News U Can Use
January 18, 2019
The Week that was…
14
th
January to 18
th
January
2
Indian Economy
• Government data showed that India’s trade deficit narrowed to a 10-month low of $13.08
billion in Dec 2018 from $16.67 billion in the previous month and $14.20 billion in the same
month of the previous year. Trade deficit narrowed as imports under merchandise trade
contracted 2.44% to $41.01 billion on a yearly basis in Dec 2018 while merchandise
exports inched up marginally 0.34% to $27.93 billion on a yearly basis in Dec 2018.
Imports came down as gold imports plunged 24.33% on a yearly basis in Dec 2018 while
imports of pearls, precious & semi-precious stones also plummeted 28.08% during the
same time period. Meanwhile, exports of engineering goods fell 3.12% on a yearly basis in
Dec 2018 which according to market participants is a matter of grave concern as the
government promised to boost exports by easing norms for manufacturing in India.
• Government data showed that India’s retail inflation plunged to an 18-month low of 2.19%
in Dec 2018 from 2.33% in the previous month and 5.21% in the same month of the
previous year. The plunge came as food prices continued to decline with the consumer
food price index contracting 2.51% in Dec 2018 compared with a contraction of 2.61% in
the previous month but an expansion of 4.96% in the same month of the previous year.
• India’s Wholesale Price Index-based inflation (WPI) came in at 3.80% in Dec 2018 as
against 4.64% in Nov 2018 as prices of onions and fruits came down. Wholesale price
inflation was at 3.58% in Dec 2017. Onion inflation fell 63.83% in Dec 2018 compared with
a fall of 47.60% in Nov 2018. Fruit inflation fell 3.69% in Dec 2018 compared with 2.49% in
Nov 2018.
3
Indian Equity Market
4
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
14-Jan-19 653 1,137 0.57
15-Jan-19 1,137 629 1.81
16-Jan-19 882 865 1.02
17-Jan-19 669 1,099 0.61
18-Jan-19 522 1,230 0.42
Source: NSE
• Indian equity markets gained after
inflation data eased to multi-month
lows, making market participants
hopeful of a rate-cut by Monetary Policy
Committee at its meeting in Feb 2019.
• Sentiment got support as China
indicated that it will support its economy
in the wake of weak trade data for Dec
2018 and fears of slowing growth.
China’s trade figures declined
unexpectedly to their two-year lows in
Dec 2018.
• However, the upside was limited after
the finance minister hinted at the
necessity of fuelling economic growth,
especially a package for farmers. This
is being seen as a deterrent to fiscal
discipline as it would increase the
government’s spending. Meanwhile, the
index of industrial production data
plunged to a seventeen month low in
Nov 2018 which weighed on the market
sentiment.
•
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
23.96 26.19 32.08 -101.16
P/B
3.04 3.40 2.57 2.16
Dividend Yield
1.16 1.24 0.98 0.89
Source: BSE, NSE Value as on Jan
18, 2019
Domestic Equity Market Indices
Indices 18-Jan-19
1 Week
Return
YTD
Return
S&P BSE Sensex
36,386.61 1.05% 0.88%
Nifty 50
10,906.95 1.04% 0.41%
S&P BSE Mid-Cap
15,023.39 -1.01% -2.69%
S&P BSE Small-Cap
14,504.60 -0.66% -1.37%
Source: MFI Explorer
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
19,917.3 -0.31% -5.93%
S&P BSE Bankex
30,739.8 -0.20% 1.17%
S&P BSE CD
20,949.8 0.13% 0.38%
S&P BSE CG
17,703.4 -2.91% -5.20%
S&P BSE FMCG
11,872.7 -0.72% 0.20%
S&P BSE HC
13,801.6 -1.55% -0.38%
S&P BSE IT
14,670.9 4.43% 1.50%
S&P BSE Metal
11,080.3 -0.48% -7.50%
S&P BSE Oil & Gas
13,578.6 2.97% -0.51%
S&P BSE Teck
7,303.7 3.09% 1.23%
S&P BSE Power
1,954.5 -1.11% -1.41%
Source: BSE Value as on January 18, 2019
• On the BSE sectoral front, most of the
indices closed in the red barring S&P BSE IT
(4.43%), S&P BSE Teck (3.09%) and S&P
BSE Oil & Gas (2.97%). S&P BSE CG (-
2.91%) was the major loser followed by S&P
BSE HC (-1.55%) and S&P BSE Power (-
1.11%).
• A major IT company gave an upbeat revenue
growth guidance which provided support to
the IT sector. Auto sector witnessed subdued
growth as the data from Society of Indian
Automobile Manufacturers (SIAM) showed
that vehicle sales across categories fell in
Dec 2018.
Indian Derivatives Market Review
• Nifty Jan 2019 Futures were at 10,927.15, a premium of 20.20 points, over the spot closing
of 10,906.95. The total turnover on NSE’s Futures and Options segment for the week
stood at Rs. 36.12 lakh crore as against Rs. 45.45 lakh crore for the week to Jan 11.
• The Put-Call ratio stood at 0.97 compared with the previous week’s close of 0.92.
• The Nifty Put-Call ratio stood at 1.56 against the previous week’s close of 1.39.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
6.45 6.35 6.48 6.14
91 Day T-Bill
6.60 6.63 6.70 6.55
7.80% 2021, (5 Yr GOI)
6.70 7.01 7.04 7.70
7.17% 2028, (10 Yr GOI)
7.60 7.50 7.35 7.75
Source: Thomson Reuters Eikon
Value as on Jan 18, 2019
• Bond yields fell on market
expectations that consumer inflation
will fall in Dec 2018, which actually
dropped to its lowest level since Jun
2017. This raised expectations of
monetary easing in the near future.
• However, yields surged continuously
till the end of the week as market
participants grew cautious over the
pre-election spending. If the pre-
election spending rises, it could lead
to a fiscal slippage. It also increased
doubts whether the federal
government will be able to move
ahead with its plan of fiscal
consolidation.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) rose 10 bps
to close at 7.60% from the last
week’s close at 7.50%, after trading
in a range of 7.42% to 7.61%.
7.10
7.40
7.70
14-Jan 15-Jan 16-Jan 17-Jan 18-Jan
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 6.95 8.37 142
3 Year 7.13 8.44 131
5 Year 7.50 8.45 95
10 Year 7.74 8.60 86
Source: Thomson Reuters Eikon
Value as on Jan 18, 2019
• Yields on gilt securities increased across the
maturities by up to 15 bps barring 1-year
paper that closed steady and 3-year paper
that fell 6 bps.
• Corporate bond yields fell on 1- and 2-year
papers by 7 bps and 4 bps, respectively.
Yields expanded across the remaining
maturities in the range of 4 bps to 7 bps
barring 3-year paper that closed steady.
• Difference in spread between AAA corporate
bond and gilt contracted across the
maturities by up to 7 bps barring 3-, 6- and
15-year papers that expanded by up to 7
bps as well.
-5
3
11
6.10
7.10
8.10
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 18-Jan-19 11-Jan-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Securities and Exchange Board of India (SEBI) decided to allow mutual funds to write
call options under certain conditions. Call options refer to an agreement that gives a buyer
the right to buy an asset at a specified price within a particular time period. Presently,
mutual fund schemes are permitted to undertake transactions in equity derivatives but
cannot write options or purchase instruments with embedded written options. SEBI said
schemes (except Index Funds and ETFs) can write call options only under a covered call
strategy for constituent stocks of Nifty 50 and Sensex indices.
• According to media reports, SEBI could tighten rules for liquid funds. The market regulator
is said to be weighing a proposal of introducing minimum investment criteria along with lock-
in period in short-term government bonds.
• According to media reports, Association of Mutual Funds in India is expected to revise the
commission structure of distributors. The existing commission structure of distributors has
become redundant following SEBI’s ban on the upfront commission in Oct 2018.
• Entities eligible to receive foreign direct investment (FDI) have been permitted to raise
external commercial borrowings (ECBs) by RBI. This is done by enabling them to raise
funds through automatic route up to $750 million per year. The ECBs raised would be within
6.5% of gross domestic product.
Regulatory Updates in India (contd..)
9
• The government has decided to recapitalise state-owned Exim Bank. The government will
recapitalise Rs. 6,000 crore and double its authorised capital to Rs. 20,000 crore. The
equity will be infused in two tranches of Rs. 4,500 crore in 2018-19 and Rs. 1,500 crore in
2019-20, Railway minister said.
• An integrated income-tax e-filing and centralised processing centre (CPC) portal has been
approved by the Union Cabinet. The return processing time will be reduced from 63 days to
just one day with this portal. Additionally, the new portal is also expected to process the
refunds within one day of filing of tax returns which will be of huge relief for taxpayers.
However, the portal is expected to be launched after 18 months.
• The Reserve Bank of India (RBI) remained net seller of dollars in Nov 2018 by selling $644
million of the greenback on a net basis in the spot market, the central bank’s latest data
showed. Compared with this, RBI had purchased $2.570 billion from the spot market and
sold $1.706 billion in Nov 2017. In Nov 2018, the central bank bought $3.127 billion from the
spot market, and sold $3.771 billion. The rupee’s weakness explains the reasons for RBI to
intervene in the forex market. In Oct 2018 also, RBI was a net seller of dollars as it
purchased $945 million and sold $8.149 billion of the U.S. currency in the spot market.
Global News/Economy
• General Administration of Customs data showed China's exports and imports declined in
Dec 2018, exhibiting the worst rates in two years. Exports dropped 4.4% YoY in Dec 2018
against expectations of a rise. Imports decreased 7.6% YoY again less than expectations of
a rise. This is worst outcome since 2016. Trade surplus in Dec 2018 came in at $57.1 billion.
For the full year, exports grew 9.9% and imports rose 15.8%, leading to a trade surplus of
$351.8 billion, which is more than 30% lower than a year ago.
• Data from the Federal Statistics Office showed that Germany's economy grew for a ninth
year in 2018 but at the slowest pace in five years. Germany’ economy grew 1.5% in 2018,
significantly slower than 2.2% in 2017. The slowdown in growth came as growth of exports
nearly halved to 2.4% in 2018 from 4.6% in 2017. However, company investments in
machinery and equipment grew 4.5% on a yearly in 2018.
• Eurostat preliminary data showed eurozone's industrial production decreased at a faster
than expected pace in Nov 2018. Industrial production declined a seasonally adjusted 1.7%
from Oct 2018’s increase of 0.1%. Production of capital goods declined 2.3% and output of
durable consumer goods dropped 1.7%. Intermediate goods output dropped 1.2% and non-
durable consumer goods 1%. Energy production decreased 0.6%.
• Labor Department data showed first-time claims for U.S. unemployment benefits
unexpectedly decreased in the week ended Jan 12, 2019. Initial jobless claims edged down
to 213,000, a decrease of 3,000 from the previous week's 216,000.
10
Global Equity Markets
11
Global Indices
Indices
18-Jan-19
1-Week
Return
YTD
Return
Dow Jones 24,706.35 2.96% 5.91%
Nasdaq 100 6,784.61 2.78% 7.18%
FTSE 100 6,968.33 0.72% 3.57%
DAX Index 11,205.54 2.92% 6.12%
Nikkei Average 20,666.07 1.50% 3.25%
Straits Times 3,224.34 0.80% 5.07%
Source: Thomson Reuters Eikon
Value as on Jan 18, 2019
U.S.
• Optimism over trade talks between U.S.
and China drove market sentiment and
helped Wall Street end the week on a
positive note. According to media
reports, U.S. had floated the idea of
easing tariffs on Chinese goods as the
two countries continue to negotiate.
However, gains were restricted by
uncertainty about the ongoing
government shutdown.
Europe
• European markets witnessed initial volatility following the parliamentary defeat for British
Prime Minister's Brexit plan. However, markets rose after the U.K. Prime Minister survived
the no-confidence which fuelled hopes that Britain can avoid a no-deal Brexit. Signs of
progress in U.S.-China trade talks added to the gains.
Asia
• Asian markets reflected positive global cues with reports of progress on U.S.-China trade
talks, which raised hopes of a positive breakthrough in their long-running trade dispute.
Japanese shares edged higher as the yen weakened on improved risk appetite following
reports that the U.S. could lift trade tariffs on China.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasuries
rose 8 bps to close at 2.78% from the
previous close of 2.70%.
• U.S. Treasury prices fell initially after the
U.S. President indicated that he was not
looking to declare a national emergency
amid a partial government shutdown.
• U.S. Treasury prices fell further after the
U.K. government led by the Prime
Minister survived a no-confidence vote a
day after the U.K. Parliament
vehemently rejected the Brexit deal.
This improved prospects for a resolution
concerning Britain's exit from the
European Union.
• Losses were extended amid reports that
the U.S. is considering removing some
or all tariffs on Chinese imports in an
effort to resolve the stalemate between
the two countries.
2.70
2.75
2.80
14-Jan 15-Jan 16-Jan 17-Jan 18-Jan
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 ($/bbl) 62.23 58.88
Gold ($/Oz) 1,281.11 1,287.50
Gold (Rs/10 gm) 32,276 32,117
Silver ($/Oz) 15.32 15.60
Silver (Rs/Kg) 39,034 39,129
Source: Thomson Reuters
Eikon *Value as on Jan 18, 2019
Gold
• Gold prices traded lower following
media reports that the U.S. is
considering to lower tariffs on Chinese
imports. This indicated easing trade
tension between the world’s two largest
economies and improved the risk
appetite of investors.
Brent Crude
• Brent crude prices traded higher as U.S.
energy companies trimmed four oil rigs
in the week of Jan 11, 2019. In addition,
OPEC and its allies’ decision of cutting
the output by 1.2 million barrels per day
to aid the commodity’s tumbling market
also supported oil prices.
Baltic Dry Index
• Baltic Dry index fell during the week due
to sluggish capesize and panamax
activities.
9.00
9.46
9.92
10.38
10.84
11.30
18-Dec-18 28-Dec-18 7-Jan-19 17-Jan-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
5.69%
-0.50%
-1.78%
18-Jan-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
71.14 70.47
Pound Sterling
92.29 89.92
EURO
81.07 81.21
JPY(per 100 Yen)
65.04 65.03
Source: RBI Figures in INR , *Value as on Jan 18, 2019
Rupee
• The Indian rupee weakened against the
greenback following China’s weak trade
data for Dec 2018. Rising concerns over
domestic fiscal slippage added to the
losses.
Euro
• The euro fell against the greenback
following slowdown in Germany’s
economy in 2018.
Pound
• The pound strengthened against the
greenback on hopes that that Britain can
avoid a no-deal Brexit. The U.K. Prime
Minister’s Brexit deal had a heavy defeat
in Parliament. However, the British
government won a subsequent vote of
confidence which supported the pound.
Yen
• The yen weakened against the greenback
as the latter gained on signs of growing
optimism in trade talks between China
and U.S.
9.70
9.90
10.10
10.30
10.50
18-Dec-18 28-Dec-18 7-Jan-19 17-Jan-19
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
0.95%
2.65%
- 0.18%
0.02%
18-Jan-19
15
The Week that was…
14
th
January to 18
th
January
The Week that was (Jan 14 – Jan 18)
16
Date Events
Present
Value
Previous
Value
Monday,
January 14, 2019
• India Retail Inflation (Dec) 2.19% 2.33%
• India WPI inflation (Dec) 3.80% 4.64%
• China Trade Balance CNY (Dec) 394.99 bn 306.04 bn
• China Foreign Direct Investment (YoY) (Dec) 24.90% -26.30%
• Eurozone Industrial Production (YoY) (Nov) -3.30% 1.20%
Tuesday,
January 15, 2019
• India Trade Deficit (Dec) $13.08 bn $16.67 bn
• China New Yuan Loans CNY (Dec) 1080.0 bn 1250.0 bn
• Germany Gross Domestic Product (YoY) (2018) 1.50% 2.20%
• Japan Machine Orders (YoY) (Nov) 0.80% 4.50%
Wednesday,
January 16, 2019
• U.K. Consumer Price Index (YoY) (Dec) 2.10% 2.30%
• U.K. House Price Index (YoY) (Nov) 2.80% 2.70%
• U.S. NAHB Housing Market Index (Jan) 58.00 56.00
Thursday,
January 17, 2019
• Eurozone Consumer Price Index (YoY) (Dec F) 1.60% 1.90%
• U.S. Initial Jobless Claims (Jan 12) 213k 216k
Friday,
January 18, 2019
• U.S. University of Michigan Sentiment (Jan P) 90.7 98.3
• Japan Industrial Production (YoY) (Nov F) 1.50% 1.40%
• U.K Retail Sales Ex Auto Fuel (YoY) (Dec) 2.60% 3.50%
• U.S. Industrial Production (MoM) (Dec) 0.30% 0.40%
17
The Week Ahead
21
th
January to 25
th
January
18
The Week Ahead
Day Event
Monday,
January 21, 2019
• China Gross Domestic Product (YoY) (4Q)
• China Retail Sales YTD (YoY) (Dec)
• China Industrial Production YTD (YoY) (Dec)
Tuesday,
January 22, 2019
• Germany ZEW Survey Expectations (Jan)
• Eurozone ZEW Survey (Economic Sentiment) (Jan)
• Japan Trade Balance (Dec)
Wednesday,
January 23, 2019
• Bank of Japan Rate Decision (Jan 23)
• Japan All Industry Activity Index (MoM) (Nov)
• U.S. House Price Index (MoM) (Nov)
• Eurozone Consumer Confidence (Jan A)
Thursday,
January 24, 2019
• European Central Bank Rate Decision (Jan 24)
• Japan Nikkei Manufacturing PMI (Jan P)
• Germany Markit Services PMI (Jan P)
• Eurozone Markit Services PMI (Jan P)
• U.S. Initial Jobless Claims (Jan 19)
• U.S. Markit Services PMI (Jan P)
Friday,
January 25, 2019
• U.S. Durable Goods Orders (Dec P)
• Germany IFO Expectations (Jan)
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.
19
Thank you for
your time.