News U Can Use
June 21, 2019
The Week that was…
June to 21
Indian Economy
India’s plans to double farmers income by 2022 and the PM-Kisan scheme are being
scrutinised by various World Trade Organization (WTO) members, including the European
Union (EU), New Zealand and the U.S. This points at early signs of a potential trade
tussle. EU has asked India how it plans to double farmers’ income and “allocate spending
of Rs. 25 lakh crore on agriculture and rural development”. “How will this (doubling
farmers’ income) be done taking into account global market prices of produce and
measures put in place to prevent excess production?” it asked. Ahead of a meeting of the
WTO’s committee on agriculture on Jun 25-26, countries have submitted questions on
various farm policies adopted by India, to ascertain if they are trade-distorting and can be
challenged at the multilateral body.
A major global credit rating agency has cut India's growth forecast for FY20 for the second
consecutive time to 6.6%. The decline reflects slowdown in manufacturing and agriculture
sectors over the past year. In Mar 2019, the global rating agency had lowered the growth
estimate for FY20 to 6.8% from prior expectation of 7% due to weak momentum of the
According to a data released by The Directorate General of Civil Aviation (DGCA),
domestic air passenger traffic grew 2.96% YoY to 12.20 million passengers in May 2019.
However, the traffic had fell 4.5% YoY in Apr 2019 due to suspension of operations by a
one of the largest airlines.
Indian Equity Market
Domestic Equity Market Indices
Indices 21-Jun-19 1 Week Return YTD Return
S&P BSE Sensex 39194.49 -0.65% 8.67%
Nifty 50 11724.1 -0.84% 7.93%
S&P BSE Mid-Cap 14624.59 -0.65% -5.27%
S&P BSE Small-Cap 14084.24 -1.96% -4.23%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
17-Jun-19 413 1444 0.29
18-Jun-19 649 1193 0.54
19-Jun-19 462 1390 0.33
20-Jun-19 1132 701 1.61
21-Jun-19 899 920 0.98
Source: NSE
Indian equity markets closed lower in
the week ended Jun 21, 2019. Surge in
crude oil prices on reports that Iranian
forces shot down a U.S. military drone
weighed on the indices. Concerns over
monsoon deficit following reports that
monsoon has progressed slower than
usual after hitting the southern state of
Kerala nearly a week late deepened the
losses. Weakening of rupee added to
the woes.
Further, investors remained cautious
ahead of the upcoming budget in Jul
2019. Media reports suggesting that the
government may exceed the budget
deficit target for FY20 soured
sentiment. Losses were extended on
reports that creditors plan to begin
insolvency proceedings against a
troubled grounded airline at the
National Company Law Tribunal.
Nifty 50
Mid Cap
Small Cap
27.96 28.99 30.84 35.90
3.00 3.74 2.46 2.01
Dividend Yield
1.22 1.24 1.01 0.99
Source: BSE, NSE Value as on
Jun 21, 2019
Indian Equity Market (contd.)
Sectoral Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
17748.4 -2.02% -4.00%
S&P BSE Bankex
34458.9 0.31% 1.63%
25621.3 1.41% 4.19%
19609.2 0.32% 5.29%
11309.8 -1.79% -4.10%
12687.9 -1.64% -4.32%
15923.7 0.10% 4.08%
S&P BSE Metal
10910.6 -0.42% 2.57%
S&P BSE Oil & Gas
14854.8 -1.28% -1.66%
Source: Thomson Reuters Eikon
*Value as on Jun 21, 2019
S&P BSE Auto was the major loser that fell
2.02% followed by S&P BSE FMCG that fell
1.79%. The auto sector has been under
pressure with declining sales and major
companies cutting production.
S&P BSE Healthcare and S&P BSE Oil &
Gas fell 1.64% and 1.28%, respectively. S&P
BSE Metal and S&P BSE Teck fell 0.42% and
0.16%, respectively. The metal sector lost as
trade fears escalated after India put
retaliatory tariffs on U.S. imports.
Indian Derivatives Market Review
Nifty Jun 2019 Futures were at 11,753.45, a premium of 29.35 points, above the spot
closing of 11,724.10. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 69.25 lakh crore as against Rs. 62.41 lakh crore for the week to June
The Put-Call ratio stood unchanged at 0.92 compared with the previous week’s close.
The Nifty Put-Call ratio stood at 1.34 against the previous week’s close of 1.26.
Domestic Debt Market
Debt Indicators
Call Rate
5.78 5.83 5.94 6.45
91 Day T-Bill
5.97 5.98 6.30 6.63
07.32% 2024, (5 Yr GOI)
6.70 6.72 7.04 7.01
07.26% 2029, (10 Yr GOI)
6.86 6.92 7.30 --
Source: Thomson Reuters Eikon
Value as on Jun 21, 2019
Bond yields fell as market sentiment
was buoyant before the U.S. Federal
Reserve (Fed) policy meeting.
Traders and banks were found
making bond purchases in
anticipation for further rally in bond
prices. The yields fell further after the
U.S. Fed signalled easing policy rates
However, the gains were capped as
crude oil prices surged with
geopolitical tension rose between the
U.S. and Iran. Besides, media reports
stating that the government may
expand fiscal deficit target raised
fiscal uncertainty and pushed the
yields higher. Profit booking by
investors also capped the gains.
Yields on the 10-year benchmark
paper (7.26% GS 2029) fell 6 bps to
close at 6.86% compared with the
previous close of 6.92% after trading
in the range of 6.73% to 6.95%.
17-Jun 18-Jun 19-Jun 20-Jun 21-Jun
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
G-Sec Yield
Corporate Yield
1 Year 6.22 7.82 161
3 Year 6.60 7.89 129
5 Year 6.81 8.08 127
10 Year 6.98 8.19 121
Source: Thomson Reuters Eikon Value as on Jun 21, 2019
Yields on gilt securities fell across maturities
in the range of 2 bps to 28 bps barring 1-
and 2-year papers, which closed steady.
Corporate bond yields rose on 2-year paper
and 5 to 9-year maturities in the range of 2
to 17 bps, while it contracted on remaining
maturities in the range of 2 to 10 bps.
Spread between AAA corporate bond and
gilt contracted on 1, 3 and 4-year papers in
the range of 3 to 10 bps and expanded
across the remaining maturities in the range
of 2 bps to 23 bps.
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 21-Jun-19 14-Jun-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
The Reserve Bank of India (RBI) has set up an eight-member expert committee under the
leadership of former SEBI chairman to review the current framework for the micro, small
and medium enterprises (MSME) sector. The committee will suggest long-term solutions for
the economic and financial sustainability of the MSMEs, RBI said. The panel will submit the
report by the end of Jun 2019.
The Indian President has announced that the government is working towards a Rs. 25-
trillion farm productivity spend and Rs. 900-billion annual spend on farmers’ income
support. He was giving an address to the joint session of Parliament. The President hinted
that fixing problems in the rural economy and giving relief to farmers was the top priority of
the government during its second term.
The Mutual Fund Advisory Committee (MFAC) of the Securities and Exchange Board of
India (SEBI) has proposed that the exposure limits of liquid funds to non-banking financial
companies (NBFCs) and housing finance companies will be reduced in a phased manner,
media reports said. This could mean liquid funds may soon be allowed to invest only up to
30% of their assets in securities issued by non-banks and mortgage lenders. Banks’ refusal
to lend has triggered a cash crunch at NBFCs, in turn raising concerns that they will
struggle to repay liquid funds that have bought their debt papers.
Regulatory Updates in India (contd..)
According to a report by the Basel Committee on Bank Supervision (BCBS), the Reserve
Bank of India is yet to meet the tougher requirements set by the Basel III norms. The semi-
annual report brought out by BCBS, which is a committee under the Bank for International
Settlements, looked at adoption status of Basel III standards by 30 global systemically
important banks (G-Sibs) as of end-May 2019. This committee of banking supervisory
authorities aims to enhance understanding of key supervisory issues and also improve the
quality of banking supervision worldwide. According to the committee, RBI is yet to publish
the securitisation framework and rules on total loss-absorbing capacity requirements. The
rules on securitisation exposures held in the banking book had come into effect on 1 Jan,
2018, globally.
The stock exchanges have been permitted by the Securities and Exchange Board of India
(SEBI) to introduce commodity indices futures. The market regulator stated that the stock
exchanges with commodity derivative segment that are prepared to begin the trading in
futures on commodity indices shall take its prior approval for launching such contracts.
Global News/Economy
The U.S. Federal Reserve (Fed) left interest rates unchanged, as was widely expected. The
Fed chief said it will "act as appropriate" to sustain the U.S. economic expansion amid
increasing uncertainties about the outlook for the economy. The Fed statement said the bank
continues to see a sustained economic expansion, a strong labor market, and inflation near
its 2% target as the most likely outcomes but noted uncertainties about this outlook have
European Central Bank (ECB) President said the central bank still has room to cut interest
rates and measures to cushion the side effect from low interest rates. This led the U.S.
President to say that the ECB chief’s statement was unfair to the U.S.
Euro zone inflation slowed sharply in May 2019 to its lowest level in over a year and core
price growth eased below 1%. Inflation slowed to 1.2% in May from 1.7% in Apr 2019. The
latest inflation rate was the lowest since Apr last year, when it was at the same level. Core
inflation eased to 0.8% from 1.3%.
The Bank of Japan (BoJ) maintained its ultra-loose monetary policy as was widely expected
and kept its forward guidance unchanged. The Policy Board of the BoJ voted 7-2 to maintain
interest rate at -0.1% on current accounts that financial institutions maintain at the bank. The
bank said it will purchase government bonds so that the yield of 10-year JGBs will remain at
around zero %.
Global Equity Markets
Global Indices
Russell 3000
1289.69 2.56% 21.36%
Nasdaq 100
7728.78 3.34% 22.10%
FTSE 100
7407.50 0.84% 10.10%
DAX Index
12331.73 1.95% 16.79%
Nikkei Average
21258.64 0.67% 6.21%
Straits Times
3321.40 3.06% 8.23%
Source: Thomson Reuters Eikon
Value as on Jun 21, 2019
U.S. markets rose led by the U.S. Fed’s
comments on the interest rate stance in
its latest policy meeting. The U.S. Fed is
ready to continue with its current
economic expansion as trade tensions
and weaker data dampen the U.S.
economic outlook. The central bank also
dropped the word “patient” from its
latest statement, which led to
speculation over probable rate-cut by
U.S. Fed soon.
European markets rose with investor sentiment buoyed by hopes of additional stimulus
measures by the ECB. The ECB President said that the central bank still has room to cut
interest rates and measures to cushion the side effect from low interest rates.
Asian markets reflected gains in global peers with investors taking positive cues from
speculations over probable rate-cut by the U.S. Fed soon. Renewed optimism over the
U.S.-China trade deal also boosted sentiment. Chinese markets rose on expectations that
China's monetary authorities may moderately ease their overall prudent policy stance in
the second half of the year.
Global Debt (U.S.)
Yield on the 10-year U.S. Treasury bond
fell 3 bps to 2.06% compared with the
previous week’s close of 2.09%.
U.S. Treasury prices grew after the U.S.
Fed held interest rates steady that came
in line with market expectations,
however, it raised the possibility of
cutting interest rates later in 2019.
Further, persistent pressure from the
trade conflict with China added to the
Gains were extended following reports
that the President of the European
Central Bank indicated that it would
provide more monetary stimulus if
regional inflation fails to pick up toward
its target.
However, at the end gains were limited
as investors booked profits after 10-year
treasury yield went below 2%.
17-Jun 18-Jun 19-Jun 20-Jun 21-Jun
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
Performance of various commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel) 67.43 64.57
Gold ($/Oz) 1398.65 1341.33
Gold (Rs/10 gm) 33909 33061
Silver ($/Oz) 15.35 14.87
Silver (Rs/Kg) 37860 37300
Source: Thomson Reuters Eikon *Value as on Jun 21, 2019
Gold prices surged following rising
geopolitical worries after a U.S. military
drone was shot down by Iranian forces
around the Strait of Hormuz. Uncertainty
over trade tension between U.S. and
China also supported the gain, although
telephonic conversation between the two
countries’ Presidents indicated a
probability of progress in the near term.
Brent Crude
Brent crude prices moved up over
deepening geopolitical tension after
Iranian forces said that they had shot
down a U.S. military surveillance drone.
This heightened tension in the Gulf
region, particularly because this came
after the recent attacks on oil tankers.
Baltic Dry Index
The Baltic Dry Index registered a rise on
the back of improved capesize and
panamax activities.
22-May-19 6-Jun-19 21-Jun-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
Currencies Markets
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
69.63 69.56
Pound Sterling
88.37 88.20
78.59 78.43
100 Yen
64.90 64.23
Source: RBI Figures in INR , *Value as on Jun 21, 2019
The rupee weakened against the
greenback following increase in global
crude oil prices and losses in the
domestic equity market.
The euro increase against the greenback
after the U.S. Fed in its monetary policy
review hinted at a possible rate-cut by as
much as 50 bps by the end of the year
even though it kept interest rates on
The pound rose against the greenback
after Bank of England voted unanimously
to keep interest rates on hold but stuck to
their stance that interest rates would
need to rise in a gradual manner.
The yen gained against the greenback
after the U.S. Fed in its monetary policy
review hinted at possible interest rate
cuts this year.
22-May-19 1-Jun-19 11-Jun-19 21-Jun-19
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
The Week that was…
June to 21
The Week that was (Jun 17 June 21)
Date Events Present Value Previous Value
June 17, 2019
U.S. NAHB Housing Market Index (Jun) 64.0 66.0
June 18, 2019
Eurozone ZEW Survey (Economic Sentiment) (Jun) -20.2 -1.6
Germany ZEW Survey Expectations (Jun) -21.1 -2.1
U.S. Housing Starts (MoM) (May) 0.0 0.1
Japan Trade Balance (May) -¥967.1b ¥56.8b
U.S. Building Permits (MoM) (May) 0.3% 0.2%
June 19, 2019
U.K. Consumer Price Index (YoY) (May) 2.0% 2.1%
U.S. Federal Reserve Bank Rate Decision 2.5% 2.5%
U.K. House Price Index (YoY) (Apr) 1.4% 1.4%
U.S. MBA Mortgage Applications (Jun 14) -3.4% 26.8%
June 20, 2019
Bank of Japan Rate Decision -0.1% -0.1%
Bank of England Rate Decision 0.8% 0.8%
Japan Consumer Price Index (YoY) (May) 0.7% 0.9%
U.S. Leading Index (May) 0.0% 0.1%
Japan All Industry Activity Index (MoM) (Apr) 0.9% -0.3%
June 21, 2019
U.S. Existing Home Sales (MoM) (May) 2.5% 0.0%
Japan Nikkei Manufacturing PMI (Jun P) 49.5 49.8
The Week Ahead
June to 28
The Week Ahead
Day Event
June 24, 2019
Eurozone German IFO Current Assessment (June)
Japan Supermarket Sales (YoY) (May)
June 25, 2019
U.S. S&P/Case-Shiller US Home Price Index (YoY) (April)
U.S. Consumer Confidence Index (June)
U.S. New Home Sales (MoM) (May)
June 26, 2019
U.S. Durable Goods Orders (May P)
U.S. Advance Goods Trade Balance (May)
U.S. Wholesale Inventories (MoM) (May P)
Japan Retail Trade (YoY) (May)
June 27, 2019
Eurozone German Consumer Price Index (YoY) (June P)
U.S. Gross Domestic Product Annualized (QoQ) (1Q T)
U.S. Pending Home Sales (YoY) (May)
Japan Jobless Rate (May)
June 28, 2019
Eurozone Consumer Price Index Core (YoY) (June A)
U.S. PCE Core (YoY) (May)
U.K. Gross Domestic Product (YoY) (1Q F)
Japan Housing Starts (YoY) (May)
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