News U Can Use
January 19, 2018
The Week that was…
January to 19
Indian Economy
Government data showed that growth of India’s Wholesale Price Index (WPI)-based inflation
slowed to 3.58% in Dec 2017 from 3.93% in the previous month. However, it increased from
2.10% during the corresponding month of the previous fiscal. The WPI food price index also
slowed to 2.91% in Dec from 4.10% in the previous month. WPI for vegetables slowed to
56.46% in Dec from 59.80% in Nov.
Government data showed that India’s trade deficit expanded to $14.88 billion in Dec 2017
from $10.55 billion in the same period of the previous year and $13.83 billion in the previous
month. Exports grew 12.36% to $27.03 billion in Dec as against an increase of 30.55% to
$26.20 billion in the previous month. India’s exports in the same period of the previous year
stood at $24.06 billion. India’s imports in Dec grew 21.12% to $41.91 billion from $34.60
billion in the same period of the previous year.
RBI deputy governor Viral Acharya said the central bank won’t intervene to protect banks from
fluctuation in interest rates. The remark comes after RBI lowered the prices of select
government securities as bond yields surged after the government breached its fiscal deficit
target. Some state-run banks had approached RBI and sought exemption from recognizing
mark to market losses and instead requested the central bank to allow them to spread these
losses over two quarters.
The Goods and Services Tax (GST) Council in its meeting put 29 handicraft items in 0% slab.
GST rates have also been reduced on few agricultural products and 53 categories of
services. The new rates are applicable from Jan 25, 2018.
Indian Equity Market
Domestic Equity Market Indices
Indices 19-Jan-18 1 Week Return YTD Return
S&P BSE Sensex 35,511.58 2.66% 5.02%
Nifty 50 10,894.70 2.00% 4.40%
S&P BSE Mid-Cap 17,765.00 -2.05% -0.40%
S&P BSE Small-Cap 19,456.16 -2.69% 0.91%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
15-Jan-18 905 898 1.01
16-Jan-18 340 1491 0.23
17-Jan-18 890 908 0.98
18-Jan-18 331 1502 0.22
19-Jan-18 910 886 1.03
Source: NSE
Indian equity markets surged over the
week with Sensex surpassing the
coveted 35,000 mark for the first time.
Initially, investors cheered as the
industrial activity in India increased to
25-month high in Nov.
Sentiment got further boost after the
government lowered the additional
borrowing requirement for the current
fiscal to Rs. 20,000 crore from Rs.
50,000 crore estimated earlier, easing
fiscal deficit worries.
Additionally, media reported that the
government is considering raising the
foreign investment ceiling in private
banks to 100% and in public lenders to
However, the upside was limited as
retail price based inflation moved to
17-month high in Dec following
increase in food prices.
Nifty 50
Mid Cap
Small Cap
26.06 27.44 47.09 113.93
3.29 3.68 3.10 2.80
Dividend Yield
1.08 1.04 0.77 0.58
Source: BSE, NSE Value as on Jan 19
, 2018
Indian Equity Market (contd.)
Sectoral Indices
Last Returns (in %)
Closing 1-Wk 1-Mth
S&P BSE Auto
26,013.48 -1.78% -2.73%
S&P BSE Bankex
30,473.35 4.73% 4.88%
23,574.93 -0.84% 4.21%
20,197.60 0.76% 8.79%
10,862.79 0.44% 2.00%
14,868.23 -0.67% 4.14%
12,243.69 4.65% 12.79%
S&P BSE Metal
15,264.51 -3.67% 6.50%
S&P BSE Oil & Gas
15,883.20 -2.93% -3.21%
S&P BSE Realty
2,622.57 -5.11% 8.76%
S&P BSE Teck
6,786.74 3.11% 9.78%
Source: Thomson Reuters
Eikon Value as on Jan 19, 2018
On the BSE sectoral front, S&P BSE
Bankex (4.73%) stood as the most preferred
sector followed by S&P BSE IT (4.65%) and
S&P BSE Teck (3.11%).
Buying interest was seen in banking stocks
following reports that the government plans
to increase foreign direct investment in the
banking sector. Meanwhile, S&P BSE
Realty (-5.11%) stood as the major loser
followed by S&P BSE Metal (-3.67%) and
S&P BSE Oil & Gas (-2.93%).
Indian Derivatives Market Review
Nifty Jan 2018 Futures were at 10,573.20, a premium of 14.35 points above the spot closing
of 10,558.85. The turnover on NSE’s Futures and Options segment stood at Rs. 27.97 lakh
crore as against Rs. 30.58 lakh crore in the week to Dec 29.
The Put-Call ratio stood at 0.88 compared with the previous week’s close of 0.90.
The Nifty Put-Call ratio stood at 1.58 compared with the previous week’s close of 1.62.
Domestic Debt Market
Debt Indicators
Call Rate
5.93 5.91 6.02 6.08
91 Day T-Bill
6.38 6.32 6.25 6.16
7.80% 2021, (5 Yr GOI)
7.07 7.06 6.85 6.51
6.79% 2027, (10 Yr GOI)
7.48 7.46 7.18 6.45
Source: Thomson Reuters
Value as on Jan 19, 2018
Bond yields rose initially after the
deputy governor of the Reserve Bank
of India (RBI) stated that the central
bank will not intervene to protect banks
from fluctuation in interest rates and
advised them to use hedging
instruments to manage their interest
rate risk and shield themselves against
large movement in bond yields.
However, most of the losses were
neutralized as bond yields plummeted
and witnessed the biggest single
session fall in two months after the
government reduced its additional
borrowing plan for this fiscal year by
more than half to Rs. 20,000 crore
from the earlier Rs. 50,000 crore.
Yield on the 10-year benchmark bond
(6.79% GS 2027) inched up 2 bps to
close at 7.48% from the previous
week’s close of 7.46% after trading in
a range of 7.37% to 7.59%.
15-Jan 16-Jan 17-Jan 18-Jan 19-Jan
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
G-Sec Yield
Corporate Yield
1 Year 6.58 7.4 82
3 Year 7.17 7.63 47
5 Year 7.40 7.79 39
10 Year 7.73 7.91 18
Source: Thomson Reuters
Eikon Value as on Jan 19, 2018
Yields on gilt securities increased across
maturities by up to 8 bps, barring 1-, 3-
and 24-year papers that fell by up to 3
bps. Yield on 30-year paper was
Corporate bond yields rose across the
curve by up to 8 bps. Yield rose the most
on 2-year paper and the least rise was on
15-year paper.
Spread between AAA corporate bond and
gilt expanded across the maturities by up
to 8 bps, leaving 15-year paper that
contracted 3 bps while 9-year paper was
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 19-Jan-18 12-Jan-18
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
The Unique Identification Authority of India (UIDAI) has introduced face authentication along
with fingerprints, iris and one-time-password. This comes in the wake of providing more
choices to citizens authenticating Aadhaar. The measure that is expected to be implemented
by Jul 2018 would increase security by adding another layer of verification.
The Securities and Exchange Board of India (SEBI) has permitted commodity bourse NCDEX
to launch options trading in non-farm items such as nickle and aluminium. The managing
director and chief executive officer of SEBI stated that the exchange is keen on options trading
in more agri-commodities as it is encouraged by the results of guarseed option that was
launched last week.
The Insolvency and Bankruptcy Board of India (IBBI) came out with stricter norms for
insolvency professionals. According to the norms mandated by IBBI, insolvency professionals
need to disclose their relationship with all associated parties including the corporate borrower
and lenders within three days of appointment.
To enhance coverage, the Housing and Urban Affairs Ministry has amended the guidelines of
housing scheme for urban areas under Pradhan Mantri Awas Yojana. According to the
amended guidelines, areas under the jurisdiction of affiliated bodies and earmarked for urban
planning and regulations shall also be included under Pradhan Mantri Awas Yojana (Urban).
Regulatory Updates in India (contd..)
The Ministry of Commerce has advocated to bring down import duty on gold in the upcoming
Union Budget on Feb 1, 2018. The objective of the move is to promote exports of gold
jewellery. The Gems and Jewellery Export Promotion Council has sought reduction in import
duty on gold to 4% from the current 10%. According to media reports, India is the world's
second biggest gold consumer after China.
The Ministry of Defence has simplified “Make II” procedure, which is a framework used by
defence firms to develop and build equipment for the military. The objective of the move is to
make the procedure more industry friendly with minimal government control. The first change
was to broaden the playing field by allowing multiple vendors to participate compared with the
earlier norms where only two vendors could be shortlisted. Also, the vendor will not be required
to submit any detailed project report. In addition, the government has eased the eligibility
criteria by doing away with conditions and criteria related to credit rating and financial net
Global News/Economy
A report from the Organization for Economic Cooperation and Development (OECD) showed
that jobless rate in OECD area remained stable in Nov 2017. The jobless rate came in at 5.6%
in Nov, unchanged from Oct 2017. The jobless rate among youth aged below 24 grew to 11.9%
in Nov from 11.8% in Oct. The overall unemployment rate fell to 8.7% in Nov in the eurozone.
Meanwhile, jobless rate in Canada and Japan fell to 5.9% and 2.7%, respectively. However, the
rate remained stable at 4.1% in the U.S.
A report from the Commerce Department showed that U.S. housing starts fell more than market
expectations in Dec 2017. It fell 8.2% to an annual rate of 1.192 million in Dec as against the
revised estimate of 1.299 million (1.297 million originally reported) in Nov 2017. The higher than
expected decline reflects steep drop in single-family starts that fell 11.8% to 8,36,000 in Dec.
However, multi-family starts grew 1.4% to 3,56,000 in Dec.
Data from the National Bureau of Statistics showed that China's economy expanded at a steady
pace at the end of 2017. Gross Domestic Product (GDP) grew 6.8% on a yearly basis in the
fourth quarter of 2017, the same pace of growth as seen in the third quarter. In 2017, the
economy expanded at a faster pace of 6.9% after rising 6.7% in 2016.
A report from the Office for National Statistics showed that U.K. inflation came in line with
market expectations at 3% in Dec 2017 as against 3.1% in Nov 2017. The central bank expects
inflation to slow to 2.4% by the fourth quarter of 2018. Core inflation (excluding energy, food,
alcoholic beverages and tobacco) came in at 2.5% in Dec as against 2.7% in Nov.
Global Equity Markets
Global Indices
Dow Jones
26,071.72 1.04% 5.03%
Nasdaq 100
6,834.33 1.12% 4.96%
FTSE 100
7,730.79 -0.62% 1.08%
DAX Index
13,434.45 1.43% 4.37%
Nikkei Average
23,808.06 0.65% 1.28%
Straits Times
3,550.36 0.85% 4.33%
Source: Thomson Reuters Eikon
Value as on Jan 19, 2018
U.S. markets gained over the week
amid truncated trading session. Positive
economic data buoyed market
sentiment as the Federal Reserve’s
(Fed) Beige Book indicated that the U.S.
economy continued to expand in Dec
and early Jan -- initial jobless claims fell
to the lowest level in nearly 45 years in
the week ended Jan 13 and industrial
output expanded in the fourth quarter.
Most of the European markets rose following upbeat economic data as the euro area
trade surplus increased in Nov, Germany's Consumer Price Inflation (CPI) accelerated to
a five-year high in 2017 and eurozone construction output increased in Nov. Positive
corporate earnings and higher than expected Chinese GDP data also helped sentiment.
Asian markets gained over the week following improved economic data from China -
Chinese GDP stood at 6.9% in 2017, marking the first expansion in seven years; property
market remained stable in Dec 2017 and industrial output accelerated during the same
month. Additionally, producer prices in Japan went up 0.2% in Dec and tertiary activity
index increased for the second straight month in Nov 2017.
Global Debt (U.S.)
Yield on the 10-year U.S. Treasury
bond rose 9 bps to close at 2.64%
from the previous week’s close of
U.S. Treasury prices rose initially amid
reports that the European Central
Bank might not end its bond buying
program in its monetary policy review
due next week as it may take more
time to assess the outlook for the
economy and the euro.
However, the trend reversed on
growing perception that the U.S. Fed
will continue to increase interest rates
this year. Losses were extended after
growth of China’s economy in the
fourth quarter of 2017 accelerated for
the first time in seven years.
16-Jan 17-Jan 18-Jan 19-Jan
Yield in %
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
Performance of various commodities
Last Closing 1-Week Ago
Brent Crude($/Barrel)
68.71 70.46
Gold ($/Oz)
1,331.41 1,338.34
Gold (Rs/10 gm)
29,958 29,838
Silver ($/Oz)
17.00 17.25
Silver (Rs/Kg)
38714 38732
Eikon Value as on Jan 19, 2018
Gold prices inched down amid growing
speculations that the U.S. Fed may hike
interest rates in Mar and second round
of rate-hike may happen in Jun.
Brent crude prices fell over the week on
concerns over supply glut after the
International Energy Agency mentioned
that rising U.S. crude oil production
might offset the Organization of
Petroleum Exporting Countries’ effort to
rebalance the crude oil market. The
U.S. Energy Information Administration
(EIA) mentioned that the country's oil
output is likely to rise in Feb 2018 and
U.S. crude output is expected to cross
10 million bpd soon.
Baltic Dry Index
The Baltic Dry Index fell 10.95% on the
back of lower capesize and panamax
19-Dec-17 29-Dec-17 8-Jan-18 18-Jan-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
Currencies Markets
Movement of Rupee vs Other Currencies
Currency Last Closing 1-Wk Ago
US Dollar
63.72 63.53
Pound Sterling
88.64 86.05
78.14 76.53
100 JPY
57.49 57.09
Source: RBI Figures in INR , Value as on Jan 19, 2018
The Indian rupee weakened against the
U.S. dollar after India’s trade deficit
widened in Dec 2017 and global crude oil
prices continued to remain at elevated
Euro strengthened against the greenback
on perception that the ECB could end its
bond purchase program soon if the
economy and inflation develop as
Sterling strengthened against the U.S.
dollar on optimism that Britain will reach a
favourable deal with the European Union
on Brexit.
Yen strengthened against the greenback
after the Bank of Japan governor said that
the country's economy could continue to
expand at a moderate pace.
19-Dec-17 29-Dec-17 8-Jan-18 18-Jan-18
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
The Week that was…
January to 19
The Week that was (Jan 15 Jan 19)
Date Events Present Value
Previous Value
Jan 15, 2018
India’s Wholesale Price Index (WPI)-based inflation (DEC) 3.58% 3.93%
India’s trade deficit (DEC) $14.88 bn $10.55 bn
• Japan Machine Tool Orders (YoY) (DEC P) 48.30% 46.80%
Jan 16, 2018
• U.K. Consumer Price Index (YoY) (DEC) 3.00% 3.10%
Japan Tertiary Industry Index (MoM) (NOV) 1.10% 0.20%
Germany Consumer Price Index (YoY) (DEC F) 1.70% 1.70%
• Japan Machine Orders (YoY) (NOV) 4.10% 2.30%
Jan 17, 2018
Eurozone Consumer Price Index (YoY) (DEC F) 1.40% 1.50%
• U.S. MBA Mortgage Applications (JAN 12) 4.10% 8.30%
U.S. Industrial Production (MoM) (DEC) 0.90% -0.10%
• U.S. NAHB Housing Market Index (JAN) 72 74
Jan 18, 2018
China Gross Domestic Product (YoY) (4Q) 6.80% 6.80%
China Retail Sales YTD (YoY) (DEC) 10.20% 10.30%
China Industrial Production (YoY) (DEC) 6.20% 6.10%
U.S. Initial Jobless Claims (JAN 13) 220k 261k
• U.S. Housing Starts (MoM) (DEC) -8.20% 3.00%
Jan 19, 2018
• U.S. University of Michigan Sentiment (JAN P) 94.4 95.9
• U.K. Retail Sales Ex Auto Fuel (YoY) (DEC) 1.30% 1.50%
The Week Ahead
January to 26
The Week Ahead
Day Event
January 22, 2018
Japan Convenience Store Sales (YoY) (DEC)
January 23, 2018
Bank of Japan Rate Decision (JAN 23)
Germany ZEW Survey Expectations (JAN)
Eurozone ZEW Survey (Economic Sentiment) (JAN)
Eurozone Consumer Confidence (JAN A)
Japan Trade Balance (DEC)
January 24, 2018
Japan Nikkei Manufacturing PMI (JAN P)
Germany Markit/BME Composite PMI (JAN P)
Eurozone Markit Composite PMI (JAN P)
U.S. Markit Composite PMI (JAN P)
U.S. Existing Home Sales (MoM) (DEC)
January 25, 2018
European Central Bank Rate Decision (JAN 25)
U.S. Advance Goods Trade Balance (DEC)
Japan National Consumer Price Index (YoY) (DEC)
U.S. New Home Sales (MoM) (DEC)
January 26, 2018
U.K. Gross Domestic Product (YoY) (4Q A)
U.S. Gross Domestic Product Annualized (QoQ) (4Q A)
U.S. Durable Goods Orders (DEC P)
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