The Week that was…
10
th
June to 14
th
June
2
Indian Economy
• India’s Index of Industrial Production (IIP) growth rose 3.4% YoY in Apr 2019 as against
revised growth of 0.4% (decline of 0.1% originally reported) in Mar 2019 and increase of
4.5% in Apr 2018. The current reading is highest in seven months. The electricity, mining
and manufacturing sector rose 6%, 5.1% and 2.8% in Apr 2019 compared with a rise of
2.1%, 3.8% and 4.9% a year ago, respectively.
• India’s consumer inflation accelerated to 3.05% YoY in May 2019 from upwardly revised
growth of 2.99% (originally reported 2.92%) in Apr 2019 but slowed compared with 4.87%
in May 2018. Food inflation grew 1.83% in May 2019 compared with a growth of 1.10% in
Apr 2019 and a growth of 3.10% in the same month of the previous year. Vegetables
inflation also accelerated to 5.46% YoY from 2.87% in Apr 2019. Pulses and products
inflation rose 2.13% YoY in May 2019 from decline of 0.89% in the previous month.
• India’s Wholesale Price Index (WPI) - based inflation slowed down to 2.45% in May 2019
from 3.07% in Apr 2019 and 4.78% in May 2018. This marked nearly two-year low. Fuel
and power inflation came in at 0.98% in May 2019, significantly down from 3.84% in Apr
2019. Inflation for manufactured products fell to 1.28% as against 1.72% in the previous
month. Meanwhile, food articles inflation came in at 6.99% as against 7.37% in Apr 2019.
• India’s trade deficit widened to $15.36 billion in May 2019 from $15.33 billion in the
previous month and $14.62 billion in the same month of the previous year.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 14-Jun-19 1 Week Return YTD Return
S&P BSE Sensex 39,452.07 -0.41% 9.38%
Nifty 50 11,823.3 -0.40% 8.84%
S&P BSE Mid-Cap 14,720.99 -1.24% -4.65%
S&P BSE Small-Cap 14,365.93 -1.99% -2.32%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
10-Jun-19 701 1143 0.61
11-Jun-19 815 1020 0.80
12-Jun-19 694 1124 0.62
13-Jun-19 590 1226 0.48
14-Jun-19 520 1289 0.40
Source: NSE
• Indian equity markets ended the week
in the red. Initial positive vibes, led by
optimism over rate-cut by U.S. Federal
Reserve in its upcoming meeting and
reports that U.S. administration has
"indefinitely suspended" tariffs on all
Mexican goods, was overshadowed by
ongoing U.S.-China trade tension.
• Markets witnessed additional selling
pressure amid increased trade tension
between U.S. and India.
• On the economic front, domestic
factory output surged in Apr 2019 to hit
a six-month high, while retail inflation
accelerated at the fastest pace in seven
months in May 2019. Inflation still is
within the RBI’s tolerance level, thereby
leaving scope for more rate-cuts.
• The downturn was cushioned by hopes
of continuity in reforms and strong
growth agenda, post the outcome of
elections.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
27.98 29.24 28.24 158.45
P/B
3.00 3.77 2.41 2.05
Dividend Yield
1.22 1.23 1.01 0.98
Source: BSE, NSE Value as on June
14, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,113.90 -2.04% 0.93%
S&P BSE Bankex
34,352.25 -1.47% 6.57%
S&P BSE CD
25,264.58 -0.02% 7.86%
S&P BSE CG
19,545.93 -0.04% 11.41%
S&P BSE FMCG
11,516.21 -0.13% 1.64%
S&P BSE HC
12,899.08 -1.07% -4.11%
S&P BSE IT
15,907.67 1.07% 3.78%
S&P BSE Metal
10,956.44 1.65% 3.75%
S&P BSE Oil & Gas
15,047.12 -1.17% 4.29%
S&P BSE Realty
2,092.99 -3.21% 8.72%
Source: Thomson Reuters Eikon
*Value as on June 14, 2019
• On the BSE sectoral front, barring S&P BSE
Metal, S&P BSE IT and S&P BSE Teck, all
the indices closed in the red. S&P BSE
Realty was the major loser, down 3.21%,
followed by S&P BSE Auto and S&P BSE
Bankex, which fell 2.04% and 1.47%,
respectively.
• Banking sector came under selling pressure
after a global credit rating agency placed the
foreign currency issuer rating of one of the
private sector banks under review for
downgrade.
Indian Derivatives Market Review
• Nifty Jun 2019 Futures were at 11,838.05, a premium of 14.75 points, above the spot closing
of 11,823.30. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 62.41 lakh crore as against Rs. 60.83 lakh crore for the week to June 7.
• The Put-Call ratio stood at 0.92 compared with the previous week’s close of 0.85.
• The Nifty Put-Call ratio stood at 1.26 against the previous week’s close of 1.32.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.83 5.69 5.91 6.41
91 Day T-Bill
5.98 5.92 6.38 6.68
07.32% 2024, (5 Yr GOI)
6.72 6.79 7.14 7.22
07.26% 2029, (10 Yr GOI)
6.92 6.97 7.38 --
Source: Thomson Reuters Eikon
Value as on June 14, 2019
• Bond yields fell after retail inflation for
May 2019 stayed below the Reserve
Bank of India's (RBI) target of 4% for
the 10th month in a row even though
the same rose to a seven-month high.
RBI’s unexpected announcement of
purchasing of government securities
under open market operation added to
the gains. Fall in global crude oil
prices over the week also contributed
to the upside.
• Yields on the 10-year benchmark
paper (7.26% GS 2029) fell 5 bps to
close at 6.92% compared with the
previous close of 6.97% after trading
in the range of 6.91% to 7.10%.
• RBI on a review of the evolving
liquidity conditions and assessment of
the durable liquidity has decided to
purchase of government securities
under Open Market Operation (OMO)
for a notified amount of Rs. 12,500
crore on Jun 20, 2019.
6.90
6.95
7.00
7.05
7.10
10-Jun 11-Jun 12-Jun 13-Jun 14-Jun
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 6.22 7.92 170
3 Year 6.64 7.93 129
5 Year 6.83 8.00 117
10 Year 7.04 8.21 117
Source: Thomson Reuters Eikon Value as on June 14, 2019
• Yields on gilt securities fell across the
maturities in the range of 3 bps to 11 bps
barring 30-year paper that increased 6 bps.
• Corporate bond yields increased across 1 to 6
years’ maturities and 15-year paper in the
range of 3 bps to 18 bps and contracted
across the remaining maturities in the range of
3 bps to 10 bps.
• Difference in spread between AAA corporate
bond and gilt expanded across the maturities
in the range of 3 bps to 23 bps barring 10-year
paper that contracted 4 bps.
-10
1
12
5.60
6.70
7.80
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 14-Jun-19 07-Jun-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Reserve Bank of India (RBI) came out with revised norms regarding resolution of non-
performing assets or stressed assets. According to the new norms, RBI mandated that in
case a borrower defaults on its payments, banks need to conduct a prima facie review of
the borrower’s account within 30 days from the date of default. During this period, banks
may decide as to what resolution strategy it needs to adopt and how it will be implemented.
Banks can also initiate legal proceedings for insolvency or recovery. Earlier RBI mandated
banks to recognize stressed assets immediately on default which was rejected by the
Supreme Court on grounds that the time given by RBI was insufficient to tackle bad debt.
• The Reserve Bank of India (RBI) announced that it will infuse Rs. 12,500 crore into the
financial system through bond purchases on Jun 20, 2019. RBI stated that the decision is
based on evaluation of the evolving liquidity conditions and assessment of durable liquidity
needs going forward.
• The Reserve Bank of India (RBI) relaxed norms for Basic Savings Bank Deposit (BSBD)
account popularly known as no-frills account. Banks are now advised to provide cheque
books and other services to basic account holders. Also, the customers are not required to
maintain minimum balance and get certain minimum facilities for free. These facilities
include, four withdrawals from ATMs in a month, deposit of cash at bank branch, and ATM
Card or ATM-cum-Debit Card.
Regulatory Updates in India (contd..)
9
• The government has lowered the contribution under the Employees’ State Insurance (ESI)
Act to 4% from 6.5%. This includes a reduction of 1.5% in employers’ contribution to 3.25%
and 1% reduction in employees’ contribution to 0.75%. Besides, increasing the take-home
salary of workers, the move is expected to lower the financial burden of employers.
• Securities and Exchange Board of India (SEBI) has prescribed guidelines which includes
probability of default (PD) benchmarks. The guidelines come in order to strengthen the
disclosures made by credit rating agencies to enhance the rating standards. Also, SEBI has
introduced, computation of cumulative default rates, standard operating procedure in
respect of tracking and timely recognition of default, rating symbol for instruments having
explicit credit enhancement feature, disclosure of rating sensitivities in press release,
disclosure on liquidity indicators and tracking deviations in bond spreads.
• The Union Cabinet has given approval for the ratification of the multilateral instrument
(MLI). This will enable the country to modify its tax treaties to limit revenue loss through
treaty abuse or base erosion and profit shifting (BEPS) strategies where companies park
their profits in low-tax jurisdictions. As countries need to deposit their instruments of
ratification, MLI provisions will apply to India’s tax treaties earliest from Apr 1, 2020.
Global News/Economy
• Labor Department report showed a modest increase in U.S. consumer prices in May 2019,
matching estimates. The Labor Department said its consumer price index inched up 0.1% in
May after rising 0.3% in Apr 2019. Excluding food and energy prices, core consumer prices
also edged up by 0.1% for the fourth consecutive month.
• Data from the Office for National Statistics showed that U.K. economy contracted for the
second straight month in Apr 2019. Gross domestic product fell 0.4% on a monthly basis in
Apr 2019 after easing 0.1% in Mar 2019. In three months to Apr 2019, GDP expanded at a
slower pace of 0.3% after growing 0.5% in the first quarter.
• Eurostat data showed euro zone industrial production fell at the fastest rate in four months in
Apr 2019, in line with expectations. Industrial production declined 0.5% MoM in Apr 2019,
following a 0.4% fall in Mar 2019. The latest decrease in production was the worst since Dec
2018, when it was down 0.9%. The latest decline was driven by 1.7% fall in durable
consumer goods. Capital goods and intermediate goods fell 1.4% and 1.0%, respectively.
• According to a report by the National Bureau of Statistics, China’s consumer price inflation
(CPI) rose 2.7% YoY in May 2019 following 2.5% rise in Apr 2019. The increase came due to
rise in food prices inflation by 7.7% from 6.1% a month ago. However, on monthly basis,
consumer prices remained unchanged in May 2019.
10
Global Equity Markets
11
Global Indices
Indices
14-Jun-19
1-Week
Return
YTD
Return
Dow Jones
26,089.61 0.41% 11.84%
Nasdaq 100
7,479.11 0.83% 18.15%
FTSE 100
7,345.78 0.19% 9.18%
DAX Index
12,096.40 0.42% 14.56%
Nikkei Average
21,116.89 1.11% 5.51%
Straits Times
3,222.63 1.78% 5.01%
Source: Thomson Reuters Eikon
Value as on June 14, 2019
U.S.
• U.S. markets gained on optimism that
U.S. Fed will cut interest rate in the
near-term after a report showed bigger
than expected decline in U.S. import
and export prices in May 2019. Also,
first-time claims for U.S. unemployment
benefits unexpectedly edged higher in
the week ended Jun 8, 2019.
• However, the upside was limited on
persisting trade tension between U.S.
and China.
Europe
• European markets moved up amid chances of rate-cut by the U.S. Fed and on
expectations of a delayed imposition of tariffs on Mexican goods. Additionally, unexpected
growth in China’s export for May 2019 despite higher U.S. tariffs further boosted the
markets. China also announced to provide fresh stimulus to support its economy.
Asia
• Most of Asian markets gained on expectations that U.S. President might delay the tariff
imposition plan on Mexico in return for more stringent efforts to control illegal border
crossings. Additionally, investors took positive cues from Beijing allowing the local
governments to use proceeds from special bonds for projects (highways, railways etc.).
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond rose 1 bps to 2.09% compared
with the previous week’s close of 2.08%.
• U.S. Treasury prices fell after U.S.-
Mexico trade and migration deal was
signed that tempered the expectations
of interest rate cuts in 2019. Further,
data showing increase in consumer
spending added to the losses. Upbeat
U.S. retail sales data for May-19 also
contributed to the downside.
• However, most of the losses were offset
due to fall in U.S. import prices in May
2019 and unexpected increase in
applications for unemployment benefits
in the week ended Jun 8, 2019 that
strengthened the possibility of rate cuts
in 2019. Further, soft inflation data
showing only 0.1% increase in
consumer prices in May 2019 as against
an increase of 0.3% in Apr 2019 added
to the safe haven appeal of the U.S.
Treasuries.
2.08
2.11
2.14
10-Jun 11-Jun 12-Jun 13-Jun 14-Jun
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 Crude($/Barrel) 64.57 65.54
Gold ($/Oz) 1,341.33 1,340.30
Gold (Rs/10 gm) 33,061 32,607
Silver ($/Oz) 14.87 14.99
Silver (Rs/Kg) 37,300 36,937
Source: Thomson Reuters Eikon *Value as on June 14, 2019
Gold
• Gold prices surged with deepening U.S.-
China trade tussle, slowdown in Chinese
industrial output growth in May 2019, and
rising U.S.-Iran geopolitical worries over
the reported attack on oil tankers in the
Gulf of Oman.
Brent Crude
• Brent crude prices fell on feeble demand
sentiment amid a slowing Chinese
economy. The U.S. Energy Information
Administration predicted a cut in oil
demand by 160,000 barrels per day to
1.22 million barrel a day in 2019. In
addition, an unexpected surge of 4.9
million barrels in U.S. crude inventory for
the week to Jun 7, 2019, also kept the
commodity under pressure.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
8.00
9.00
10.00
11.00
14-May-19 25-May-19 5-Jun-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-1.48%
0.80%
-0.08%
14-Jun-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
69.56 69.30
Pound Sterling
88.20 88.02
EURO
78.43 78.07
100 Yen
64.23 63.92
Source: RBI Figures in INR , *Value as on June 14, 2019
Rupee
• The rupee weakened against the
greenback as persisting concerns over
U.S.-China trade tensions dented
investor appetite for risk assets,
Euro
• The euro weakened against the
greenback on worries that the ongoing
trade tensions between U.S. and China
may derail global economic growth.
Pound
• The pound fell against the greenback
after data showed the British economy
slowed sharply in Apr 2019.
Yen
• The yen weakened against the
greenback as its safe haven appeal
dampened after U.S. shelved plans to
impose tariffs on Mexico. Upbeat U.S.
retail sales data for May 2019 also
strengthened the greenback.
9.60
9.80
10.00
14-May-19 24-May-19 3-Jun-19 13-Jun-19
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
0.20%
0.46%
0.48%
0.38%
14-Jun-19
15
The Week that was…
10
th
June to 14
th
June
The Week that was (June 10 – June 14)
16
Date Events Present Value Previous Value
Monday,
June 10, 2019
• U.K. Industrial Production (YoY) (Apr) -1.00% 1.30%
• China Trade Balance (May) $41.65B $13.84B
• Japan Eco Watchers Survey Current (May) 44.1 45.3
Tuesday,
June 11, 2019
• U.K. ILO Unemployment Rate 3Mths (Apr) 3.80% 3.80%
• Japan Machine Orders (YoY) (Apr) 2.50% -0.70%
Wednesday,
June 12, 2019
• India Consumer Price Index (YoY) (May) 3.05% 2.99%
•
India Index of Industrial Production (YoY) (May)
3.40% 0.40%
• China Consumer Price Index (YoY) (May) 2.70% 2.50%
• U.S. Consumer Price Index (YoY) (May) 1.80% 2.00%
• U.K. House Price Balance (May) -10.00% -22.00%
Thursday,
June 13, 2019
• Japan Tertiary Industry Index (MoM) (Apr) 0.80% -0.20%
• Eurozone Industrial Production (YoY) (Apr) -0.40% -0.70%
Friday,
June 14, 2019
• India Wholesale Price Index (YoY) (May) 2.45% 3.07%
• U.S. Retail Sales Advance (MoM) (May) 0.50% 0.50%
• U.S. University of Michigan Sentiment (Jun P) 97.90 100.00
• China Industrial Production (YoY) (May) 5.00% 5.40%
• China Retail Sales (YoY) (May) 8.60% 7.20%
17
The Week ahead
17
th
June to 21
st
June
18
The Week Ahead
Day Event
Monday,
Jun 17, 2019
• U.S. NAHB Housing Market Index (Jun)
Tuesday,
Jun 18, 2019
• Eurozone ZEW Survey (Economic Sentiment) (Jun)
• U.S. Housing Starts (MoM) (May)
• Japan Trade Balance (May)
Wednesday,
Jun 19, 2019
• U.K. Consumer Price Index (YoY) (May)
• U.S. Federal Reserve Bank Rate Decision
• U.K. House Price Index (YoY) (Apr)
• U.S. MBA Mortgage Applications (Jun 14)
Thursday,
Jun 20, 2019
• Bank of Japan Rate Decision
• Bank of England Rate Decision
• Japan Consumer Price Index (YoY) (May)
• U.S. Leading Index (May)
• Japan All Industry Activity Index (MoM) (Apr)
Friday,
Jun 21, 2019
• U.S. Existing Home Sales (MoM) (May)
• Japan Nikkei Manufacturing PMI (Jun P)
Disclaimer
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