News U Can Use
July 13, 2018
The Week that was…
9
th
July to 13
th
July
2
Indian Economy
• India’s consumer price inflation or retail inflation grew to a 5-month high at 5.00% in Jun
from 4.87% in May and 1.46% in the same period of the previous year. Among the key
components, growth in fuel and light inflation accelerated to 7.14% in Jun from 5.80% in
May. The growth in clothing and footwear inflation also rose to 5.67% in Jun from 5.47% in
May. Housing inflation also inched up to 8.45% in Jun from 8.40% in May. The growth in
Consumer Food Price Index stood at 2.91% in Jun compared with 3.10% in the previous
month and -2.12% in the same month of the previous year.
• The growth of index of industrial production (IIP) plunged to a seven-month low of 3.2% in
May from a revised 4.8% (4.9% originally reported) in the previous month. However, the
latest industrial production growth is better than 2.9% in the same month of the previous
year. Manufacturing sector grew 2.8% in May better than 2.6% in the same month of the
previous year. The growth of IIP from Apr to May of 2018 also accelerated to 4.0% from
3.1% in the same period of the previous year.
• According to the trade ministry, India’s trade deficit reached its highest level in more than
five years in Jun 2018. Trade deficit stood at $16.6 billion in Jun 2018 from $14.62 billion in
May 2018. Imports went up 21.31% YoY to $44.30 billion in Jun 2018 due to rise in oil
imports that jumped 56.61% to $12.73 billion. Merchandise exports rose 17.57% YoY to
$27.7 billion. Meanwhile, gold imports dropped 2.8% YoY to $2.39 billion.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 13-Jul-18 1 Week Return YTD Return
S&P BSE Sensex 36541.63 2.48% 7.30%
Nifty 50 11018.9 2.29% 4.64%
S&P BSE Mid-Cap 15431.47 0.26% -13.42%
S&P BSE Small-Cap 16196.33 0.85% -15.78%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
09-Jul-18 1265 528 2.40
10-Jul-18 1243 542 2.29
11-Jul-18 670 1140 0.59
12-Jul-18 760 1031 0.74
13-Jul-18 459 1344 0.34
Source: NSE
• Indian equity markets closed in the
green. Gains in oil & gas stocks due
to fall in crude oil prices boosted the
indices. Gains in stock of an Indian
conglomerate in one of the sessions,
after an international brokerage firm
showed positivity on the prospects of
the stock, supported buying interest.
Optimism over upcoming corporate
earnings season also added to the
gains.
• However, surge in retail inflation data
to 5-month high for Jun 2018 and fall
in IIP growth to seven-month low in
May 2018 weighed on market
sentiment. Concerns over U.S.
threats of tariffs on an additional
$200 billion worth of Chinese goods,
raised probability of a full-scale trade
war between the two nations, thereby
restricting the gains.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
23.41 27.38 32.88 107.58
P/B
3.03 3.71 2.63 2.31
Dividend Yield
1.20 1.18 0.98 0.78
Source: BSE, NSE Value as on Jul
13, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
24567.12 -0.55% -1.71%
S&P BSE Bankex
29788.45 1.38% -0.35%
S&P BSE CD
19764.85 0.92% -5.04%
S&P BSE CG
17798.96 1.57% -4.47%
S&P BSE FMCG
11485.10 1.07% 1.82%
S&P BSE HC
14057.07 0.08% 1.60%
S&P BSE IT
14385.70 3.17% 3.95%
S&P BSE Metal
12470.90 -1.18% -8.81%
S&P BSE Oil & Gas
14154.44 3.36% -3.42%
Source: Thomson Reuters Eikon
*Value as on July 13, 2018
• On the BSE sectoral front, indices closed
on a higher note. S&P BSE Oil & Gas
(3.36%) stood as the major gainer followed
by S&P BSE IT (3.17%) and S&P BSE
Teck (2.04%). Gains in the stock of an IT
major, following better than expected
corporate earnings numbers for Q1FY19,
helped the S&P BSE IT sector go up.
• S&P BSE Capital Goods and S&P BSE
Bankex grew 1.57% and 1.38%,
respectively. S&P BSE Metal stood as the
major loser (-1.18%) followed by S&P BSE
Auto that fell (-0.55%). Consistent trade
war concerns amid threats of tariffs led to
decline in metal stocks.
Indian Derivatives Market Review
• Nifty Jul 2018 Futures were at 11,020, a premium of 1.10 points, above the spot closing of
11,018.90. The turnover on NSE’s Futures and Options segment stood at Rs. 40.98 lakh
crore as against Rs. 39.85 lakh crore on Jul 6.
• The Put-Call ratio stood at 0.90 compared with the previous week’s close of 0.85.
• The Nifty Put-Call ratio stood at 1.79 compared with the previous week’s close of 1.51.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
6.16 6.15 6.08 5.91
91 Day T-Bill
6.54 6.45 6.52 6.32
7.80% 2021, (5 Yr GOI)
7.75 7.75 7.77 7.06
7.17% 2028, (10 Yr GOI)
7.79 7.87 7.93 7.28
Source: Thomson Reuters
Eikon
Value as on July 13, 2018
• Bond yields fell following decline in
the global crude oil prices. However,
rise in consumer price inflation data
to a five-month high in Jun 2018 and
easing of Index of Industrial
Production data to a 7-month low in
May 2018, capped the gains.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) fell 8 bps to
close at 7.79% from the previous
week’s close of 7.87% after trading in
a range of 7.77% to 7.91%.
• The Reserve Bank of India (RBI)
conducted auction of state
development loans of 10 state
governments for a notified amount of
Rs. 10,500 crore for which Rs.
8,264.75 crore was accepted. The
cut-off yield stood in the range of
8.50% to 8.59%.
7.76
7.84
7.92
9-Jul 10-Jul 11-Jul 12-Jul 13-Jul
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 7.34 8.27 93
3 Year 7.90 8.63 73
5 Year 8.11 8.76 65
10 Year 7.94 8.76 81
Source: Thomson Reuters Eikon
Value as on July 13, 2018
• Yields on gilt securities increased on 2-
and 30-year papers by 1 and 5 bps,
respectively. Yield fell on remaining
papers in the range of 2 to 13 bps
barring 3-year that closed steady.
• Corporate bond yields fell across the
curve in the range of 3 to 10 bps barring
15-year paper that increased 1 bps.
• Spread between AAA corporate bond
and gilt expanded on 4-, 10- and 15-year
papers by 2, 1 and 6 bps, respectively.
Spread contracted on remaining
maturities in the range of 2 to 7 bps
barring 2- and 5-year that closed steady.
-12
0
12
6.30
7.30
8.30
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 13-Jul-18 06-Jul-18
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Securities and Exchange Board of India (SEBI) has altered the methodology for daily
stress testing for commodity derivatives. This comes as part of strengthening the risk
management system. SEBI stated that the modification is done keeping in mind the various
features and concerns of commodity derivatives markets.
• The stocks brokers in the country have been asked by Securities and Exchange Board of
India (SEBI) to stop accepting cash from their clients. Further, SEBI has barred the stock
brokers from receiving cash deposits in their bank accounts from the clients. Meanwhile,
with an aim to accelerate the listing process, SEBI is planning bring in an alternative
payment mechanism in initial public offers for retail investors.
• As per media reports, The Criminal Law (Amendment) Bill, 2018, that provides for severe
punishment including death penalty for those found guilty of raping girls below the age of 12
years, will be introduced in the monsoon session of Parliament beginning Jul 18. This
amendment bill will replace Criminal Law (Amendment) Ordinance promulgated on Apr 21
after it receives approval from the Parliament.
• According to Department of Industrial Policy and Promotion (DIPP), Andhra Pradesh has
secured the top position in the third edition of the government’s Ease of Doing Business
index for states followed by Telangana (98.33%) and Haryana (98.07%) at the second and
third position. However, Mumbai (Maharashtra) and New Delhi (Delhi), the two cities that
World Bank takes into consideration for its annual Ease of Doing Business Index, didn’t
perform well on this state index.
Regulatory Updates in India (contd..)
• The government will focus on states to adopt zero-budget natural farming (ZBNF), using of
natural farming methods where the cost of growing and harvesting crops is almost zero.
This new method will lower the cost of farming, thereby significantly increasing the profit
margins for farmers.
• According to the Directorate General of Anti-dumping and Allied Duties (DGAD), India has
imposed anti-dumping duty on a Chinese polyester yarn used in automobile and other
industries of up to $528 per tonne for 5 years. This is done to provide a level playing field to
domestic players and protect them against below-cost imports.
• According to a group of ministers (GoM) headed by the Bihar deputy chief minister has
recommended the goods and service tax (GST) council to omit section 9(4) in GST Act
concerning the reverse charge mechanism (RCM) and introduce a new section. The reason
for replacing is that the current RCM mechanism discriminates against the unregistered
dealers by not adding much to the revenue. Another ministerial body led by the same
minister has recommended to the GST Council to delay by a year the proposal to
incentivise digital payments under GST due to revenue implications of doling out
concessional tax rate.
• According to the finance minister, the amount of money locked in tax litigation will come
down by Rs. 5,600 crore as the government has increased the threshold monetary limit to
file appeals in tribunals and courts. The minister further added that tax disputes amounting
Rs. 7.6 lakh crore were stuck in various stages of litigation in tribunals, high courts and the
Supreme Court.
9
Global News/Economy
• Data from the U.S. Labor Department showed that growth in consumer price index inched up
to 0.1% MoM in Jun 2018 after growing by 0.2% in May 2018. Food prices grew 0.2% MoM
in Jun after remaining unchanged in the previous month while energy prices fell 0.3% in Jun
after growing 0.9% in May.
• According to a report from the Office for National Statistics, U.K.’s gross domestic product
grew 0.3% MoM in May 2018 as against an increase of 0.2% in Apr 2018 and a flat reading
in Mar 2018. This marked the strongest growth since Nov 2017. The gained momentum led
to expectations that the Bank of England will raise interest rates in Aug 2018.
• According to minutes of the European Central Bank’s governing council meeting held on Jun
13-14, policymakers are of views that ample monetary policy stimulus will be required to
support inflation in the euro zone. Policymakers also warned that economic slowdown
witnessed in the first three months of the year in the euro zone may extend into the second
quarter in several member countries.
• According to a report from the National Bureau of Statistics, China’s consumer prices grew
1.9% YoY in Jun 2018 as against growth of 1.8% in May 2018. Also, China’s producer prices
rose 4.7% in Jun as against 4.1% rise in May.
• According to data from the Ministry of Economy, Trade and Industry, Japan’s industrial
production fell 0.2% MoM in May 2018 as against 0.5% increase in Apr 2018. On a yearly
basis, Japan’s industrial production increased 4.2% in May 2018 from 2.6% in Apr.
10
Global Equity Markets
11
Global Indices
Indices
13-Jul-18
1-Week
Return
YTD
Return
Dow Jones
25019.41 2.30% 1.21%
Nasdaq 100
7375.82 2.34% 15.31%
FTSE 100
7661.87 0.58% -0.34%
DAX Index
12540.73 0.36% -2.92%
Nikkei Average
22597.35 3.71% -0.74%
Straits Times
3260.35 2.15% -4.19%
Source: Thomson Reuters Eikon
Value as on Jul 13, 2018
U.S.
• U.S. markets traded up on optimism
about the Jun quarter earnings. Federal
Reserve’s (Fed) positive outlook on the
U.S. economy and better than expected
U.S. economic data supported bourses.
However, trade war concerns kept
investors cautious as the U.S.
administration proposed new tariffs on
additional $200 billion worth of Chinese
goods and China has also threatened to
take countermeasures.
Europe
• Market participants remained optimistic of strong corporate results and key economic data
from Germany, Eurozone and France. Optimism over post Brexit deal between U.S. and
U.K. also helped sentiment and outweighed initial concerns when two key Brexit
proponents resigned from the U.K. government. However, trade war concerns kept
investors cautious.
Asia
• Asian markets rose on better than expected economic data across the region. Japan's
tertiary activity index increased for the second straight month in May, South Korea's
unemployment rate decreased more than expected in Jun and Chinese exports rose
11.3% in Jun over the year, which is faster than the expected.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
remained unchanged at 2.83% from the
previous week’s close.
• U.S. Treasury prices fell as investor
focus shifted towards equity market.
Prices fell further following weak
demand in the auction of 3-year notes.
• Modest increase in U.S. consumer price
inflation data for Jun 2018 reinforced
expectations that the U.S. Federal
Reserve will maintain its rate increase
schedule, thereby contributing to further
fall in U.S. Treasury prices.
• However, losses reversed as growing
trade tension between China and the
U.S. boosted the safe-haven appeal of
U.S. Treasuries.
2.80
2.85
2.90
9-Jul 10-Jul 11-Jul 12-Jul 13-Jul
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel)
73.80 74.57
Gold ($/Oz)
1241.00 1254.20
Gold (Rs/10 gm)
30080 30540
Silver ($/Oz)
15.78 16.00
Silver (Rs/Kg)
38649 39264
Source: Thomson Reuters
Eikon *Value as on Jul 13, 2018
Gold
• Gold prices fell on concerns over further
rate hikes by U.S. Federal Reserve
(Fed). Improved labour market condition
in the U.S. also weighed on the bullion
prices as the Job Openings and Labor
Turnover survey (JOLTs) reinforced U.S.
labor market strength and job openings
are at a higher than expected rate.
Crude
• Brent crude prices fell on news that
Libya's National Oil Corp would reopen
its four export oil terminals. Further,
Organisation of Oil Exporting countries
(OPEC) has forecasted that trade
tensions might adversely impact the oil
market.
Baltic Dry Index
• The Baltic Dry Index gained 2.71% on
the back of higher capesize and
panamax activities.
8.50
9.00
9.50
10.00
10.50
11.00
13-Jun-18 23-Jun-18 3-Jul-18 13-Jul-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-1.03%
-1.05%
-1.38%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
68.41 68.88
Pound Sterling
90.07 91.14
EURO
79.76 80.63
100 JPY
60.77 62.25
Source: RBI Figures in INR , *Value as on Jul 13, 2018
Rupee
• The rupee rose against the greenback
following gains in the domestic equity
market and fall in global crude oil prices.
Euro
• The euro weakened against the
greenback on concerns that the U.S.
Federal Reserve (Fed) would continue
with its rate hikes in 2018 following
upbeat U.S. inflation data for Jun 2018.
Pound
• The pound weakened against the
greenback following the resignation of
the British foreign secretary and the
Brexit minister that led to uncertainty
over the interest outlook in the country
and speculation of a possible challenge
to the existing British leadership.
Yen
• The yen plunged against the greenback
on concerns that the U.S. Fed would
continue with its rate hikes in 2018.
9.80
10.00
10.20
10.40
13-Jun-18 23-Jun-18 3-Jul-18 13-Jul-18
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
-0.68%
-1.18%
-1.08%
-2.38%
15
The Week that was…
9
th
July to 13
th
July
The Week that was (July 9 – July 13)
16
Date Events
Present
Value
Previous
Value
Monday,
July 9, 2018
• Japan Bankruptcies (YoY) (Jun) -2.26% -4.36%
Tuesday,
July 10, 2018
• China Consumer Price Index (YoY) (Jun) 1.9% 1.8%
• Germany ZEW Survey Expectations (Jul) -24.7 -16.1
• Eurozone ZEW Survey (Economic Sentiment) (Jul) -18.7 -12.6
• Japan Machine Tool Orders (YoY) (Jun P) 11.4% 14.9%
• U.K. Industrial Production (YoY) (May) 0.8% 1.6%
Wednesday,
July 11, 2018
• U.S. MBA Mortgage Applications (Jul 06) 2.5% -0.5%
• Japan Tertiary Industry Index (MoM) (May) 0.1% 1.0%
Thursday,
July 12, 2018
• U.S. Consumer Price Index (YoY) (Jun) 2.9% 2.9%
• India's Consumer's Price Inflation index (June) 5.0% 4.9%
• India's Index of Industrial Production (IIP) 3.2% 4.8%
• Germany Consumer Price Index (YoY) (Jun F) 2.1% 2.1%
• U.S. Initial Jobless Claims (Jul 07) 214k 232k
• Eurozone Industrial Production (YoY) (May) 2.4% 1.7%
• China Foreign Direct Investment (YoY) (Jun) 0.3% 7.6%
Friday,
July 13, 2018
• India’s Trade Deficit (June) $16.6b $14.62b
• U.S. University of Michigan Sentiment (Jul P) 97.1 98.2
• China Trade Balance (Jun) $41.61b $24.92b
17
The Week Ahead
16
th
July to 20
th
July
18
The Week Ahead
Day Event
Monday,
Jul 16, 2018
• India's Wholesale Price Index (June)
• China Gross Domestic Product YTD (YoY) (2Q)
• U.S. Retail Sales Advance (MoM) (Jun)
• China Retail Sales YTD (YoY) (Jun)
• China Industrial Production (YoY) (Jun)
Tuesday,
Jul 17, 2018
• Japan Nationwide Department Sales (YoY) (Jun)
• China New Home Prices (MoM) (Jun)
• U.K. ILO Unemployment Rate 3Mths (May)
• U.S. Industrial Production (MoM) (Jun)
• U.S. NAHB Housing Market Index (Jul)
Wednesday,
Jul 18, 2018
• U.K. Consumer Price Index (YoY) (Jun)
• Eurozone Consumer Price Index (YoY) (Jun F)
• U.S. Housing Starts (Jun)
• Japan Trade Balance (Jun)
Thursday,
Jul 19, 2018
• Japan National Consumer Price Index (YoY) (Jun)
• U.S. Initial Jobless Claims (Jul 14)
Friday,
Jul 20, 2018
• Japan All Industry Activity Index (MoM) (May)
• U.K. Public Finances (PSNCR) (Pounds) (Jun)
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19
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