News U Can Use
February 16, 2018
The Week that was…
12
th
February to 16
th
February
2
Indian Economy
• The Consumer Price Index (CPI)-based inflation or retail inflation grew 5.07% in Jan 2018,
down from 5.21% MoM and up from 3.17% YoY. Retail inflation growth thus surpassed
Reserve Bank of India’s medium-term target of 4% for the third consecutive month. The
Consumer Food Price Index also grew 4.70% in Jan 2018, down from 4.96% MoM and up
from 0.61% YoY.
• India’s Index of Industrial Production (IIP) grew 7.1% in Dec 2017 as against upwardly revised
growth of 8.8% in Nov 2017 (8.4% originally reported) and 2.4% in the same period of the
previous year. The manufacturing sector also surged 8.4% in Dec 2017 from 0.6% in the
same period of the previous year. However, IIP growth for Apr to Dec 2017 slowed to 3.7%
from 5.1% in the same period of the previous fiscal.
• India’s export during the month of Jan 2018 increased 9.07% YoY to $24.38 billion from
$22.36 billion in Jan 2017. Similarly, import grew 26.10% YoY to $40.68 billion from $32.26
billion in the same period of the previous year. Trade deficit widened to $16.30 billion during
the period, which is the highest since May 2013, as against $9.90 billion in Jan 2017. Trade
deficit widened as imports grew for petroleum, chemicals, silver, pearls and machine tools.
• India’s Wholesale Price Index (WPI) based inflation eased to a six-month low of 2.84% in Jan
2018 owing to cheaper food articles even as vegetable prices continued to rise. The
wholesale price-based inflation eased from 3.58% in Dec 2017 and 4.26% in Jan 2017. The
inflation on food articles slowed to 3.00 % in Jan 2018, from 4.72 % in Dec 2017
.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 16-Feb-18 1 Week Return YTD Return
S&P BSE Sensex 34,010.76 0.01% 0.59%
Nifty 50 10,452.30 -0.03% 0.16%
S&P BSE Mid-Cap 16,602.35 -0.20% -6.92%
S&P BSE Small-Cap 18,035.75 -0.76% -6.45%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
12-Feb-18 1429 383 3.73
14-Feb-18 848 959 0.88
15-Feb-18 483 1313 0.37
16-Feb-18 353 1431 0.25
Source: NSE
• Indian equity closed on a flat note after
witnessing volatility over the week.
Markets initially took positive cues
from Wall Street as concerns over U.S.
political deadlock eased to some
extent. U.S. policymakers managed to
end a brief government shutdown with
a bill raising spending caps and
funding the government until Mar 23.
• Gains were largely erased after a
major state-owned bank detected
fraudulent and unauthorised
transactions worth about Rs 1.13
trillion ($1,771.69 million) at one of its
branches in Mumbai. Meanwhile,
investors shrugged off speculation
over faster than expected interest rate
hike by the U.S. Federal Reserve,
thereby restricting the downturn.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
24.19 25.32 39.33 105.20
P/B
3.17 3.53 2.87 2.58
Dividend Yield
1.15 1.08 0.87 0.63
Source: BSE, NSE Value as on Feb 16
, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing 1-Wk 1-Mth
S&P BSE Auto
24,773.37 -1.08% -4.56%
S&P BSE Bankex
28,396.48 -1.68% -3.27%
S&P BSE CD
20,961.52 -1.21% -11.67%
S&P BSE CG
19,200.54 -0.21% -3.15%
S&P BSE FMCG
10,537.88 0.10% -1.38%
S&P BSE HC
14,267.46 -0.56% -3.61%
S&P BSE IT
12,099.01 -0.15% 0.58%
S&P BSE Metal
15,124.21 0.16% -1.99%
S&P BSE Oil & Gas
15,546.62 0.03% -2.53%
Source: Thomson Reuters
Eikon
Value as on Feb 16, 2018
• On the BSE sectoral front, majority of the
indices closed in the red. S&P BSE Bankex
was the major loser, down 1.68%, followed
by S&P BSE Consumer Durables and S&P
BSE Auto, which slipped 1.21% and 1.08%,
respectively.
• Banking stocks came under selling pressure
during the week following unauthorized
transactions detected by a major state-
owned bank. Meanwhile, S&P BSE Metal
was the top gainer, up 0.16%, followed by
S&P BSE FMCG and S&P BSE Oil & Gas,
which rose 0.10% and 0.03%, respectively.
Indian Derivatives Market Review
• Nifty Feb 2018 Futures were at 10,453.35 points, a premium of 1.05 points above the spot
closing of 10,452.30. The turnover on NSE’s Futures and Options segment stood at Rs. 33.38
lakh crore as against Rs. 42.16 lakh crore in the week to Feb 9.
• The Put-Call ratio stood at 0.82 compared with the previous week’s close of 0.81.
• The Nifty Put-Call ratio stood at 1.07 compared with the previous week’s close of 1.09.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.96 5.89 5.88 5.84
91 Day T-Bill
6.34 6.39 6.32 6.13
7.80% 2021, (5 Yr GOI)
7.10 7.09 7.13 6.44
7.17% 2028, (10 Yr GOI)
7.58 7.49 7.38 --
Source: Thomson Reuters
Eikon
Value as on Feb 16, 2018
• Bond yields rose amid fresh supply of
state government debt and rising U.S
Treasury yields. Rise in international
crude oil prices also weighed on the
bond market. Also, investors deferred
purchases of domestic bonds ahead of
an extended weekend as domestic
bond market will remain closed on Feb
19.
• Yield on the 10-year benchmark paper
(7.17% GS 2028) rose 9 bps to close
at 7.58% from the previous week’s
close of 7.49% after trading in a range
of 7.45% to 7.61%.
• Data from RBI showed that India's
foreign exchange reserves fell after
rising for last eight consecutive week
to $419.76 billion as on Feb 9, 2018,
from $421.91 billion in the previous
week.
7.40
7.50
7.60
12-Feb 14-Feb 15-Feb 16-Feb
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 6.73 7.63 90
3 Year 7.20 7.76 56
5 Year 7.54 7.88 34
10 Year 7.82 8.14 33
Source: Thomson Reuters
Eikon
Value as on Feb 16, 2018
• Yields on gilt securities fell on 2- and 15-
year maturities by 2 bps each. Yield on
the remaining maturities increased by up
to 9 bps, barring 1- and 6-year maturities
that closed steady.
• Corporate bond yields increased across
the maturities by up to 5 bps.
• Spread between AAA corporate bond and
gilt expanded on 1 to 4 years’ maturities
and 15-year paper in the range of 2 bps to
4 bps. Spread closed steady on 5- and 6-
year maturities and contracted by 3 bps or
5 bps across 7 to 10 years’ maturities.
-10
0
10
20
6.00
7.10
8.20
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-Feb-18 09-Feb-18
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Securities and Exchange Board of India (SEBI) is set to crack down on companies whose
financial statements have either been falsified or incorrect business records have been
approved by auditors. It is mandatory under law to report to the government and report any
fraud they come across while auditing the books of accounts of companies.
• The Reserve Bank of India (RBI) has scrapped several loan restructuring programmes
prevalent among banks to restructure defaulted loans. Almost all the schemes such as the
Corporate Debt Restructuring, Sustainable Structuring of Stressed Assets or S4A, Strategic
Debt Restructuring, and Flexible Structuring of Existing Long-Term Project Loans have been
abolished by RBI. Also, RBI has made resolution of defaults time bound with the Insolvency
and Bankruptcy Code becoming the main tool to deal with defaulters. Also, the central bank
has warned banks of monetary penalties and higher provisions if banks are found to have
violated or found ‘evergreening’ accounts to escape its stringent new norms on fixing defaults.
• The finance ministry has proposed to merge Government Savings Certificates Act, 1959 and
Public Provident Fund Act, 1968 with the Government Savings Banks Act, 1873 to bring more
governance and minimise government control. The legislative changes proposed in the
Finance Bill 2018 are aimed at adding flexibility in operation of the account under Small
Savings Schemes (SSS). This will also allow premature closure of Public Provident Fund
(PPF) accounts.
Regulatory Updates in India (contd..)
• RBI has stated that it is ready to inject more liquidity in the economy during end of Mar 2018, if
required, as the liquidity situation moves from surplus to neutral going ahead. The central bank
would be taking such action to address any additional demand for liquidity because of increase
in currency in circulation and advance tax payments by corporates and to provide flexibility to
the banking system.
• The Ministry of Statistics and Implementation, GoI has proposed to revise the base year for
gross domestic product (GDP) and index of industrial production (IIP) to 2017-18 and 2018 for
consumer price inflation (CPI). The revision in the base year will be done to accommodate and
factor in the changes that took place in the economic scenario of the country.
• With a view to reduce confusion among investors and expedite scheme consolidation, the
SEBI reportedly asked mutual fund houses not to use the word ‘opportunities’ in their large-cap
and multi-cap funds. However, the sales head of a large fund house reported that SEBI will not
have issue with the use of ‘opportunities’ in mid-cap and small-cap funds. Earlier, the capital
market regulator asked fund houses to do away with the word ‘prudence’ from their balanced
fund, following which 3 of 5 fund houses changed the name of their prudence fund to
aggressive hybrid fund.
9
Global News/Economy
• A report from the Labor department showed that U.S. consumer price index came in higher than
market expectations in Jan 2018. U.S. consumer price index grew 0.5% in Jan 2018 as against
a revised gain of 0.2% (0.1% gain originally reported) in Dec 2017. The bigger than expected
increase was partly due to an increase in energy prices that grew 3.0% in Jan 2018 as against
a decline of 0.2% in Dec 2017. Core consumer prices (excluding food and energy prices) grew
0.3% in Jan 2018 as against a gain of 0.2% in Dec 2017.
• According to a report from the Commerce Department, U.S. retail sales missed market
expectations and fell 0.3% in Jan 2018 as against revised unchanged retail sales (0.4% gain
originally reported) in Dec 2017. The unexpected decline reflects steep drop in sales by motor
vehicle and parts dealers that fell 1.3% in Jan 2018 as against a decline of 0.1% in Dec 2017.
• A preliminary report from the Cabinet Office showed that Japan’s gross domestic product rose
less than expected by 0.1% in the fourth quarter of 2017 and less than 0.6% growth in the third
quarter of 2017. On an annual basis, GDP rose 0.4% compared with downwardly revised 2.2%
growth in the prior quarter.
• According to Eurostat, eurozone’s Gross Domestic Product (GDP) rose as previously estimated
by 0.6% in the Dec quarter of 2017, in line with expectations and slower than 0.7% increase in
the Sep quarter of 2017. On a yearly basis, GDP growth slowed to 2.7% from 2.8% in the
preceding period.
10
Global Equity Markets
11
Global Indices
Indices
16-Feb-18
1-Week
Return
YTD
Return
Dow Jones
25,219.38 4.25% 1.59%
Nasdaq 100
6,770.66 5.58% 3.98%
FTSE 100
7,294.70 2.85% -4.62%
DAX Index
12,451.96 2.85% -3.26%
Nikkei Average
21,720.25 1.58% -7.60%
Straits Times
3,443.51 1.96% 1.19%
Source: Thomson Reuters Eikon
Value as on Feb 16, 2018
U.S.
• U.S. markets gained over the week
following better than expected key
economic data.
• However, gains were capped as market
participants perceived that rise in
inflation might lead to faster interest rate
hikes by the Federal Reserve.
Unexpected decrease in retail sales in
Jan 2018 also limited the upside.
Europe
• European markets traded up following GDP data from Germany and the eurozone that
came in-line with market expectations. Car-maker companies also got support after
European Automobile Manufacturers' Association reported rebound in Europe’s car
registration in Jan 2018.
Asia
• Asian markets gained after the People's Bank of China mentioned that the Chinese banks
lent a record amount of new yuan loans in Jan 2018 and Japanese industrial production in
Dec 2017 came higher than expected. Gains were enhanced on expectations that easing
monetary policy will be continued after the present Bank of Japan Governor was
nominated for the second five-year term.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury
bond rose 5 bps to close at 2.88%
from the previous week’s close of
2.83%.
• U.S. Treasury prices fell initially as
improving risk appetite diminished the
safe-haven appeal of U.S. debt, which
can be attributed to strong U.S.
economic growth prospects and global
central banks normalizing years of
easy monetary policy.
• Losses were extended after data
showed that U.S. consumer prices
rose more than expected in Jan 2018
posting its biggest gain in a year,
which increased the possibility of a
faster pace of interest rate hikes from
the U.S. Federal Reserve.
2.80
2.87
2.94
12-Feb 13-Feb 14-Feb 15-Feb 16-Feb
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)
63.54 62.98
Gold ($/Oz)
1,347.78 1,316.64
Gold (Rs/10 gm)
30,693 30,007
Silver ($/Oz)
16.67 16.35
Silver (Rs/Kg)
38,709 37,792
Source: Thomson Reuters
Eikon
Value as on Feb 16, 2018
Gold
• Gold prices traded on a positive terrain
because of concerns over rise in fiscal
deficit in the U.S. following the recent
announcement of infrastructure
spending and large corporate tax cuts.
Mixed economic data from the U.S. also
raised uncertainty about the U.S.
Federal Reserve’s policy stance.
Crude
• Brent crude prices grew on growing
endeavours of OPEC and non-OPEC
members towards curbing supply glut by
means of production cut. Investors took
positive cues from Saudi Arabia Energy
Minister’s statement that the country will
remain committed with its policy to
withhold production throughout 2018.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
8.70
9.55
10.40
17-Jan-18 1-Feb-18 16-Feb-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
0.89%
2.37%
1.93%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing 1-Wk Ago
US Dollar
63.91 64.37
Pound Sterling
90.31 89.71
EURO
80.17 78.89
100 JPY
60.46 59.06
Source: RBI Figures in INR ,
Value as on Feb 16, 2018
Rupee
• The Indian rupee gained against the U.S.
dollar amid easing of consumer inflation in
Jan 2018 against previous month and
positive Index of Industrial Production
data for Dec 2017.
Euro
• Euro rose against the greenback due to
growing possibility that the European
Central Bank will scale back its stimulus
in 2018 amid strong recovery in the euro
zone.
Pound
• Pound strengthened against the
greenback as strong U.K. inflation data for
Jan 2018 raised possibility that the Bank
of England will raise interest rates again
in May 2018.
Yen
• Yen surged against the broadly weak U.S.
dollar because of concerns over rise in
fiscal deficit in the U.S.
9.90
10.10
10.30
10.50
17-Jan-18 27-Jan-18 6-Feb-18 16-Feb-18
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
- 0.71%
0.67%
2.37%
1.62%
15
The Week that was…
12
th
February to 16
th
February
The Week that was (Feb 12 – Feb 16)
16
Date Events Present Value Previous Value
Monday,
Feb 12, 2018
• India’s Industrial Production YoY (Dec)
7.1% 8.8%
• India’s Consumer Price Index Inflation Rate YoY (Jan)
5.1% 5.2%
Tuesday,
Feb 13, 2018
• U.K. Consumer Price Index (YoY) (Jan)
3.0% 3.0%
• Japan Gross Domestic Product Annualized (QoQ) (4Q P)
0.5% 2.2%
• Japan Machine Tool Orders (YoY) (Jan P)
0.49 0.48
Wednesday,
Feb 14, 2018
• Germany Gross Domestic Product w.d.a. (YoY) (4Q P)
2.9% 2.8%
• Eurozone Gross Domestic Product (YoY) (4Q P)
2.7% 2.7%
• U.S. Consumer Price Index (YoY) (Jan)
2.1% 2.1%
• Germany Consumer Price Index (YoY) (Jan)
1.6% 1.6%
• Eurozone Industrial Production (YoY) (Dec)
5.2% 3.7%
• U.S. Retail Sales (MoM) (Jan)
-0.3% 0.0%
• Japan Machinery Orders (YoY) (Dec)
-5.0% 4.1%
Thursday,
Feb 15, 2018
• India’s Wholesale Price Index Inflation YoY (Jan)
2.84% 3.58%
• India’s Trade Deficit (Jan)
$16.30B $14.88B
• U.S. Initial Jobless Claims (10 Feb)
230K 223K
• U.S. Industrial Production (MoM) (Jan) -0.1% 0.4%
Friday,
Feb 16, 2018
• U.S. University of Michigan Sentiment (Feb P) 99.9 95.7
• U.K. Retail Sales (YoY) (Jan) 1.6% 1.5%
• U.S. Housing Starts (MoM) (Jan)
1.326M 1.209M
17
The Week Ahead
19
th
February to 23
rd
February
18
The Week Ahead
Day Event
Monday,
February 19, 2018
• Japan Trade Balance (Jan)
• Eurozone Current Account s.a. (euros) (Dec)
• U.K. Rightmove House Prices (YoY) (Feb)
Tuesday,
February 20, 2018
• Eurozone Consumer Confidence (Feb A)
• German ZEW Survey Expectations (Feb)
• Eurozone ZEW Survey (Economic Sentiment) (Feb)
Wednesday,
February 21, 2018
• Japan Nikkei Japan PMI Manufacturing (Feb P)
• Japan All Industry Activity Index (MoM) (Dec)
• Markit Eurozone Composite PMI (Feb P)
• Markit US Composite PMI (Feb P)
• U.K. Public Sector Net Borrowing (Jan)
• U.S. Existing Home Sales (Jan)
Thursday,
February 22, 2018
• U.K. Gross Domestic Product (YoY) (4Q P)
• U.S. Leading Index (Jan)
• Japan National Consumer Price Index (YoY) (Jan)
Friday,
February 23, 2018
• Eurozone Consumer Price Index (YoY) (Jan F)
• German Gross Domestic Product w.d.a. (YoY) (4Q F)
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19
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