Mutual Fund News of 15th February 2019

News U Can Use

February 15, 2019

The Week that was…

February to 15

February

Indian Economy

• India’s retail inflation declined to 2.05% in Jan 2019 from 2.11% in the previous month and

5.07% in the same month of the previous year. This is the lowest reading since Jun 2017.

Fuel and light category fell to 2.20% in Jan from 4.54% in Dec 2018. The drop came as

food prices continued to decline with the consumer food price index contracting 2.17% in

Jan 2019 compared with a contraction of 2.65% in the previous month but an expansion of

4.70% in the same month of the previous year.

• The Index of Industrial Production (IIP) rose to 2.4% in Dec 2018 as against a growth of

0.3% in the previous month and 7.3% in the same period of the previous year. For the

period from Apr to Dec of 2018, IIP grew 4.6% as against an increase of 3.7% in the same

period of the previous year. On the sectoral front, the manufacturing sector increased 4.7%

in Dec 2018 compared with growth of 2.7% in the same month of the previous year.

• India’s Wholesale Price Index-based inflation (WPI) came in at 2.76% in Jan 2019 as

against 3.80% in Dec 2018 as prices of fuel and power came down. Wholesale price

inflation was at 3.02% in Jan 2018. Fuel and power inflation increased 1.85% in Jan 2019

compared with a rise of 8.38% in Dec 2018. This happened as LPG fell 7.47% in Jan

against a rise of 6.87% in Dec. Petrol too fell 3.35% in Jan from a rise of 1.57% in Dec.

Inflation in potato grew at a slower of 26.30% in Jan 2019 against a rise of 48.68% in Dec

2018. The WPI Food Index came in at 1.84% in Jan 2019 against 0.07% in Dec 2018.

Indian Equity Market

Domestic Equity Market Indices

Indices

15-Feb-19

1 Week Return

YTD Return

S&P BSE Sensex

35,808.95 -2.02% -0.72%

Nifty 50

10,724.4 -2.00% -1.27%

S&P BSE Mid

-Cap 13,940.54 -2.71% -9.70%

S&P BSE Small

-Cap 13,252.81 -2.96% -9.89%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines

Advance/Decline Ratio

11-Feb-19 547 1299 0.42

12-Feb-19 717 1077 0.67

13-Feb-19 685 1116 0.61

14-Feb-19 854 932 0.92

15-Feb-19 642 1158 0.55

Source: NSE

• Indian equity markets closed in the red

as investors remained concerned over

rising oil prices after Saudi Arabia

declared deeper cuts in oil production.

Further, the terrorist attack in Kashmir

weighed on the market sentiment,

thereby muting buying interest.

• Weak global cues continued to take a

toll over the benchmark indices. Weak

U.S. retail sales data for Dec 2018 and

comments from the U.S. President to

declare a national emergency to try to

obtain more funds for the U.S.-Mexico

border wall kept the markets under

pressure.

• Further, investors remained cautious

over the latest round of discussion

between U.S. and China. However,

slowdown in retail and wholesale

inflation for Jan 2019 and strong IIP

data for Dec 2018 restricted the losses.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

22.79 26.53 29.88 -98.04

P/B

2.97 3.34 2.38 1.96

Dividend Yield

1.19 1.26 1.06 0.98

Source: BSE, NSE Value as on Feb 15, 2019

Indian Equity Market (contd.)

Sectoral Indices

Indices

Last Returns (in %)

Closing* 1-Wk 1-Mth

S&P BSE Auto

18,263

-3.59%

-8.87%

S&P BSE Bankex

29,972

-1.88%

-2.31%

S&P BSE CD

21,092

-2.60%

0.57%

S&P BSE CG

16,411.2

-2.59%

-8.50%

S&P BSE FMCG

11,358.8

-1.93%

-5.68%

S&P BSE HC

13,433

-3.93%

-5.06%

S&P BSE IT

15,378.4

-1.57%

6.17%

S&P BSE Metal

10,014.3

-2.45%

-10.52%

S&P BSE Oil & Gas

13,073.3

-4.22%

-1.96%

Source: Thomson Reuters Eikon

*Value as on Feb 15, 2019

• On the BSE sectoral front, indices closed on

a weak note. S&P BSE Oil & Gas was the

major loser, down 4.22%, followed by S&P

BSE Healthcare that fell 3.93%. Oil and Gas

stocks remained under pressure over

renewed concerns about rising crude oil

prices. Healthcare sector plunged as a

pharma major fell after a research firm

reportedly stated that 11 observations found

under Form 483 on one of its manufacturing

unit includes four repeat observations.

• S&P BSE S&P BSE Auto and S&P BSE

Consumer Durables fell 3.59% and 2.60%,

respectively.

Indian Derivatives Market Review

• Nifty Feb 2019 Futures were at 10,746.55, a premium of 22.15 points, over the spot

closing of 10,724.40. The total turnover on NSE’s Futures and Options segment for the

week stood at Rs. 44.27 lakh crore as against Rs. 42.12 lakh crore for the week to Feb 8.

• The Put-Call ratio stood at 0.96 compared with the previous week’s close of 0.91.

• The Nifty Put-Call ratio stood at 1.30 against the previous week’s close of 1.59.

Domestic Debt Market

Debt Indicators

(%)

Current

Value

Ago

Mth

Ago

Mth

Ago

Call Rate

6.24 6.35 6.42 6.37

91 Day T

-Bill

6.37 6.38 6.63 6.75

07.80% 2021, (5 Yr GOI)

6.75 6.85 6.90 7.67

07.17% 2028, (10 Yr GOI)

7.58 7.52 7.47 7.82

Source: Thomson Reuters Eikon

Value as on Feb 15, 2019

• Bond yields rose following sharp

surge in crude oil prices and

concerns over higher than expected

borrowing plan set forth by the

government. The government plans

additional borrowing of Rs. 36,000

crore. However, fall in inflation rate

for Jan 2019 restricted the losses.

• Yields on the 10-year benchmark

paper (7.17% GS 2028) rose 6 bps to

close at 7.58% from the last week’s

close at 7.52%, after trading in a

range of 7.47% to 7.58%.

• RBI conducted auction of state

development loans of 11 state

governments for notified amount of

Rs. 15,200 crore, of which Rs. 14,545

crore was accepted. The cut-off yield

was in the range of 7.83% to 8.37%.

7.37

7.47

7.57

7.68

11-Feb 12-Feb 13-Feb 14-Feb 15-Feb

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

Domestic Debt Market (Spread Analysis)

Maturity

G-

Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 6.66 8.23 157

3 Year 6.90 8.38 148

5 Year 7.26 8.53 128

10 Year 7.72 8.69 97

Source: Thomson Reuters Eikon

Value as on Feb 15

, 2019

• Yields on gilt securities increased on 2-

year paper and 10 to 30-year maturities

by up to 10 bps. Yield fell across the

remaining maturities in the range of 2 bps

to 11 bps.

• Corporate bond yields fell across 1 to 4-

year maturities in the range of 3 bps to 12

bps and increased across the remaining

maturities by up to 3 bps.

• Difference in spread between AAA

corporate bond and gilt expanded on 1-

year paper and 4 to 7-year maturities in

the range of 3 bps to 12 bps.

-11

-4

5.87

6.67

7.47

8.27

3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs

India Yield Curve Shift (%) (W-o-W)

Change in bps 15-Feb-19 08-Feb-19

Yield

in %

Change

in bps

Source: Thomson Reuters Eikon

Regulatory Updates in India

• The minister of state for finance said the number of suspicious refund claims under income

tax have increased over the last three years. Refunds disbursed by the income tax

department (ITD) has grown over the years. The ITD selected 20,874 cases in the current

fiscal to examine suspicious refund claims compared with 11,059 and 9,857 in the previous

two fiscals. The income tax refunds disbursed till Feb 2 stood at Rs. 1.43 lakh crore

compared with Rs. 1.52 lakh core in FY18 and Rs. 1.63 lakh crore in FY17.

• According to latest Reserve Bank of India (RBI) data, the pace of growth in bank credit and

deposits has moderated on a fortnightly basis. While credit grew 14.5% to Rs. 94.29 trillion,

deposits increased 9.63% to Rs. 121.22 trillion for the fortnight ended Feb 1, 2019. In the

fortnight ended Jan 18, 2019, deposits had increased 9.69% to Rs. 119.86 trillion and credit

grew 14.61% to Rs. 93.32 trillion, RBI data showed. The gap between pace of credit

disbursal and deposits mobilisation is growing bigger.

• The Comptroller and Auditor General (CAG) has said in a report that the income tax

department (ITD) caused a loss of Rs. 6,093 crore to the exchequer due to 1,183 mistakes

made in assessing the income-tax returns (ITRs) of real estate companies between FY14

and FY17. The CAG scrutinised 22% of the 78,647 assessments made during this period. It

said ITD needed to internally audit the remaining assessments to pin down reasons for

errors.

Regulatory Updates in India (contd..)

• In order to incentivise effort to bring down recoverable arrears, the indirect tax department

has made ‘recovery of arrears’ a parameter in the annual performance appraisal for tax

officials. Recoverable arrears stand at over Rs. 26,000 crore. Against a target of Rs. 10,000

crore for FY19, the tax arrears recovery vertical of the department has managed to achieve

just Rs. 3,500 crore in the Apr-Dec period.

• The government could extend additional subsidised loans of at least Rs. 6,000 crore to

sugar mills and others to expand their ethanol production capacity. This is being done to

help mills diversify their product basket away from over-dependence on sugar and bolster

their ability to clear cane dues to farmers.

• An expert panel established by the government has recommended setting the minimum

wage at Rs. 375 a day. This would be higher than the existing rate of Rs. 321 for agriculture

or unskilled workers and Rs. 371 for semi-skilled workers. The committee has devised a

new methodology that does away with the variation in wages based on sector, skills and

location. It has proposed a “balanced diet approach” to compute minimum wages. The

recommendations, if accepted, will lead to a wage bracket ranging from Rs. 340 for Bihar

and Uttar Pradesh to Rs. 447 for Gujarat.

Global News/Economy

• According to a report from the Labor Department, U.S. consumer price index remained

unchanged in Jan 2019 as against the revised reading in Dec 2018. Consumer prices

remained unchanged for the third month in a row. Steep decline in energy prices was offset

by surge in prices for other goods and services. On an annual basis, consumer price growth

eased to 1.6% in Jan 2019 as against 1.9% in Dec 2018. This marked the slowest rate of

growth since Jun 2017.

• Preliminary figures from the Office for National Statistics showed U.K. economic growth

slowed more than expected in the fourth quarter of 2018. The full-year growth came in at the

weakest since 2009. Gross domestic product grew 0.2% from the third quarter, when the

economy expanded 0.6%. Annually, GDP increased 1.3% in the fourth quarter, the weakest

pace since the second quarter of 2012.

• According to a report from the Cabinet office, Japan's gross domestic product grew 0.3%

(seasonally adjusted) on quarter in the fourth quarter of 2018 as against a fall of 0.6% in

third quarter of 2018. GDP grew 1.4% on yearly basis after contracting 2.5% in the third

quarter 2018.

Global Equity Markets

Global Indices

Indices

15-Feb-19

1-Week

Return

YTD

Return

Dow Jones

25,883.25 3.09% 10.96%

Nasdaq 100

7,055.179 2.05% 11.46%

FTSE 100

7,236.68 2.34% 7.56%

DAX Index

11,299.8 3.60% 7.02%

Nikkei Average

20,900.63 2.79% 4.43%

Straits Times

3,239.74 1.18% 5.57%

Source: Thomson Reuters Eikon

Value as on

Feb 15, 2019

U.S.

• U.S. markets traded higher backed by

optimism about trade talks between the

U.S. and China. The U.S. government

said that it wishes to see additional

progress as discussions at the

ministerial and vice-ministerial levels

continue in Washington.

• Buying interest found additional support

from media reports stating that both the

House and Senate passed legislation to

avoid another government shutdown.

Europe

• European markets too witnessed buying spree led by optimism regarding U.S.-China trade

talks. Market sentiment improved after fresh round of long-term loans from the European

Central Bank to euro zone banks is being discussed in the wake of the recent economic

slowdown in the region. However, gains were restricted by fresh political uncertainty in

Spain.

Asia

• Asian markets rose, reflecting gains in global peers. Optimism about U.S.-China trade

talks, strong endeavor by U.S. to avoid another government shutdown and surge in crude

oil prices supported market gains.

Global Debt (U.S.)

• Yields on the 10-year U.S. Treasuries

rose 4 bps to close at 2.67% from the

previous close of 2.63%.

• U.S. Treasury prices fell initially after

U.S. lawmakers reached a tentative

pact to avert another government

shutdown, which reduced the safe

haven appeal of U.S. Treasuries. U.S.

Treasury prices fell further after U.S.

core consumer price inflation rose

modestly in Jan 2019 which eased

concerns of low inflation.

• However, most of the losses were

neutralized after U.S. retail sales

recorded their biggest drop in more than

nine years in Dec 2018 which raised

concerns of a slowdown in U.S.

economic activity at the end of 2018.

2.61

2.65

2.69

2.73

11-Feb 12-Feb 13-Feb 14-Feb 15-Feb

US 10-Year Treasury Yield Movement

Source: Thomson Reuters Eikon

Commodities Market

Performance of various commodities

Commodities

Last Closing*

1-Week Ago

Brent Crude($/Barrel)

66.04 61.46

Gold ($/Oz)

1,321.01 1,313.99

Gold (Rs/10 gm)

33,193 33,043

Silver ($/Oz)

15.78 15.82

Silver (Rs/Kg)

39,767 39,880

Source: Thomson Reuters Eikon *

Value as on Feb 15, 2019

Gold

• Gold prices gained as investors became

anxious over the slowdown in the global

economy. Further, investors remained

watchful of the progress of U.S.-China

trade negotiations as the discussion will

resume next week in Washington

although both the nations stated that

this week’s talks in Beijing made

progress.

Brent Crude

• Brent crude prices surged tracking

OPEC-led production cut of around

800,000 barrels per day in Jan 2019 to

squeeze out supply from the oil market

and support the commodity’s price. In

addition, Saudi Arabia announced its

plan for deeper cuts.

Baltic Dry Index

• The Baltic Dry Index registered a rise of

on the back of improved capesize and

panamax activities.

9.57

10.19

10.81

11.44

15-Jan-19 25-Jan-19 4-Feb-19 14-Feb-19

Global Commodity Movement

Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)

Global

Commodity Prices

Rebased to 10

Source: Thomson Reuters Eikon

7.45%

0.53%

-0.30%

15-Feb-19

Currencies Markets

Movement of Rupee vs Other Currencies

Currency

Last Closing*

1-Wk Ago

US Dollar

71.25 71.29

Pound Sterling

91.23 92.29

EURO

80.42 80.83

JPY(per 100 Yen)

64.55 64.98

Source: RBI Figures in INR , *

Value as on Feb 15, 2019

Rupee

• The rupee strengthened slightly against

the greenback as optimism continued

over rate cut by the Monetary Policy

Committee on Feb 7. Selling of the

greenback by banks further strengthened

the rupee.

Euro

• The euro weakened against the

greenback on concerns of a slowdown in

eurozone’s economic growth after

industrial production in euro zone fell

more than expected in Dec 2018.

Pound

• The pound weakened against the

greenback after U.K’s economic growth

slowed sharply in fourth quarter of 2018

amid Brexit concerns.

Yen

• The yen weakened against the

greenback after U.S. lawmakers reached

a tentative pact to avert another

government shutdown.

9.70

9.90

10.10

10.30

15-Jan-19 25-Jan-19 4-Feb-19 14-Feb-19

USD GBP Euro JPY

Source: RBI

Currency

Prices (

in terms of

INR)

Rebased to 10

Currency Movement

15-Feb-19

-1.16%

-0.06%

-0.51%

-0.66%

The Week that was…

February to 15

February

The Week that was (Feb 11 – Feb 15)

Date Events

Present

Value

Monday,

February 11, 2019

•

U.K. Gross Domestic Product (YoY) (4Q P) 1.30% 1.60%

• U.K. Industrial Production (YoY) (Dec)

-0.90% -1.30%

• U.K. Manufacturing Production (YoY) (Dec)

-2.10% -1.20%

Tuesday,

February 12, 2019

• India Consumer Price Inflation (YoY) (Jan)

2.05% 2.11%

• India Index of Industrial Production (YoY) (Dec)

2.40% 0.30%

• Japan Tertiary Industry Index (MoM) (DEC)

-0.30% -0.30%

Wednesday,

February 13, 2019

• U.K. Consumer Price Index (YoY) (Jan)

1.80% 2.10%

• U.S. Consumer Price Index (YoY) (Jan)

1.60% 1.90%

• Japan Gross Domestic Product Annualized (

QoQ

) (4Q P)

1.40% -2.50%

• U.K. House Price Index (YoY) (Dec)

2.50% 2.70%

• Eurozone Industrial Production (YoY) (Dec)

-4.20% -3.00%

Thursday,

February 14, 2019

• India Wholesale Price Inflation (YoY) (Jan)

2.76% 3.80%

• Germany Gross Domestic Product (YoY) (4Q P)

0.60% 1.10%

• Eurozone Gross Domestic Product (YoY) (4Q P)

1.20% 1.20%

• U.S. Retail Sales Advance (MoM) (Dec)

-1.20% 0.10%

• Eurozone Employment (YoY) (4Q P)

1.20% 1.30%

Friday,

February 15, 2019

• China Consumer Price Index (YoY) (Jan)

1.70% 1.90%

The Week Ahead

February to 22

February

The Week Ahead

Day Event

Monday,

February 18, 2019

•

U.K. Rightmove House Prices (YoY) (Feb)

Tuesday,

February 19, 2019

•

Eurozone ZEW Survey (Economic Sentiment) (Feb)

•

U.K. Employment Change 3M/3M (Dec)

•

Japan Trade Balance (Jan)

Wednesday,

February 20, 2019

•

U.S. FOMC Meeting Minutes (Jan 30)

•

U.S. MBA Mortgage Applications (Feb 15)

•

Eurozone Consumer Confidence (Feb A)

Thursday,

February 21, 2019

•

Japan National Consumer Price Index (YoY) (Jan)

•

U.S. Durable Goods Orders (Dec P)

•

Japan All Industry Activity Index (MoM) (Dec)

•

Germany Consumer Price Index (YoY) (Jan F)

Friday,

February 22, 2019

•

China New Home Prices (MoM) (Jan)

•

Germany Gross Domestic Product (YoY) (4Q F)

•

Eurozone Consumer Price Index (YoY) (Jan F)

Disclaimer

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