News U Can Use
January 25, 2019
The Week that was…
21
st
January to 25
th
January
2
Indian Economy
• The International Monetary Fund (IMF) upgraded the growth forecasts of the Indian
economy for 2019 by 10 bps to 7.5%. For 2018, IMF estimated the growth of the Indian
economy at 7.3% and projected the growth rate to go up to 7.7% in 2020. IMF is of the
view that low global crude oil prices, slower pace of monetary tightening and fall in
domestic inflationary pressures will provide support to the growth prospects of the Indian
economy.
• An interim finance minister got appointed for second time in the absence of the incumbent
finance minister. The interim minister will present the upcoming Budget 2019-20. This has
happened as the incumbent finance minister is said to be in the U.S. for the treatment of
an illness.
• A United Nations (UN) report showed India's economy could grow at 7.4% during 2018-19
and improve to 7.6% in 2019-20. The United Nations' World Economic Situation and
Prospects 2019 report expects India's Gross Domestic Product (GDP) to expand by 7.4%
in 2020-21. The report said growth continues to be supported by robust private
consumption, a more expansionary fiscal stance and benefits from earlier reforms. It said a
sustained recovery of private investment is crucial to lift medium-term growth.
• India has started bilateral talks on the modalities of tariff concessions with China. India is
under pressure to reduce duties on at least 80% of its imports from China under a mega
trade agreement Regional Comprehensive Economic Partnership (RCEP) that covers 16
countries.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
25-Jan-19
1 Week Return
YTD Return
S&P BSE Sensex
36,025.54 -0.99% -0.12%
Nifty 50
10,780.55 -1.16% -0.75%
S&P BSE Mid
-Cap 14,681.82 -2.27% -4.90%
S&P BSE Small
-Cap 14,000.20 -3.48% -4.80%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
21-Jan-19 553 1238 0.45
22-Jan-19 538 1244 0.43
23-Jan-19 677 1073 0.63
24-Jan-19 591 1178 0.50
25-Jan-19 443 1356 0.33
Source: NSE
• Indian equity markets lost in the week
ended Jan 25, 2019, after witnessing
gains in the last two weeks. Investors
shied away from riskier assets after
the International Monetary Fund
(IMF) revised its growth forecast for
the global economy. The IMF’s
revised projection is 3.5% growth rate
worldwide for 2019 and 3.6% for
2020, which is a cut of 0.2 and 0.1
percentage points, respectively, from
its forecasts in Oct 2018.
• Weak global cues continued to weigh
on the domestic markets. U.S.-China
trade tensions re-emerged as media
reports claimed a meeting between
the two has been cancelled, though
U.S. officials denied the same.
Further, prolonged U.S. government
shutdown and Brexit concerns played
spoil sport.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
23.68 26.14 31.43 -96.08
P/B
3.02 3.36 2.52 2.09
Dividend Yield
1.17 1.25 0.99 0.91
Source: BSE, NSE Value as on Jan 25, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,624.2
-10.10%
S&P BSE Bankex
30,377.5
1.51%
S&P BSE CD
20,951.3 0.01% 4.38%
S&P BSE CG
17,174.3
-6.76%
S&P BSE FMCG
11,657.4
0.15%
S&P BSE HC
13,948.3 1.06% 1.68%
S&P BSE IT
14,784.4 0.77% 5.88%
S&P BSE Metal
10,735.5
3.11% -7.26%
S&P BSE Oil & Gas
13,765.0 1.37% 1.89%
S&P BSE Power
1883.29
-4.21%
S&P BSE Realty
1790.41
-1.06%
Source: Thomson Reuters Eikon
*Value as on Jan 25, 2019
• On the BSE sectoral front, majority of the
indices closed on a weak note. S&P BSE
Auto was the major loser, down 6.49%,
followed by S&P BSE Power that fell
3.65%.
• Auto stocks remained under pressure as a
major domestic automaker registered
double-digit decline in net profit for the
third quarter of FY19.
• S&P BSE Metal and S&P BSE Realty
plunged 3.11% and 3.08%, respectively.
Indian Derivatives Market Review
• Nifty Jan 2019 Futures were at 10,785.95, a premium of 5.40 points, over the spot closing
of 10,780.55. The total turnover on NSE’s Futures and Options segment for the week
stood at Rs. 35.67 lakh crore as against Rs. 36.12 lakh crore for the week to Jan 18.
• The Put-Call ratio stood at 0.94 compared with the previous week’s close of 0.97.
• The Nifty Put-Call ratio stood at 1.37 against the previous week’s close of 1.56.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
6.41 6.45 6.50 6.24
91 Day T
-Bill
6.58 6.60 6.66 6.65
7.80% 2021, (5
Yr GOI)
7.02 6.70 6.85 7.70
7.17% 2028, (10
Yr GOI)
7.55 7.60 7.29 7.79
Source: Thomson Reuters Eikon
Value as on Jan 25, 2019
• Bond yield came down over the week
as fall in global crude oil prices
boosted market sentiment.
• However, gains were capped as the
country’s fiscal position remained in
focus. Market participants worry that
a farm relief package, which is
expected to be announced by the
government soon, and increase in
expenditure ahead of the general
elections might make it difficult for the
government to adhere to its fiscal
consolidation roadmap.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) fell 5 bps to
close at 7.55% from the last week’s
close at 7.60%, after trading in a
range of 7.51% to 7.65%.
7.40
7.50
7.60
21-Jan 22-Jan 23-Jan 24-Jan 25-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 6.94 8.38 144
3 Year 7.13 8.54 141
5 Year 7.43 8.49 106
10 Year 7.69 8.61 92
Source: Thomson Reuters Eikon
Value as on Jan 25
, 2019
• Yields on gilt securities increased on 2-,
6-, 11- and 15-year maturities by up to 6
bps. Yield fell across the remaining
maturities by up to 7 bps barring 3- and
19-year papers that closed steady.
• Corporate bond yields increased across 1
to 6 years’ papers and 15-year maturity
by up to 8 bps.
• Difference in spread between AAA
corporate bond and gilt expanded across
the maturities in the range of 3 bps to 15
bps barring 6- and 15-year papers that
contracted 3 bps each.
-9
-4
1
6.00
7.00
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 25-Jan-19 18-Jan-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Union cabinet approved setting up of the national bench of the appellate tribunal for
disputes under the Goods and Services Tax (GST). The body (GSTAT) will be the first
common forum of dispute resolution between the Centre and states. Also, it will be an
adjudication authority on distinct orders passed by different state-level appellate authorities
on the same issue of law. GSTAT bench will be located in Delhi and presided by the
president along with two technical member — one each from the Centre and state.
• The Reserve Bank of India (RBI) made amendments to Foreign Exchange Management Act
(FEMA) regulations wherein now foreign companies in defence, telecom, information &
broadcasting, and private security sectors will not require the central bank’s approval to
open branch offices. These entities need to have an approval of the regulator and the
ministry concerned.
• RBI proposed to relax rules for entry of new players in the retail payment systems. RBI is
doing this to give a boost to innovation and competition. RBI grants authorisation to non-
banks for setting up and operating payment systems. By the end of 2018, there were 89
authorised non-bank Payment System Operators (PSOs).
• Exporters could get incentives based on criteria such as research and development,
product-specific clusters and production pattern under a five-year foreign trade policy (FTP).
The FTP will be released later in 2019, according to media reports.
Regulatory Updates in India (contd..)
• A committee on special economic zones (SEZ) suggested that certain sectors such as
electronics are showing high domestic demand and should have a plan for import
substitution. For SEZs focussed on services including information technology, medical
tourism and financial services, the panel said the government may not have to completely
change the existing policies but design measures to make them more attractive for
investors.
• The National Highways Authority of India (NHAI) is tightening the rules for developers to bid
for road projects under the engineering, procurement, and construction (EPC) mode. This is
being done in an effort to disqualify weak, non-performing and incapable developers from
winning projects. NHAI has already imposed certain filters like missing at least two
construction milestones in past projects, physical progress not commensurate with the
funds released, and failure to maintain a highway in spite of two rectification notices.
9
Global News/Economy
• According to a report from the National Association of Realtors, U.S. existing home sales fell
6.4% to an annual rate of 4.99 million in Dec 2018 as against a gain of 2.1% to a revised
rate of 5.33 million (5.32 million originally reported) in Nov 2018. This marked the lowest
level since Nov 2015.
• European Central Bank left its key interest rates and forward guidance unchanged in its
latest policy meeting. The main refinance rate is currently at a record low of 0% and the
deposit rate at -0.40%. The marginal lending facility rate is at 0.25%. The interest rates were
last raised in Jul 2011 by 25 basis points. The central bank stated that the interest rates are
likely to remain at their present levels at least through the summer of 2019. The same may
extend as long as it is necessary to ensure the continued sustained convergence of inflation
to levels that are below, but close to 2%, over the medium term.
• The National Bureau of Statistics showed China's economy expanded at the weakest pace
in around three decades in 2018. The trade war with the U.S. has hurt business activity and
sentiment. Full-year growth slowed to 6.6% in 2018, which is the weakest pace of expansion
since 1990, but in line with expectations. On a quarterly basis, gross domestic product grew
6.4% YoY in the fourth quarter of 2018, which is slower than 6.5% expansion in the previous
three months and the weakest since the global financial crisis in 2009.
• The Bank of Japan (BoJ) kept its monetary policy unchanged and maintained interest rate at
-0.1% on current accounts that financial institutions maintain at the bank. Also, BoJ asserted
that interest rates will remain at ultra low levels for an extended period of time.
10
Global Equity Markets
11
Global Indices
Indices
25-Jan-19
1-Week
Return
YTD
Return
Dow Jones
24,737.2 0.12% 6.04%
Nasdaq 100
6,787.4 0.04% 7.23%
FTSE 100
6,809.2 -2.28% 1.21%
DAX Index
11,281.8 0.68% 6.85%
Nikkei Average
20,773.6 0.52% 3.79%
Straits Times
3,202.3 -0.69% 4.35%
Source: Thomson Reuters Eikon
Value as on
Jan 25, 2019
U.S.
• U.S. markets rose marginally on
expectations of positive development
over the U.S.-China trade relationships
after the U.S. Treasury Secretary said
the two countries were "making a lot of
progress" in talks. However, U.S.
government’s partial shutdown and
weak global growth forecast by the
International Monetary Fund eroded
much of the gains.
Europe
• European markets mostly gained on expectations of positive outcome from U.S.-China
trade talks scheduled for next week. However, concerns over Brexit and economic growth
limited the upside. While International Monetary Fund (IMF) lowered its forecast for global
growth in the current year; the ECB President expressed concerns about the euro zone
economy.
Asia
• Asian markets mostly closed in the green as positive developments occurred in the U.S.-
China trade relations. Investors also became optimist after the Chinese Finance Minister
indicated that the Chinese government would raise its fiscal spending to support economic
growth. Bank of Japan also mentioned that it would continue with its ultra-easy monetary
policy. This has raised investors’ confidence in economic growth.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasuries
fell 3 bps to close at 2.75% from the
previous close of 2.78%.
• U.S. Treasury prices grew prompted by
worries over slowing global growth and
trade tensions between China and the
U.S. A record-long U.S. government
shutdown and comments from the
European Central Bank President
indicating rise in eurozone’s economic
risks added to the gains. Gains were
extended after U.S. home resales fell to
the lowest level since Nov 2015.
• However, gains in U.S. equity markets
and decline in U.S. initial jobless claims
in the week ended Jan 19, 2019 to the
lowest level since 1969 limited the
upside.
2.66
2.71
2.76
2.81
22-Jan 23-Jan 24-Jan 25-Jan
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($/Barrel)
61.93 62.23
Gold ($/Oz)
1,303.14 1,281.11
Gold (Rs/10 gm)
32,303 32,276
Silver ($/Oz)
15.74 15.32
Silver (Rs/Kg)
38,826 39,034
Source: Thomson Reuters Eikon *
Value as on Jan 25, 2019
Gold
• Gold prices traded higher following the
European Central Bank’s warning
regarding a slowdown in the eurozone.
Weak global economic data also raised
concerns over global growth slowdown.
Safe haven appeal of the bullion
increased after the IMF trimmed its
global growth forecast.
Brent Crude
• Brent crude prices traded lower after the
IMF cautioned of sluggish global
economic growth. The economic
slowdown in China, indicated by the
weakest GDP growth in three decades
in 2018, raised concerns over fuel
demand.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
9.40
10.90
12.40
26-Dec-18 5-Jan-19 15-Jan-19 25-Jan-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-0.48%
1.72%
2.77%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
71.11 71.14
Pound Sterling
93.24 92.29
EURO
80.50 81.07
100 JPY
64.74 65.04
Source: RBI Figures in INR , *
Value as on Jan 25, 2019
Rupee
• Indian rupee stood almost unchanged as
losses due to concerns over general
elections, fiscal deficit and global growth
was neutralized by gains due to selling of
greenback by banks and importers.
Euro
• Euro fell against the U.S. dollar after
ECB President indicated rise in
eurozone’s economic risks and that near-
term data could be weaker.
Pound
• Pound surged against the U.S. dollar
following strong U.K. employment data
that indicated strong labour market
condition despite an economic slowdown
ahead of Brexit.
Yen
• Yen weakened against the U.S. dollar
after the Bank of Japan kept its monetary
policy unchanged but downgraded the
inflation forecasts.
9.85
10.08
10.31
10.54
26-Dec-18 5-Jan-19 15-Jan-19 25-Jan-19
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-0.05%
1.02%
-0.70%
-0.46%
15
The Week that was…
21
st
January to 25
th
January
The Week that was (Jan 21 – Jan 25)
16
Date Events
Present Value
Previous Value
Monday,
January 21, 2019
• China Gross Domestic Product (YoY) (4Q)
6.4% 6.5%
• China Retail Sales YTD (YoY) (Dec)
9.0% 9.1%
• China Industrial Production YTD (YoY) (Dec)
6.2% 6.3%
Tuesday,
January 22, 2019
• Germany ZEW Survey Expectations (Jan)
-15 -17.5
• Eurozone ZEW Survey (Economic Sentiment) (Jan)
-20.9 -21.0
• Japan Trade Balance (Dec)
-¥55.3b -¥737.7b
Wednesday,
January 23, 2019
• Bank of Japan Rate Decision
-0.1% -0.1%
• Japan All Industry Activity Index (MoM) (Nov)
-0.3% 2.1%
• U.S. House Price Index (MoM) (Nov)
0.4% 0.4%
• Eurozone Consumer Confidence (Jan A)
-7.90 -8.30
Thursday,
January 24, 2019
• European Central Bank Rate Decision
0.0% 0.0%
• Japan Nikkei Manufacturing PMI (Jan P)
50.0 52.6
• Germany Markit Manufacturing PMI (Jan P)
49.9 51.5
• Eurozone Markit Composite PMI (Jan P)
50.7 51.1
• U.S. Initial Jobless Claims (Jan 19)
199K 212k
• U.S. Markit Manufacturing PMI (Jan P)
54.9 53.8
Friday,
January 25, 2019
• Germany IFO Expectations (Jan)
94.2 97.3
17
The Week Ahead
28
th
January to 1
st
February
18
The Week Ahead
Day Event
Monday,
January 28, 2019
•
U.K. Nationwide House Px n.s.a. (YoY) (Jan)
•
China Industrial Profits (YoY) (Dec)
Tuesday,
January 29, 2019
•
U.S. Advance Goods Trade Balance (Dec)
•
U.S. Consumer Confidence Index (Jan)
•
U.S. Wholesale Inventories (MoM) (Dec P)
•
Japan Retail Trade (YoY) (Dec)
•
Japan Large Retailers' Sales (Dec)
Wednesday,
January 30, 2019
•
Japan Consumer Confidence Index (Jan)
•
U.S. Gross Domestic Product Annualized (QoQ) (4Q A)
•
U.S. FOMC Rate Decision
•
Japan Industrial Production (YoY) (Dec P)
Thursday,
January 31, 2019
•
China Manufacturing PMI (Jan)
•
Eurozone Gross Domestic Product s.a. (YoY) (4Q A)
•
Eurozone Unemployment Rate (Dec)
Friday,
February 1, 2019
•
Eurozone Consumer Price Index Estimate (YoY) (Jan)
•
U.S. Change in Non-farm Payrolls (Jan)
•
U.S. Unemployment Rate (Jan)
•
U.S. ISM Manufacturing (Jan)
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19
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