Mutual Fund News of 22nd February 2019

News U Can Use

February 22, 2019

The Week that was…

February to 22

February

Indian Economy

• Foreign direct investment (FDI) into India shrank 7% to $33.49 billion during Apr-Dec in

FY19, according to commerce and industry ministry data. Foreign fund inflows during Apr-

Dec FY18 stood at $35.94 billion. The sectors that received the maximum foreign

investment during in the nine months of the fiscal are services ($5.91 billion), computer

software and hardware ($4.75 billion), telecommunications ($2.29 billion), trading ($2.33

billion), chemicals ($6.05 billion), and the automobile industry ($1.81 billion). Singapore

was the largest source of FDI during Apr-Dec FY19 with $12.97 billion inflow, followed by

Mauritius ($6 billion), the Netherlands ($2.95 billion), Japan ($2.21 billion), U.S. ($2.34

billion), and the U.K. ($1.05 billion).

• According to a major global credit rating agency, Indian corporate entities might witness a

slowdown in revenue growth over the next 12-24 months. The rating agency is of the view

that the pending general elections might give rise to additional risks for the Indian

corporates as a change in administration may trigger an increase in government spending

which may push up borrowing costs and result in an increase in domestic inflationary

pressures.

• According to media reports, the Ministry of Finance will infuse Rs. 48,239 crore in 12 state-

run banks in this fiscal. The objective of the move is to help the banks maintain regulatory

capital requirements and finance growth plans. The total amount of capital infusion with

this funding will thus increase to Rs. 1,00,958 crore of the planned recapitalisation of Rs

1.06 lakh crore for the state run banks in this fiscal.

Indian Equity Market

Domestic Equity Market Indices

Indices 22-Feb-19 1 Week Return YTD Return

S&P BSE Sensex 35,871.48 0.17% -0.55%

Nifty 50 10,791.65 0.63% -0.65%

S&P BSE Mid-Cap 14,169.74 1.64% -8.22%

S&P BSE Small-Cap 13,517.71 2.00% -8.08%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines

Advance/Decline Ratio

18-Feb-19 583 1216 0.48

19-Feb-19 1024 753 1.36

20-Feb-19 1119 676 1.66

21-Feb-19 1218 571 2.13

22-Feb-19 1226 589 2.08

Source: NSE

• Indian equity markets fell on escalating

geo-political tensions, rising crude oil

prices and concerns over slower global

growth. Uncertainty ahead of the

general elections further kept investors

cautious. Meanwhile, investors

remained watchful on U.S.-China trade

talks as initially China blamed U.S. of

spreading cyber security fears and

maligning its leading technology

company. Although, later positive

developments were witnessed as the

U.S. President hinted that the truce

between them could be extended and

U.S. might postpone the increase in

tariffs if the trade talks continue to

progress.

• Further, investors became worried over

the Reserve Bank of India’s (RBI)

meeting minutes showing Monetary

Policy Committee (MPC) members are

concerned about growth in the country.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

22.92 26.32 30.31 -97.68

P/B

2.99 3.41 2.43 2.00

Dividend Yield

1.20 1.25 1.04 0.96

Source: BSE, NSE Value as on Feb

22, 2019

Indian Equity Market (contd.)

Sectoral Indices

Indices

Last Returns (in %)

Closing* 1-Wk 1-Mth

S&P BSE Auto

18,608.14 1.89% -4.73%

S&P BSE Bankex

30,091.92 0.40% -2.14%

S&P BSE CD

21,282.27 0.90% 0.62%

S&P BSE CG

16,815.07 2.46% -4.16%

S&P BSE FMCG

11,344.28 -0.13% -4.24%

S&P BSE HC

13,585.80 1.14% -2.99%

S&P BSE IT

15,110.63 -1.74% 2.31%

S&P BSE Metal

10,669.97 6.55% -1.13%

S&P BSE Oil & Gas

13,634.56 4.29% -0.69%

S&P BSE Teck

18,608.14 1.89% -4.73%

S&P BSE Power

30,091.92 0.40% -2.14%

Source: Thomson Reuters Eikon

*Value as on Feb 22, 2019

• On the BSE sectoral front, most of the

indices closed in the green barring S&P BSE

IT (-1.74%) and S&P BSE Teck (-0.95%) and

S&P BSE FMCG (-0.13%). S&P BSE Metal

(6.55%) stood as the major gainer followed

by S&P BSE Realty (4.46%) and S&P BSE

Oil & Gas (4.29%).

• Banking sector got some support as media

reports suggested that the Ministry of

Finance will infuse Rs. 48,239 crore in 12

state-run banks in the fiscal. The objective of

the move is to help banks maintain regulatory

capital requirements and finance growth

plans.

Indian Derivatives Market Review

• Nifty Feb 2019 Futures were at 10,808.80, a premium of 17.15 points, over the spot

closing of 10,791.65. The total turnover on NSE’s Futures and Options segment for the

week stood at Rs. 44.09 lakh crore as against Rs. 44.27 lakh crore for the week to Feb 15.

• The Put-Call ratio stood at 0.88 compared with the previous week’s close of 0.96.

• The Nifty Put-Call ratio stood at 1.37 against the previous week’s close of 1.30.

Domestic Debt Market

Debt Indicators

(%)

Current

Value

1-Wk

Ago

1-Mth

Ago

6-Mth

Ago

Call Rate

6.34 6.24 6.43 6.42

91 Day T-Bill

6.43 6.37 6.56 6.81

7.80% 2021, (5 Yr GOI)

6.76 6.75 7.02 7.69

7.17% 2028, (10 Yr GOI)

7.60 7.58 7.53 7.83

Source: Thomson Reuters Eikon

Value as on Feb 22, 2019

• Bond yields fell initially after the

central bank announced to transfer

an amount of Rs. 280 billion as an

interim surplus to bridge the fiscal

deficit. This was a positive surprise

for the market, which helped in

bringing down the yield.

• However, the trend reversed due to

feeble demand at the auction.

Concerns over widening fiscal deficit

and heavy borrowing plan of Rs. 7.10

trillion by the government for the next

financial year continued to weigh on

market sentiment. Minutes of the

latest monetary policy meeting

released by the central bank hinted at

rate cut in Apr 2019 and were in line

with expectations.

• Yields on the 10-year benchmark

paper (7.17% GS 2028) rose 2 bps to

close at 7.60% from the last week’s

close at 7.58%.

7.50

7.56

7.62

18-Feb 20-Feb 21-Feb 22-Feb

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

Domestic Debt Market (Spread Analysis)

Maturity

G-Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 6.67 8.28 161

3 Year 6.88 8.36 148

5 Year 7.32 8.51 119

10 Year 7.75 8.73 98

Source: Thomson Reuters Eikon Value as on Feb 22, 2019

• Yields on gilt securities increased across

the maturities by up to 7 bps barring 3-,

12- and 13-year papers that fell by up to

2 bps.

• Corporate bond yields rose across the

maturities in the range of 2 bps to 7 bps

barring 1-year paper that closed steady.

• Difference in spread between AAA

corporate bond and gilt contracted on 1-

and 15-year papers by 2 bps each.

Spread expanded across the remaining

maturities by up to 8 bps barring 4- and

5-year papers that closed steady.

6.20

7.10

8.00

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

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

Change in bps 22-Feb-19 15-Feb-19

Yield in %

Change in bps

Source: Thomson Reuters Eikon

Regulatory Updates in India

• According to media reports, the Reserve Bank of India will pay an interim dividend of Rs.

28,000 crore to the government. There is a perception that the move that will help the

central government to keep fiscal deficit in check. It needs to be noted that this is the

second successive year that the Reserve Bank of India will be transferring an interim

surplus.

• The Union Cabinet has approved the National Electronics Policy. The policy aims at

domestic production of electronics goods to touch $400 billion by 2025 against around $80

billion now. The policy has proposed interest subvention scheme under which an interest

subsidy of 4% will be provided on loans of up to Rs. 1,000 crore on plant and machinery. In

case of a larger loan, subsidy will be limited to Rs. 1,000 crore.

• According to media reports, the government plans to address taxation-related pain points

and reduce the number of tax litigations, while focusing on some of the major issues that

may lead to revenue generation. The Central Board of Direct Taxes (CBDT) has made a

four-member committee, in the leadership of income tax commissioner to examine the

matter and submit its final report and recommendations by middle of Mar 2019. The

committee is looking to tackle the issue in a two-prong way — addressing some current

pain points and recommending some steps borrowed from international best practices, the

report said.

Regulatory Updates in India (contd..)

• According to media reports, the government has eased angel tax norms for start up

companies. The government has increased the investment limit to Rs. 25 crore for availing

income tax concessions by start up entities from the present limit of Rs. 10 crore. In

addition, the government has also broadened the definition of a start up entity. According to

the new norm, an entity will be considered as a start up entity when has been operating for

a time period of ten years from its date of incorporation or registration, instead of the current

seven years. Furthermore, an entity will be treated as a start up entity if its turnover for any

of the financial years since incorporation and registration has not exceeded Rs 100 crore

from the present limit of Rs. 25 crore. The move is of significant importance given the fact

that many start up entities has expressed concerns regarding the fact that they were given

angel tax notices which had adversely impacted their business.

• A section of the GST Council is worried that the need to give tax relief to the housing sector

to boost demand could lead to large scale tax evasion by builders. Thus, it wants to ensure

that relief should be structured in such a way that revenue leakage is taken care of. The

proposed GST rate cut with denial of input tax credit to builders would come with a condition

that builders must ensure 80% of the inputs are procured from GST-registered dealers.

Kerala finance minister feels that including capital goods as inputs would enable developers

to meet the condition easily and opening up a window for them to procure other building

materials from unregistered dealers. This could result in lower revenue collection for the

government, and facilitate more evasion.

Global News/Economy

• As per the minutes of the U.S. Federal Reserve's latest policy meeting, "a patient approach

would have the added benefit of giving policymakers an opportunity to judge the response of

economic activity and inflation to the recent steps taken to normalize the stance of monetary

policy". The minute stated that additional data would help policymakers gauge the trajectory

of business and consumer sentiment and the impact of the financial tightening on aggregate

demand.

• The Commerce Department showed a significant increase in U.S. durable goods orders in

Dec 2018. The report said durable goods orders increased 1.2% in Dec after jumping 1.0%

in Nov 2018.

• U.K. employment hit a record high in Dec 2018 and wages grew at their fastest pace in a

decade. Employment rose by 167,000 to a record high of 32.60 million in the three months to

December.

• Preliminary survey data from IHS Markit showed that eurozone's private sector expanded at

the fastest pace in three months in Feb 2019, led by stronger growth in services, while

manufacturing contracted. The flash Composite Purchasing Managers' Index grew to 51.4

from 51 in Jan 2019.

• Overall nationwide consumer prices in Japan increased 0.2% YoY in Jan 2018. This was in

line with expectations and less than 0.3% in Dec 2018. Core consumer prices, which

excludes volatile food prices, increased 0.8% YoY, matching forecasts and up from 0.7% in

the previous month.

Global Equity Markets

Global Indices

Indices

22-Feb-19

1-Week

Return

YTD

Return

Dow Jones

26,031.81 0.57% 11.59%

Nasdaq 100

7,090.63 0.50% 12.02%

FTSE 100

7,178.60 -0.80% 6.70%

DAX Index

11,457.70 1.40% 8.51%

Nikkei Average

21,425.51 2.51% 7.05%

Straits Times

3,269.90 0.93% 6.55%

Source: Thomson Reuters Eikon

Value as on Feb 22, 2019

U.S.

• U.S. markets witnessed buying spree,

led by optimism over positive

breakthrough of talks between U.S. and

China over the trade deal. Recently, the

U.S. President suggested that he could

postpone the increase of tariffs, set to

take effect after the deadline of Mar 1,

2019, in case the trade talks show signs

of progress.

Europe

• Majority of the European markets drew positive cues from optimism over the upcoming

round of talks between the U.S. and Chinese officials. Investors are expecting that the two

nations will take steps closer toward achieving a trade deal in the foreseeable future.

Market participants also closely followed developments over Brexit.

Asia

• Asian markets reflected gains in global peers. Buying interest was impacted by the

minutes of the U.S. Federal Reserve’s latest meeting that indicated a patient approach to

raising interest rates in the future. Japanese markets rose on optimism over U.S.-China

trade talks, which helped investors shrug off weak manufacturing data, as revealed in

preliminary reading of a private survey.

Global Debt (U.S.)

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

fell 1 bps to close at 2.66% from the

previous close of 2.67%.

• U.S. Treasury prices grew ahead of the

release of U.S. Federal Reserve's (Fed)

Jan 2019 policy meeting minutes. Fed

had indicated patience in raising interest

rates in the policy meeting. Weak U.S.

economic data amid federal government

shutdown added to the gains.

Preliminary data for U.S Markit

Manufacturing PMI showed that it fell

more than market expectations for Feb

2019.

• However, reports of progress in U.S.

and China trade talks, restricted the

gains. According to media reports,

leaders from U.S. and China have

begun framing commitments in principle

on the major issues, thereby marking

the most significant progress so far.

2.60

2.65

2.69

2.74

19-Feb 20-Feb 21-Feb 22-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) 67.45 66.04

Gold ($/Oz) 1327.71 1321.01

Gold (Rs/10 gm) 33252 33193

Silver ($/Oz) 15.92 15.78

Silver (Rs/Kg) 40121 39767

Source: Thomson Reuters Eikon *Value as on Feb 22, 2019

Gold

• Gold prices grew amid Brexit

uncertainties and political unrest in U.S.

pertaining to the controversial U.S.-

Mexico border. The bullion’s price was

also supported by the cautious stance

taken by Bank of Japan on its monetary

policy amid rising global risks. Concerns

over U.S.-China trade negotiations also

led to the gains. The two economies

recently held talks in Beijing to resolve

their trade differences.

Brent Crude

• Brent crude prices surged due to the

OPEC-led production cut to tighten the

oil market. Besides, the U.S. sanction

on Venezuela also raised supply

concerns, thereby adding to the gains.

Baltic Dry Index

• The Baltic Dry Index fell on the back of

lower capesize and panamax activities.

9.50

10.00

10.50

11.00

11.50

23-Jan-19 2-Feb-19 12-Feb-19 22-Feb-19

Global Commodity Movement

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

Global Commodity Prices

Rebased to 10

Source: Thomson Reuters Eikon

2.14%

0.51%

0.89%

Currencies Markets

Movement of Rupee vs Other Currencies

Currency Last Closing* 1-Wk Ago

US Dollar

71.22 71.25

Pound Sterling

92.83 91.23

EURO

80.75 80.42

JPY(per 100 Yen)

64.29 64.55

Source: RBI Figures in INR , *Value as on Feb 22, 2019

Rupee

• The rupee inched up against the

greenback amid gains in the domestic

equity market and on hopes that the

ongoing trade tussle between U.S. and

China might soon be resolved.

Euro

• The euro rose against the greenback on

hopes that the ongoing trade tussle

between U.S. and China might soon

come to an end.

Pound

• The pound rose against the greenback

on hopes that the British Prime Minister

would be able to come out with a revised

Brexit deal with the European Union.

Yen

• The yen weakened against the

greenback on concerns of another rate

hike in U.S. following the release of U.S.

Fed’s policy meeting minutes of Jan

2019.

9.70

9.80

9.90

10.00

10.10

10.20

10.30

23-Jan-19 2-Feb-19 12-Feb-19 22-Feb-19

USD GBP Euro JPY

Source: RBI

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

-0.05%

1.75%

0.42%

-0.40%

The Week that was…

February to 22

February

The Week that was (Feb 18 – Feb 22)

Date Events

Present

Value

Monday,

February 18, 2019

• U.K. Rightmove House Prices (YoY) (Feb) 0.2% 0.4%

Tuesday,

February 19, 2019

• Eurozone ZEW Survey (Economic Sentiment) (Feb) -16.6 -20.9

• German ZEW Survey Expectations (Feb) -13.0 -15.0

• U.K. Employment Change 3M/3M (Dec) 167k 141k

• Japan Trade Balance (Jan) -¥1452.2b -¥56.7b

Wednesday,

February 20, 2019

• U.S. MBA Mortgage Applications (Feb 15) 3.6% -6.9%

• Eurozone Consumer Confidence (Feb A) -7.4 -7.9

Thursday,

February 21, 2019

• Japan National Consumer Price Index (YoY) (Jan) 0.2% 0.3%

• U.S. Durable Goods Orders (Dec P) 1.2% 1.0%

• Japan All Industry Activity Index (MoM) (Dec) -0.4% -0.5%

• Germany Consumer Price Index (YoY) (Jan F) 1.4% 1.4%

• Germany Markit/BME Composite PMI (Feb P) 52.7 52.1

• Eurozone Markit Composite PMI (Feb P) 51.4 51.0

• U.S. Existing Home Sales (MoM) (Jan) -1.2% -4.0%

• U.K. Public Sector Net Borrowing (Jan) -15.8b 2.14b

• U.S. Leading Index (Jan) -0.1% -0.1%

Friday,

February 22, 2019

• Germany Gross Domestic Product (YoY) (4Q F) 0.9% 0.6%

• Eurozone Consumer Price Index (YoY) (Jan F) 1.4% 1.6%

The Week Ahead

February to 01

March

The Week Ahead

Day Event

Monday,

February 25, 2019

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

Tuesday,

February 26, 2019

• German GfK Consumer Confidence (Mar)

• U.S. Housing Starts (MoM) (Dec)

• U.S. Consumer Confidence Index (Feb)

Wednesday,

February 27, 2019

• German Retail Sales (YoY) (Jan)

• U.S. Advance Goods Trade Balance (Dec)

• Japan Industrial Production (YoY) (Jan P)

Thursday,

February 28, 2019

• U.K. GfK Consumer Confidence (Feb)

• German Consumer Price Index (YoY) (Feb P)

• U.S. Gross Domestic Product Annualized (GDP) (QoQ) (4Q A)

• India GDP Estimate Q3FY19

• India Index of Eight Core Industries (Jan)

Friday,

March 01, 2019

• Eurozone Consumer Price Index Estimate (YoY) (Feb)

• U.S. Personal Consumption Expenditure Core (YoY) (Dec)

• U.S. ISM Manufacturing (Feb)

• India Nikkei Manufacturing PMI (Feb)

Disclaimer

The information herein is meant only for general reading purposes and contains all factual and statistical information pertaining to Industry and markets

which have been obtained from independent third party sources and which are deemed to be reliable. The information provided cannot be considered

as guidelines, recommendations or as a professional guide for the readers. It may be noted that since Reliance Nippon Life Asset Management

Company Limited (RNAM) has not independently verified the accuracy or authenticity of such information or data, or for that matter the reasonableness

of the assumptions upon which such data and information has been processed or arrive data; RNAM does not in any manner assures the accuracy or

authenticity of such data and information. Some of the statements & assertions contained in these materials may reflect RNAM’s views or opinions,

which in turn may have been formed on the basis of such data or information. The Sponsor(s), the Investment Manager, the Trustee or any of their

respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy

and reliability of such data or information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to

ensure that the facts are accurate and opinions given are fair and reasonable, to the extent possible. This information is not intended to be an offer or

solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should rely on information/data arising out of

their own investigations. Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order

to arrive at an informed investment decision. None of the Sponsor(s), the Investment Manager, the Trustee, their respective directors, employees,

affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages,

including on account of lost profits arising from the information contained in this material.

All information contained in this document has been obtained by ICRA Online Limited from sources believed by it to be accurate and reliable. Although

reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and

ICRA Online Limited or its affiliates or group companies and its respective directors, officers, or employees in particular, makes no representation or

warranty, express or implied, as to the accuracy, suitability, reliability, timelines or completeness of any such information. All information contained

herein must be construed solely as statements of opinion, and ICRA Online Limited, or its affiliates or group companies and its respective directors,

officers, or employees shall not be liable for any losses or injury, liability or damage of any kind incurred from and arising out of any use of this

document or its contents in any manner, whatsoever. Opinions expressed in this document are not the opinions of our holding company, ICRA Limited

(ICRA), and should not be construed as any indication of credit rating or grading of ICRA for any instruments that have been issued or are to be issued

by any entity.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

Thank you for

your time.