The Week that was…
15
th
July to 19
th
July
2
Indian Economy
• India’s Wholesale Price Index (WPI) - based inflation slowed down to 2.02% in Jun 2019
from 2.45% in May 2019 and 5.68% in Jun 2018. Vegetable inflation came in at 24.7% in
Jun 2019, down from 33.15% in May 2019. Inflation for fuel and power fell to -2.20% in Jun
from 0.98% in the previous month.
• Government data showed that India’s trade deficit narrowed to $15.28 billion in Jun 2019
from $15.36 billion in May 2019 and $16.60 billion in the same month of the previous year.
This is the first contraction in nine months and worse data since Jan 2016. India’s trade
deficit narrowed as imports fell 9.1% in Jun 2019 and exports declined 9.7% as well. Oil
imports declined 13.33% to $11.03 billion and non-oil imports dropped 7.34% to $29.26
billion.
• A survey by IHS Markit India Business Outlook has showed that business sentiment in
India fell to its lowest level since June 2016. It said companies were worried over a slowing
economy, government policies and water shortage. The net balance of private sector
companies foreseeing output growth in the year ahead fell from 18% in Feb 2019 to 15%
in Jun, matching the data of Jun 2016, and Oct 2009 when aggregate figures became
available. According to the IHS Markit India Business Outlook, predictions of softer activity
growth underpin the downward revisions of profit outlook, subdued hiring plans and
relatively muted capital expenditure.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
19-Jul-19
1 Week Return
YTD Return
S&P BSE Sensex
38,337.01 -1.03% 6.29%
Nifty 50
11,419.25 -1.15% 5.12%
S&P BSE Mid
-Cap 14,078.34 -3.27% -8.81%
S&P BSE Small
-Cap 13,310.35 -3.38% -9.49%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
15-Jul-19 605 1,241 0.49
16-Jul-19 871 952 0.91
17-Jul-19 876 931 0.94
18-Jul-19 438 1,372 0.32
19-Jul-19 403 1,449 0.28
Source: NSE
• Indian equity markets closed on a weak
note. Reports that the finance minister
adhered to her Union Budget proposal
as on July 5, 2019 and refused to
remove the applicability of the new
surcharge on the superrich as
requested by the association of foreign
portfolio investors weighed on the
market sentiments. This tax would
impact foreign portfolio investors and
markets fear that it may lead to capital
outflows.
• Meanwhile, Asian Development Bank
lowered India's GDP growth forecast to
7% for 2019-20 as against previous
expectation of 7.2% due to fiscal
shortfall concerns, thereby denting
market sentiments. Losses were
extended on weak earnings reports by
a slew of major corporates and slow
progress of monsoon weighed on
investors' risk appetite.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
27.73 27.92 29.62 34.25
P/B
2.93 3.57 2.37 1.86
Dividend Yield
1.22 1.31 1.05 1.08
Source: BSE, NSE Value as on July
19, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
16,261.58
-
5.85% -7.36%
S&P BSE Bankex
33,464.04
-
2.76% -1.76%
S&P BSE CD
22,927.82
-
1.13% -8.90%
S&P BSE CG
18,026.92
-
3.36% -6.45%
S&P BSE FMCG
11,087.43
-
1.18% -2.75%
S&P BSE HC
12,772.44
-
1.17% 2.09%
S&P BSE IT
15,455.03 2.34% -3.30%
S&P BSE Metal
10,239.65
-
2.85% -4.61%
S&P BSE Oil & Gas
13,905.95
-
1.30% -5.82%
Source: Thomson Reuters Eikon
*
Value as on July
19, 2019
• S&P BSE Auto was the major loser that fell
5.85% followed by S&P BSE Capital Goods
that fell 3.36%. S&P BSE Metal and S&P
BSE Bankex fell 2.85% and 2.76%,
respectively. An Indian scheduled commercial
bank expects some challenges on some of
their exposures in the near term, though it
posted 41% YoY growth in earnings in the
quarter ended Jun 30, 2019.
• S&P BSE IT was the major gainer that grew
2.34%. One of the information technology
majors beat estimates in its first quarter
earnings and increased its revenue growth
guidance for 2019-20.
Indian Derivatives Market Review
• Nifty Jul 2019 Futures stood at 11,421.85, a premium of 2.60 points, above the spot closing
of 11,419.25. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 57.39 lakh crore as against Rs. 62.90 lakh crore for the week to July 12.
• The Put-Call ratio stood at 0.94 compared with the previous week’s close of 0.87.
• The Nifty Put-Call ratio stood at 1.05 against the previous week’s close of 1.15.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
5.70 5.63 5.80 6.45
91 Day T
-Bill
5.73 5.85 5.98 6.60
07.32% 2024, (5 Yr GOI)
6.33 6.45 6.68 6.70
07.26% 2029, (10
Yr GOI)
6.36 6.49 6.84 7.31
Source: Thomson Reuters Eikon
Value as on July 19
, 2019
• Bond yields fell on hopes of deep rate
cuts by the Monetary Policy
Committee in the next policy meeting.
Optimism on rate cuts strengthened
particularly after the release of the
retail inflation data, which came in
before the central bank’s target rate.
The retail inflation rate stood at 3.18%,
below the central bank’s target of 4%.
• However, the gains were capped as
traders preferred to book profits and
take advantage of the recent bond
rally.
• Yields on the 10-year benchmark
paper (7.26% GS 2029) plunged 13
bps to close at 6.36% compared with
the previous close of 6.49% after
trading in the range of 6.27% to
6.47%.
6.20
6.35
6.50
15-Jul 16-Jul 17-Jul 18-Jul 19-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 5.99 7.51 152
3 Year 6.33 7.59 126
5 Year 6.43 7.63 120
10 Year 6.46 8.03 157
Source: Thomson Reuters Eikon
Value as on July 19, 2019
• Yields on gilt securities decreased across the
maturities by up to 16 bps barring 2 and 30-
year papers which rose by 1 bps each and 15-
year paper that closed steady.
• Corporate bond yields decreased across the
maturities in the range of 4 bps to 15 bps
barring 10 and 15-year papers which rose 1
bps and 50 bps, respectively.
• Difference in spread between AAA corporate
bond and gilt expanded across most of the
maturities in the range of 4 bps to 50 bps 6
bps barring 4 to 7-year papers which
contracted by up to 8 bps while the same
closed steady on 3-year paper.
-20
-10
0
10
5.20
5.70
6.20
6.70
7.20
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-Jul-19 12-Jul-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Securities & Exchange Board of India has reviewed the disclosure criteria for listed
companies with respect to asset provisioning divergence. The modifications in the
disclosure standards are in line with the amended RBI criteria, the regulator said ina Jul 17,
2019, circular. According to the circular, listed banks will have to disclose to the stock
exchanges divergences in the asset classification and provisioning if "the additional
provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before
provisions and contingencies for the reference period." This threshold was 15% earlier.
• Stricter standards have been suggested by the Securities and Exchange Board of India
(SEBI) to reinforce audit procedures and reduce sudden auditor resignations in publicly
traded companies. SEBI suggested in a consultation document that the role of the audit
committee and disclosures to shareholders should be enhanced to guarantee that statutory
auditors behave more responsibly and resign only for real reasons without harming investor
sentiment.
• A panel of the Reserve Bank of India (RBI) formulating guidelines for the transfer of surplus
funds to government from the central bank has concluded its recommendations and will
submit its report "very soon", media reports said. The six-member panel led by a former RBI
governor initially intended to submit the report in Apr 2019, but due to a lack of consensus
was postponed. According to reports, the panel has proposed the transfer of RBI funding
over 3-5 years with the amount of cash that RBI will transfer not clear.
Regulatory Updates in India (contd..)
9
• The finance minister said seven laws under indirect taxation are being amended to ensure
higher simplicity, media reports showed. She moved the Finance Bill in the Lok Sabha. The
minister told the Lower House that amendments to laws are being made in five major
categories, including Goods and Services Tax (GST), through the Finance Bill.
• Media reports showed the Ministry of Housing and Urban Affairs has drafted the Model
Tenancy Act, 2019. This is being done to balance the rights and interest of both landlords
and tenants and create adequate rental housing stock. The finance minister had mentioned
about this Act in her budget speech. The report said the this will help overhaul the legal
framework vis-à-vis rental housing across India and may also give a boost to private
participation in this segment.
• The amendment bill of the Companies Act, 2013 has been cleared by the government. Bill
would replace an ordinance issued in 2019. Proposed amendments will lead to further
promotion of ease of doing business, de-clogging of National Company Law Tribunal and
Special Courts, government said. The focus would be on serious cases of violations of the
Act and ensuring enhanced compliance by corporates.
Global News/Economy
• According to a preliminary report from the University of Michigan, U.S. consumer sentiment
index edged up to 98.4 in Jul 2019 as against the final reading of 98.2 in Jun 2019. Index of
consumer expectations grew to 90.1 in Jul from 89.3 in Jun.
• A report from Office for National Statistics showed that U.K. consumer prices came in line
with market expectations and grew 2% YoY in Jun 2019, thereby remaining unchanged
against May 2019. Meanwhile, core inflation surged to 1.8% in Jun as against 1.7% in May.
• According to a report from the ZEW-Leibniz Centre, Germany’s economic confidence index
fell to -24.5 in Jul 2019 from -21.1 in Jun 2019. This marked the lowest score since Oct
2018.
• Preliminary estimates from the National Bureau of Statistics showed China’s gross domestic
product expanded 6.2% YoY in the second quarter, slower than the 6.4% growth registered a
quarter ago. This is the country’s slowest pace in 27 years in the second quarter,
emphasizing the need for measures to stimulate domestic consumption and investment amid
escalating trade disputes with the U.S.
• The Ministry of Internal Affairs and Communications Overall said Japan’s nationwide
consumer prices were up 0.7% YoY in Jun 2019 unchanged from May 2019 and in line with
expectations. Core consumer prices, which excludes food prices, rose an annual 0.6%.
10
Global Equity Markets
11
Global Indices
Indices
19-Jul-19
1-Week
Return
YTD
Return
Russell 3000
1,305.18 -1.21% 22.82%
Nasdaq 100
7,834.90 -1.36% 23.77%
FTSE 100
7,508.70 0.04% 11.60%
DAX Index
12,266.29 -0.46% 16.17%
Nikkei Average
21,466.99 -1.01% 7.26%
Straits Times
3,377.96 0.61% 10.08%
Source: Thomson Reuters Eikon
Value as on July 19, 2019
U.S.
• U.S. markets fell as investors remained
worried over the fate of the U.S. China
trade turf. Selling pressure emerged
after U.S. President said that U.S.-
China trade talks still have a long way to
go and threatened to impose tariffs on
another $325 billion worth of Chinese
goods. Market sentiments was further
dented after report from Commerce
Department showed housing starts fell
annually in June after slipping in May.
Europe
• European markets witnessed selling pressure as trade worries reignited after U.S.
President threatened to impose tariffs on another $325 billion worth of Chinese goods.
Few disappointing earnings reports also weighed on sentiment and prompted traders to
cut down on long positions.
Asia
• Asian markets witnessed mixed trend during the week. Japanese market came under
selling pressure as investors remained concerned over U.S.- China trade war and Japan-
South Korea trade tension. However, much of the weakness seen was neutralized after
comments from one of the U.S. Federal Reserve officials, which fanned speculations that
the central bank may ease its monetary policy stance more aggressively.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond fell 6 bps to 2.05% compared with
the previous week’s close of 2.11%.
• U.S treasury prices grew following
reports showing weakness in U.S.
housing starts and building permits data
in Jun 2019. Additionally, concerns
about the trade war between the U.S.
and China boosted the safe-haven
appeal of U.S. treasury.
• Further, expectations that U.S. Federal
Reserve would cut rates in its meeting
on Jul 30-31, 2019 due to concerns
about global growth added to the gains.
• However, upbeat U.S. retail sales data
in Jun 2019 that rose 0.4% and strong
U.S. manufacturing data for Jun
restricted the gains.
2.00
2.08
2.16
15-Jul 16-Jul 17-Jul 18-Jul 19-Jul
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
61.18 67.14
Gold ($/Oz)
1,424.91 1,415.50
Gold (Rs/10 gm)
35,091 34,407
Silver ($/Oz)
16.21 15.21
Silver (Rs/Kg)
40,624 37,733
Source: Thomson Reuters Eikon *
Value as on
July 19, 2019
Gold
• Gold prices remained strong with rising
geo-political tension and expectations of
rate cuts by the U.S. Federal Reserve.
Weak Chinese GDP data which came in
lowest in the past 27 years also helped
sentiments.
Brent Crude
• Brent crude prices plunged after drillers
resumed production in the Gulf of Mexico
as hurricane Barry moved inland. In
addition, the Energy Information
Administration expects U.S. crude
production to rise by 49,000 bpd from the
seven key shale formations in Aug.
Further, fall in Chinese GDP data raised
concerned over the demand side of the
liquid gold.
Baltic Dry Index
• The Baltic Dry Index registered a rise on
the back of improved capesize and
panamax activities.
9.00
10.00
11.00
19-Jun-19 29-Jun-19 9-Jul-19 19-Jul-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-8.88%
0.67%
6.54%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
68.82 68.59
Pound Sterling
86.22 86.01
EURO
77.52 77.29
100 Yen
63.93 63.30
Source: RBI Figures in INR , *
Value as on July 19, 2019
Rupee
• The rupee weakened against the U.S.
dollar following losses in the domestic
equity market and greenback demand
from state run banks.
Euro
• The euro weakened against the
greenback following upbeat U.S. retail
sales data for Jun-19 and on growing
possibility that the European Central
Bank might cut interest rates in its
monetary policy review due next week.
Pound
• The pound weakened against the
greenback on concerns that Britain may
leave the European Union without any
transition trading agreements in place.
Yen
• The yen strengthened against the
greenback as the latter remained under
pressure on growing possibility that the
U.S. Federal Reserve may also lower
interest rates by the end of Jul-19.
9.50
9.75
10.00
10.25
19-Jun-19 29-Jun-19 9-Jul-19 19-Jul-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
0.35%
0.25%
0.29%
1.00%
15
The Week that was…
15
th
July to 19
th
July
The Week that was (July 15 – July 19)
16
Date Events
Present
Value
Previous
Value
Monday,
July 15, 2019
•
India Wholesale Price Index (Jun) 2.0% 2.5%
•
China Gross Domestic Product YTD (YoY) (2Q) 6.2% 6.4%
•
China Industrial Production (YoY) (Jun) 6.0% 6.0%
Tuesday,
July 16, 2019
•
Germany ZEW Survey Expectations (Jul) -24.5 -21.1
•
Eurozone ZEW Survey (Economic Sentiment) (Jul) -20.3 -20.2
•
U.S. Retail Sales Advance (MoM) (Jul) 0.4% 0.4%
•
U.K. ILO Unemployment Rate 3Mths (May) 3.8% 3.8%
•
U.S. Industrial Production (MoM) (JUN) 0.0% 0.4%
Wednesday,
July 17, 2019
•
U.K. Consumer Price Index (YoY) (Jun) 2.0% 2.0%
•
Eurozone Consumer Price Index (YoY) (Jun F) 1.3% 1.2%
•
U.S. Housing Starts (MoM) (Jun) -0.9% -0.4%
•
Japan Trade Balance (Jun) ¥589.5b -¥968.3b
Thursday,
July 18, 2019
•
Japan National Consumer Price Index (YoY) (Jun) 0.7% 0.7%
•
U.S Initial Jobless Claims (Jul 13) 216k 208k
•
U.S. Leading Index (Jun) -0.3% 0.0%
Friday,
July 19, 2019
•
U.S. University of Michigan Sentiment (Jul P) 98.4 98.2
•
Japan All Industry Activity Index (MoM) (May) 0.3% 0.8%
17
The Week ahead
22
nd
July to 26
th
July
18
The Week Ahead
Day Event
Monday,
July 22, 2019
•
Japan Convenience Store Sales (YoY) (Jun)
•
U.S. Chicago Fed Nat Activity Index (Jun)
Tuesday,
July 23, 2019
•
U.S. Existing Home Sales (MoM) (Jun)
•
Eurozone Consumer Confidence (Jul A)
•
U.S. House Price Index (MoM) (May)
Wednesday,
July 25, 2019
•
U.S. Markit Composite PMI (Jul P)
•
Eurozone Markit Composite PMI (Jul P)
•
Germany Markit/BME Composite PMI (Jul P)
•
U.S. New Home Sales (MoM) (Jun)
•
Japan Nikkei PMI Manufacturing (Jul P)
Thursday,
July 25, 2019
•
European Central Bank Rate Decision
•
U.S. Durable Goods Orders (Jun P)
•
U.S. Advance Goods Trade Balance (Jun)
•
German IFO Expectations (Jul)
•
U.S. Initial Jobless Claims (Jul 20)
Friday,
July 26, 2019
•
U.S. Gross Domestic Product Annualized (QoQ) (2Q A)
•
U.S. Personal Consumption (2Q A)
Disclaimer
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19
