.a (Jun)
Tuesday,
August 20, 2019
• Germany Producer Price Index (YoY) (Jul)
• Euro Zone Construction Output w.d.a (YoY) (Jun)
• U.S. API Weekly Crude Oil Stock (Aug 16)
Wednesday,
August 21, 2019
• U.S. Existing Home Sales Change (MoM) (Jul)
• U.S. MBA Mortgage Applications (Aug 16)
• U.K. Public Sector Net Borrowing (Jul)
• Japan Foreign Bond Investment (Aug 16)
Thursday,
August 22, 2019
• U.S. Initial Jobless Claims (Aug 16)
• Euro Zone Consumer Confidence (Aug) (P)
• U.S. Markit PMI Composite (Aug) (P)
• Euro Zone Markit PMI Composite (Aug) (P)
• Japan National Consumer Price Index (YoY) (Jul)
Friday,
August 23, 2019
• U.K. BBA Mortgage Approvals (Jul)
• U.S. New Home Sales Change (MoM) (Jul)
• U.S. Baker Hughes US Oil Rig Count
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