The Week that was…
26
th
August to 30
th
August
2
Indian Economy
• Government data showed that the growth of the Indian economy slowed for the fifth
consecutive quarter to a more than 6-year low of 5.00% on a year basis in the first quarter
of FY20 compared to a growth of 5.80% in the previous quarter and 8.00% in the same
period of the previous year. This was the weakest rate of growth since the first quarter of
2013 when the domestic economy grew 4.30% on a yearly basis.
• The Reserve Bank of India said after its board meeting that it will transfer Rs. 1.76 lakh
crore to the government this fiscal. The transfer includes Rs. 1.23 lakh crore of surplus for
2018-19 and Rs. 52,637 crore of excess provisions identified as per the revised Economic
Capital Framework (ECF) adopted at the meeting. The higher surplus is due to the long-
term forex swaps and the open market operations (OMO) conducted by the central bank
over the last fiscal.
• Government data showed that India’s fiscal deficit for the period from Apr to Jul of 2019
stood at Rs. 5.48 lakh crore or 77.8% of the budget estimate compared to 86.5% of the
budget estimate in the corresponding period of the previous year. Total expenditure stood
at Rs. 9.47 lakh crore or 34.0% of the budget estimate compared to 36.4% of the budget
estimate in the corresponding period of the previous year. Total receipts stood at Rs. 3.99
lakh crore or 19.2% of the budget estimate which was unchanged from the corresponding
period of the previous year. Tax revenue stood at Rs. 3.39 lakh crore or 20.5% of the
budget estimate compared to 19.8% of the budget estimate in the corresponding period of
the previous year.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
30
-Aug-
19
1 Week Return
YTD Return
S&P BSE Sensex
37,332.79 1.72% 3.51%
Nifty 50
11,023.25 1.79% 1.48%
S&P BSE Mid
-Cap 13,467.55 2.01% -12.77%
S&P BSE Small
-
Cap
12,534.70 2.86% -14.77%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline
Ratio
26-Aug-19 1,344 490 2.74
27-Aug-19 1,297 516 2.51
28-Aug-19 691 1,145 0.60
29-Aug-19 640 1,188 0.54
30-Aug-19 1,038 762 1.36
Source: NSE
• Indian equity markets closed on positive
note in the week ended Aug 30, 2019.
Initially, indices gained on announcement
of slew of measures by the finance
minister to boost the economy after the
close of markets on Aug 23, 2019. The
government had rolled back the increase
in surcharge on foreign portfolio investors
and announced relief packages for the
auto and finance sectors.
• Meanwhile, bourses got a boost after the
Reserve Bank of India (RBI) decided to
transfer Rs. 1.76 lakh crore to the
government. Additionally, expectations
that the finance minister could announce
steps on recapitalization of state-run
banks and their consolidation further
boosted market sentiment. Positive
global cues towards the end of the week
with Italy getting a new government and
signs of recommencing of U.S.-China
trade talks added to the gains.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.25 27.27 35.21 33.51
P/B
2.82 3.35 2.30 1.79
Dividend Yield
1.24 1.39 1.11 1.13
Source: BSE, NSE Value as on Aug 30, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
15,768.40 0.26% 3.20%
S&P BSE Bankex
30,949.72 1.66% -5.01%
S&P BSE CD
23,420.17 2.63% 4.27%
S&P BSE CG
16,941.77 3.01% -2.79%
S&P BSE FMCG
11,077.23 3.46% 0.64%
S&P BSE HC
12,875.40 3.33% 2.31%
S&P BSE IT
16,149.45 1.13% 3.26%
S&P BSE Metal
8,524.28 0.45% -9.85%
S&P BSE Oil & Gas
13,163.72 2.70% 0.50%
S&P BSE Realty
2,047.65 8.53% -1.18%
Source: Thomson Reuters Eikon
*Value as on Aug
30, 2019
• S&P BSE Realty was the major gainer that
grew 8.53% followed by S&P BSE FMCG
that grew 3.46%. At the end of last week, the
government had announced an additional
liquidity support to the tune of Rs. 20,000
crore for housing finance companies in order
to improve their lending capacity. The move
is expected to help the real estate sector
which is facing a slowdown in demand and
liquidity crunch.
• S&P BSE Healthcare and S&P BSE Capital
Goods grew 3.33% and 3.01%, respectively.
S&P BSE Oil & Gas and S&P BSE Consumer
Durables grew 2.70% and 2.63%,
respectively.
Indian Derivatives Market Review
• Nifty Sep 2019 Futures stood at 11,058.90, a premium of 35.65 points above the spot
closing of 11,023.25. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 79.69 lakh crore as against Rs. 68.20 lakh crore for the week to Aug 23.
• The Put-Call ratio stood at 0.83 compared with the previous week’s close of 0.69 .
• The Nifty Put-Call ratio stood at 1.38 against the previous week’s close of 1.02.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
5.38 5.34 5.53 6.26
91 Day T
-Bill
5.42 5.41 5.74 6.42
07.32% 2024, (5 Yr GOI)
6.25 6.28 6.34 7.09
07.26% 2029, (10 Yr GOI)
6.56 6.57 6.39 7.41
Source: Thomson Reuters Eikon
Value as on Aug 30
, 2019
• Bond yields inched down as market
participants resorted to short covering
ahead of the release of the gross
domestic product data of the Indian
economy for the first quarter of FY20.
• However, most of the gains were
neutralized on concerns that the
government may spend more to
boost the growth of the Indian
economy and ultimately breach its
fiscal deficit target. Meanwhile data
released post market hours showed
that the growth of the Indian economy
slowed for the fifth consecutive
quarter to a more than 6-year low of
5.00% on a year basis in the first
quarter of FY20.
• Yield on the 10-year benchmark
paper (7.26% GS 2029) inched down
1 bps to 6.56% compared with the
previous close of 6.57% after trading
in a range of 6.39% to 6.62%.
6.45
6.50
6.55
6.60
26-Aug 27-Aug 28-Aug 29-Aug 30-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 5.85 7.43 158
3 Year 6.15 7.48 133
5 Year 6.47 7.56 109
10 Year 6.66 8.11 145
Source: Thomson Reuters Eikon
Value as on Aug 30
, 2019
• Yields on gilt securities fell across the
maturities by up to 5 bps, barring 2-, 13-, 14-
and 30-year papers that increased by up to 9
bps. Yield fell the most on 3-year paper.
• Corporate bond yields plunged on 2- to 8-year
papers in the range of 2 to 19 bps while
remaining securities increased by up to 9 bps.
Yield fell the most on 3-year paper and the
least on 8-year paper.
• Difference between the spread of AAA
corporate bond and gilt contracted on 2- to 7-
year papers in the range of 3 to 15 bps, barring
1-,10- & 15-year papers that expanded in the
range of 4 to 10 bps. Spread fell the most on 4-
year paper.
-5
0
5
10
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 30-Aug-19 23-Aug-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The finance minister announced the merger of ten state run banks into four distinct entities.
According to the government, Oriental Bank of Commerce and United Bank of India will get
merged with Punjab National Bank. Syndicate Bank and Canara Bank will get merged into
one entity, while Andhra Bank, Union Bank of India and Corporation Bank will get merged
into a single entity. Similarly, merger will also take place between Indian Bank and
Allahabad Bank. Thus, after the merger of ten public sector banks, the number of state-run
banks in the country will come down to 12 from 27 in 2017.
• The government eased local sourcing norms for single-brand retail companies. Under the
present norms, a single-brand retail company which has more than 51% FDI (Foreign Direct
Investment) needs to source 30% of its goods from within India. Under the new norm, this
30% can be met as an average over the first five years of operation and thereafter annually
towards its Indian operations. In addition, the government also approved that single brand
retail companies can start selling online before setting up physical stores, subject to the
condition that they set one up within 2 years of starting online sales.
• The government gave approval for 100% FDI in contract manufacturing under automatic
route. The objective of the move is to give a boost to domestic manufacturing. Furthermore,
the government permitted 100% FDI in coal mining and associated infrastructure under
automatic route as well. The government also announced 26% FDI with government
approval in digital media. Under the present norms, 26% FDI is allowed through
government approval route in the print media sector.
Regulatory Updates in India (contd..)
9
• The government has started the process of disinvesting its stake to below 51% in state-run
companies. It has identified nearly 12 firms for implementing the Budget announcement.
The department of public investment and asset management is in the process of floating a
discussion paper to consider the advantages and disadvantages of the move, media reports
showed. This fiscal’s target from asset sales is estimated at Rs. 1.05 lakh crore. The
companies identified in a preliminary list include the ones in which the government’s holding
ranges from about 50% to 60%.
• As per media report, the Insurance Regulatory and Development Authority of India (IRDAI)
announced that it has set up a single point contact for its the Regulatory Sandbox
approach, which will help financial technology firms in seeking permission to experiment
with innovative approaches for the growth of the sector. The regulator has stated that the
sandbox approach can be used to develop a benign and favourable environment to test
innovative methods (including Fin-Tech solutions). According to the regulator, the
consequences of failure under the process will be limited.
Global News/Economy
• A Commerce Department report showed U.S. gross domestic product increased 2% in the
second quarter compared with the previously reported 2.1%. The downward revision came
in line with estimates. The downwardly revised GDP growth seen in the second quarter
compares with 3.1% jump in GDP in the first quarter.
• Flash estimate from Destatis showed Germany's consumer price inflation eased more than
expected in Aug 2019. Consumer prices advanced 1.4% YoY in Aug, slower than the 1.7%
increase seen in Jul 2019. On a monthly basis, consumer prices dropped 0.2%.
• Data from the Ministry of Land, Infrastructure, Transport and Tourism showed Japan's
housing starts fell in Jul 2019 after rising in the previous month. Housing starts decreased
4.1% YoY in Jul, after a 0.3% rise in Jun 2019. Annualized housing starts fell to 910,000 in
Jul from 922,000 in the previous month. In the same period last year, housing starts totaled
950,000.
• A Commerce Department report showed new orders for U.S. durable goods jumped much
more than expected in Jul 2019. Durable goods orders surged up 2.1% in Jul following a
1.8% increase in Jun 2019.
• Federal Employment Agency preliminary data showed Germany's number of unemployed
grew by a seasonally adjusted 4,000 persons after a 1,000 increase in Jul 2019. The rise
was in line with expectations.
10
Global Equity Markets
11
Global Indices
Indices
30-Aug-19
1-Week
Return
YTD
Return
Russell 3000
1,294.15 2.67% 21.78%
Nasdaq 100
7,691.00 3.03% 21.50%
FTSE 100
7,207.18 1.58% 7.12%
DAX Index
11,939.28 2.82% 13.07%
Nikkei Average
20,704.37 -0.03% 3.45%
Straits Times
3,106.52 -0.12% 1.23%
Source: Thomson Reuters Eikon
Value as on
Aug 30, 2019
U.S.
• U.S. markets traded in the green,
supported by initial gains in the energy
sector. Reports from Energy
Information Administration (EIA)
showed that U.S. crude oil inventories
slumped by 10.0 million barrels in the
week to Aug 23 compared to estimates
for a decrease of 2.1 million barrels.
Investors’ sentiment was largely buoyed
by optimism over de-escalation of U.S.-
China trade war.
Europe
• European markets too witnessed buying spree as Italy's opposition Democrats and rival
populists' party expressed optimism over negotiations to potentially form a government.
The news somewhat pacified concerns over probable no-deal Brexit following media
reports stating that the British government is looking to suspend parliament from around
mid-Sep.
Asia
• Asian markets ended the week in the red despite underlying sentiment remaining
supported by signs that the U.S. and China are set to resume trade talks in Sep. Investors
remained concerned over ongoing mass protests in Hong Kong seeking political freedom
and self-determination for the semi-autonomous territory.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond fell 2 bps to 1.51% compared with
the previous week’s close of 1.53%.
• U.S treasury prices grew initially amid
fears about a recession and trade
tensions between China and U.S.
• U.S. Treasury prices rose further after
the British Prime Minister decided to
suspend the British Parliament until
October 14. The move increased
concerns of a no deal Brexit as it will
reduce the parliamentary time before
the Brexit deadline which is scheduled
on October 31, 2019.
• However, reports at the end of the week
that U.S. and China will take steps to
de-escalate their trade war that has
been worsening business sentiment
restricted the gains.
1.45
1.50
1.55
26-Aug 28-Aug 30-Aug
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
8.50
9.40
10.30
11.20
30-Jul-19 9-Aug-19 19-Aug-19
29-Aug-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
3.73%
-0.41%
5.52%
Commodities Market
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
61.13 58.93
Gold ($/Oz)
1,519.85 1,526.10
Gold (Rs/10 gm)
38,405 37,599
Silver ($/Oz)
18.35 17.39
Silver (Rs/Kg)
46,688 43,708
Source: Thomson Reuters Eikon *
Value as on
Aug 30, 2019
Gold
• Gold prices fell as investors resorted to
profit booking to capitalize on the recent
rally. The bullion’s price had initially risen
during the week owing to the U.S.-China
trade war concerns. However, all gains
were erased after China’s commerce
ministry expressed hopes of a resolution
to the ongoing U.S.-China trade dispute.
Brent Crude
• Brent crude prices were up following a
sharp fall in U.S. crude oil inventories in
the week ended Aug 23, as revealed by
the EIA report. However, the upside was
limited by profit booking and concerns
over a slowdown in global growth.
Baltic Dry Index
• The Baltic Dry Index grew on the back of
improved capesize and panamax
activities.
30-Aug-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
71.76 71.73
Pound Sterling
87.43 87.62
EURO
79.24 79.39
100 Yen
67.49 67.26
Source: RBI Figures in INR , *
Value as on
Aug 30, 2019
Rupee
• The rupee strengthened against the
greenback on hopes that ongoing trade
tensions between U.S. and China might be
resolved. However, month end dollar demand
capped the gains.
Euro
• The euro weakened against the greenback
as latter strengthened after U.S. and China
sought to ease trade war tensions.
Pound
• The pound fell against the greenback after
Britain’s Queen approved Prime Minister’s
plan to suspend parliament from early Sep
2019.
Yen
• The yen fell against the U.S. dollar on reports
that U.S. and China would talk in Sep 2019
which fueled hopes that ongoing trade
tensions might be resolved.
9.80
10.20
10.60
11.00
30-Jul-19 9-Aug-19 19-Aug-19
29-Aug-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of
INR)
Rebased to 10
Currency Movement
0.04%
-0.22%
-0.19%
0.34%
30-Aug-19
15
The Week that was…
26
th
August to 30
th
August
The Week that was (August 26 – August 30)
16
Date Events
Present
Value
Previous
Value
Monday,
August 26, 2019
•
U.S. Durable Goods Orders (Jul P) 2.10% 1.80%
•
Germany IFO Expectations (Aug) 91.30 92.10
Tuesday,
August 27, 2019
•
U.S. Consumer Confidence Index (Aug) 135.10 135.80
•
Germany Gross Domestic Product (YoY) (2Q F) 0.00% 0.00%
•
U.S. House Price Purchase Index (QoQ) (2Q) 1.00% 1.30%
Wednesday,
August 28, 2019
•
Germany GfK Consumer Confidence (Sep) 9.70 9.70
•
U.S. MBA Mortgage Applications (Aug 23) -6.20% -0.90%
Thursday,
August 29, 2019
•
Germany Unemployment Claims Rate (Aug) 5.00% 5.00%
•
Germany Consumer Price Index (YoY) (Aug P) 1.40% 1.70%
•
U.S. Gross Domestic Product Annualized (QoQ) (2Q S) 2.00% 2.10%
•
U.S. Advance Goods Trade Balance (Jul) -$72.3b -$74.2b
•
U.S. Initial Jobless Claims (Aug 24) 215k 211k
•
Japan Jobless Rate (Jul) 2.20% 2.30%
Friday,
August 30, 2019
•
India Gross Domestic Product (1Q) 5.00% 5.80%
•
U.S. PCE Core (YoY) (Jul) 1.60% 1.60%
•
Eurozone Consumer Price Index Estimate (YoY) (Aug) 1.00% 1.10%
•
Japan Housing Starts (YoY) (Jul) -4.10% 0.30%
•
Germany Retail Sales (YoY) (Jul) 4.40% -1.40%
17
The Week Ahead
02
nd
September to 6
th
September
18
The Week Ahead
Day Event
Monday,
September 02, 2019
•
India Manufacturing PMI (Aug)
•
China Caixin Manufacturing PMI (Aug)
•
U.K. Markit Manufacturing PMI (Aug)
Tuesday,
September 03, 2019
•
U.S. ISM Manufacturing (Aug)
•
U.S. ISM Employment (Aug)
•
U.K Markit/CIPS Construction PMI (Aug)
Wednesday,
September 04, 2019
•
India Service PMI (Aug)
•
China Caixin Services PMI (Aug)
•
U.K. Markit/CIPS Services PMI (Aug)
•
Eurozone Retail Sales (YoY) (Jul)
Thursday,
September 05, 2019
•
U.S. ISM Non-Manufacturing/Services Composite (Aug)
•
Germany Factory Orders (YoY) (Jul)
•
Germany Markit Construction PMI (Aug)
•
U.S. Initial Jobless Claims (Aug 31)
•
U.S. Factory Orders (Jul)
Friday,
September 06, 2019
•
U.S Change in Non-farm Payrolls (Aug)
•
U.S Unemployment Rate (Aug)
•
Eurozone Gross Domestic Product (YoY) (2Q F)
Disclaimer
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19
