News U Can Use
March 22, 2019
The Week that was…
18
th
March to 22
nd
March
2
Indian Economy
• The International Monetary Fund (IMF) said India has been one of the fastest growing
large economies in the world. The bank asserted that the country has carried out several
key reforms in the last five years. It also added that more needs to be done. Indian
economy details will be revealed in the scheduled World Economic Outlook (WEO) survey
report, which will be released by IMF before the annual spring meeting with the World
Bank in Apr 2019. This report will be the first under IMF’s new chief economist, who is an
Indian American.
• The government has crossed its disinvestment target for FY19 by Rs. 5,000 crore and the
proceeds have touched Rs. 85,000 crore. The government has mopped up Rs. 9,500 crore
from the fifth tranche of CPSE ETF and Rs. 14,500 crore from the REC-PFC deal. The
disinvestment target has been fixed at Rs. 90,000 crore for the next fiscal.
• Data from the Petroleum Planning & Analysis Cell showed that the total usage of oil
products by the country increased 3.8% to 17.4 million tonnes in Feb 2019 compared with
the same period of the previous year. The increase in oil consumption can be attributed to
increased demand for cooking fuel and transportation fuel.
• The Insolvency and Bankruptcy Board of India and the Securities and Exchange Board of
India have entered into an agreement for effective implementation of the new bankruptcy
law. The two bodies will hold meetings at regular intervals and take up matters of mutual
interest which include regulatory requirements, research, data analysis, information
technology and data sharing.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
22-Mar-19
1 Week Return
YTD Return
S&P BSE Sensex
38,164.61 0.37% 5.81%
Nifty 50
11,456.90 0.26% 5.47%
S&P BSE Mid
-Cap 15,076.89 -0.62% -2.34%
S&P BSE Small
-Cap 14,758.80 -0.53% 0.35%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
18-Mar-19 777 1,073 0.72
19-Mar-19 963 882 1.09
20-Mar-19 691 1,160 0.60
22-Mar-19 644 1,192 0.54
Source: NSE
• Indian equity markets witnessed
volatility before ending the week with
modest gains. Buying interest found
initial support amid strength in rupee
and upbeat global cues.
• Global markets got a fillip from reports
suggesting U.S. and China have made
concrete progress in their trade talks.
Additionally, investors remained hopeful
of a stable government post election
and the Reserve Bank of India (RBI)
cutting rates in its next meeting.
• Later, most of the gains were eroded as
trade worries re-emerged on media
reports that China is not conceding to
U.S. demands. Further, investor
sentiment got hurt following growth
concerns as a major global rating
agency cut India's GDP growth forecast
for FY20 to 6.8% from its previous
estimate of 7%.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
27.68 28.08 31.01 -147.3
P/B
3.11 3.62 2.58 2.22
Dividend Yield
1.15 1.18 0.97 0.89
Source: BSE, NSE Value as on Mar 22, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,798.43
1.02%
S&P BSE Bankex
33,150.80 0.72% 10.17%
S&P BSE CD
23,141.99 0.45% 8.74%
S&P BSE CG
18,340.55
9.07%
S&P BSE FMCG
11,692.75 0.73% 3.07%
S&P BSE HC
14,182.20
4.39%
S&P BSE IT
15,240.23 0.54% 0.86%
S&P BSE Metal
11,151.85
4.52%
S&P BSE Oil & Gas
14,812.87
8.64%
S&P BSE Realty
2,063.70 5.73% 13.53%
S&P BSE Power
2,000.75 0.96% 10.29%
Source: Thomson Reuters Eikon
*Value as on Mar
22, 2019
• On the BSE sectoral front, majority of the
sectors closed in the green. S&P BSE Realty
was the top gainer, up 5.73%, followed by
S&P BSE Power and S&P BSE FMCG, which
edged up 0.96% and 0.73%, respectively.
During the week, the real estate industry
achieved a major milestone after ‘Embassy
Office Parks’, a joint venture between the real
estate company Embassy and private equity
firm Blackstone launched the country’s first
Real Estate Investment Trust (REIT).
• Meanwhile, S&P BSE Auto turned out to be a
major loser (-4.55%) during the week
followed S&P BSE Oil & Gas (-0.95%) and
S&P BSE Metal (-0.64%).
Indian Derivatives Market Review
• Nifty Mar 2019 Futures were at 11,472.4, a premium of 15.50 points, over the spot closing
of 11,456.90. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 48.98 lakh crore as against Rs. 58.92 lakh crore for the week to Mar 15.
• The Put-Call ratio stood at 1.04 compared with the previous week’s close of 0.79.
• The Nifty Put-Call ratio stood at 1.60 against the previous week’s close of 1.68.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
6.19 6.23 6.34 6.58
91 Day T
-Bill
6.28 6.32 6.43 7.10
07.32% 2024, (5 Yr GOI)
6.97 6.95 7.06 --
07.26% 2029, (10 Yr GOI)
7.34 7.34 7.41 --
Source: Thomson Reuters Eikon
Value as on Mar 22
, 2019
• Bond yields fell after the U.S. Federal
Reserve (Fed) in its much-awaited
monetary policy review kept interest
rates on hold as expected and
indicated that interest rates are likely
to remain unchanged for the
remainder of the year. This boosted
market sentiment and allayed
concerns over foreign fund outflow
from the Indian economy.
• The stance comes as the U.S.
Federal Reserve pointed to a
slowdown in economic growth due to
slower growth of household spending
and business fixed investment in the
first quarter of 2019. However, profit
booking wiped out the gains.
• Yields on the 10-year benchmark
paper (7.26% GS 2029) stood
unchanged at 7.34% from the last
week’s close, after trading in the
range of 7.29% to 7.39%.
7.28
7.32
7.36
7.40
18-Mar 19-Mar 20-Mar 22-Mar
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 6.63 8.12 149
3 Year 6.73 8.16 143
5 Year 7.09 8.38 129
10 Year 7.64 8.60 95
Source: Thomson Reuters Eikon
Value as on Mar 22
, 2019
• Yields on gilt securities fell across maturities
by up to 9 bps, barring 10- and 11-year
papers that remained flat. Yields on 1-, 2-,
5- and 6-year papers increased by up to 2
bps.
• Corporate bond yields increased on 5 to 7
years’ papers in the range of 6 to 10 bps,
while it remained unchanged on 4- and 8-
year papers. Remaining securities dropped
by up to 31 bps.
• Spread between AAA corporate bond and
gilt expanded by up to 9 bps on 4 to 7 years’
papers while remaining securities
contracted in the range of 3 to 23 bps.
-10
-5
0
5
6.00
7.00
8.00
9.00
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 22-Mar-19 15-Mar-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Goods and Services Tax (GST) Council gave its approval for the implementation of new
tax structure for housing units. According to the revenue secretary, the GST rates for the
new projects will be applicable from Apr 1, 2019. The Council also mandated that 80% of
materials need to be procured from registered dealer while 15% of commercial space would
be treated as residential property for GST purpose.
• RBI governor called for a permanent status to the Finance Commission and a robust
expenditure planning without compromising on fiscal consolidation. Fiscal federalism is
gathering momentum in the era of GST. The governor said there is a need to ensure
consistencies between finance commissions so that there is some certainty in the flow of
funds to states.
• The Union government extended the soft loan window for sugar sector approximately by
another one month. The move is likely to ease some pressure on debt laden mills. The
banks could consider the soft loan application of sugar mills that would have cleared at least
25% of sugarcane payables as on Feb 28, by Mar 26, 2019, according to a notification by
the Department of Food and Public Distribution.
• According to media reports, the Central government permitted a five-fold increase in one-
time incentive for its employees who acquire higher degrees while serving in their
departments. The amount of incentive will be raised from a minimum of Rs. 10,000 to a
maximum of Rs. 30,000 for acquiring higher qualifications like Ph.D.
Regulatory Updates in India (contd..)
9
• According to media reports, the Reserve Bank of India (RBI) is urging banks to track closely
the end usage of funds in order to prevent divergence of the same by corporate borrowers.
RBI is of the view that the usage of funds can be tracked with the help of technology,
electronic payments and interlinkage between banks. The move comes at a time when the
banking sector is plagued with non-performing assets.
• According to media reports, RBI came out with a rule-based approach for modifying new
Ways and Means limits for state governments. RBI in this regard will set up a panel which
will suggest parameters of the new system. The objective of the move is to put a check on
automatic monetisation of deficits of the state governments amid concerns that market
borrowing by state governments may go up due to increase in stress on state finances
following indiscriminate loan wavers. Ways and Means Advances is a temporary loan facility
which is given by the RBI to the state governments to take care of the temporary liquidity
mismatches.
Global News/Economy
• The U.S. Federal Reserve left interest rates unchanged following a two-day monetary policy
meeting. The Fed decided to maintain the target range for the federal funds rate at 2.25% to
2.50% in support of its mandate of fostering maximum employment and price stability. The
central bank's forward projections also indicated interest rates are likely to remain
unchanged for the remainder of 2019.
• Bank of England policymakers decided to keep interest rate and monetary stimulus
unchanged as U.K. lawmakers hasten to secure an extension of the deadline for leaving the
European Union. The bank also released the results of a survey which showed that "a
significantly greater number of companies had judged themselves ready for a no-deal, no-
transition Brexit scenario.“
• Preliminary data from the Office for National Statistics showed U.K. consumer price inflation
unexpectedly increased in Feb 2019. This was for the first time in six months. The consumer
price index rose 1.9% YoY following a 1.8% increase in Jan 2019. Expectations were for
inflation rate to remain unchanged. Core inflation slowed to 1.80% from 1.90%.
• The Ministry of Internal Affairs and Communications said overall nationwide inflation in Japan
increased 0.2% YoY in Feb 2019. That was shy of expectations and unchanged from the Jan
2019 reading. Core inflation rose 0.7% in Feb 2019 as against 0.8% in the previous month.
10
Global Equity Markets
11
Global Indices
Indices
22-Mar-19
1-Week
Return
YTD
Return
Dow Jones
25,502.32 -1.34% 9.32%
Nasdaq 100
7,326.06 0.26% 15.74%
FTSE 100
7,207.59 -0.29% 7.13%
DAX Index
11,364.17 -2.75% 7.63%
Nikkei Average
21,627.34 0.82% 8.06%
Straits Times
3,212.10 0.37% 4.67%
Source: Thomson Reuters Eikon
Value as on
Mar 22, 2019
U.S.
• Most of the U.S. markets remained low
amid lingering uncertainty about trade
talks between the U.S. and China,
ahead of another round of high-level
negotiations. Meanwhile, U.S. Fed kept
interest rates unchanged and indicated
no further rate hike in 2019. Although
the same brought some relief to the
investors, the central bank’s reduced
growth outlook for 2019 weighed on
market sentiments.
Europe
• European markets mostly traded down as weak economic data in the euro zone
resurfaced growth concerns. Eurozone manufacturing and services PMI fell in Mar 2019
and eurozone construction output fell in Jan 2019. Concerns over U.S.-China trade
negotiations further weighed on the sentiment.
Asia
• Asian markets moved up after the U.S. Fed in its meeting hinted that it could no longer
raise rates in 2019. This level of dovishness was more than the markets had expected
from the Fed. Expectations of more stimulus measures by China as hinted by the Chinese
Premier also acted as catalyst.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond plunged 13 bps to close at 2.46%
compared with the previous close of
2.59%.
• U.S. Treasury prices fell initially during
the week under review as market
participants remained on the sidelines
ahead of the U.S. Fed monetary policy
review, which was due on Mar 20, 2019
• However, the trend reversed and U.S.
Treasury prices surged after the U.S.
Fed in its much awaited monetary policy
review kept interest rates on hold as
expected and indicated that interest
rates are likely to remain unchanged for
the remainder of the year.
• The stance came as the U.S. Fed
pointed to a slowdown in economic
growth due to slower growth of
household spending and business fixed
investment in the first quarter of 2019.
2.30
2.40
2.50
2.60
2.70
18-Mar 20-Mar 22-Mar
Yield (%)
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($/Barrel)
66.73 66.10
Gold ($/Oz)
1,313.13 1,301.13
Gold (Rs/10 gm)
32,007 31,966
Silver ($/Oz)
15.41 15.28
Silver (Rs/Kg)
38,160 37,993
Source: Thomson Reuters Eikon *
Value as on
Mar 22, 2019
Gold
• Gold prices grew after the U.S. Fed, in
its latest policy meeting, announced its
widely expected decision to leave
interest rates unchanged. It also
indicated that the central bank could no
longer raise rates in 2019, such
dovishness was more than the markets
had expected.
Brent Crude
• Brent crude prices surged as market
sentiment was swayed by OPEC-led
supply cut to tighten the oil market. In
addition, U.S. sanction against oil
exports by Iran and Venezuela aided the
commodity’s price. However, economic
growth concerns weighed on sentiment.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
9.30
9.55
9.80
10.05
10.30
22-Feb-19 8-Mar-19 22-Mar-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
0.95%
0.92%
0.90%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
68.66 69.21
Pound Sterling
90.28 91.64
EURO
78.14 78.34
100 Yen
61.97 61.99
Source: RBI Figures in INR , *
Value as on
Mar 22, 2019
Rupee
• The rupee rose against the greenback as
trade deficit declined to $9.6 billion in
Feb 2019, lowest since Sep 2017.
Euro
• The euro fell against the greenback
following Germany’s weaker than
expected flash composite PMI for Mar
2019 and Brexit-related concerns.
Pound
• The pound weakened against the
greenback initially on growing worries of
a "no-deal" Brexit. However, reports that
European Union has stated that Britain
can have a short delay to Brexit
restricted the losses.
Yen
• The yen gained against the greenback
as the latter fell on growing worries about
the U.S. economy and as the U.S. Fed
held interest rates steady and denied
projections for further rate hikes in 2019.
9.50
9.70
9.90
10.10
10.30
22-Feb-19 8-Mar-19 22-Mar-19
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-0.80%
-1.49%
-0.26%
-0.03%
The Week that was…
18
th
March to 22
nd
March
15
The Week that was (Mar 18 – Mar 22)
16
Date Events
Present
Value
Previous
Value
Monday,
March 18, 2019
•
U.K. Rightmove House Price Index (YoY) (Mar) -0.80% 0.20%
•
Japan Industrial Production (YoY) (Jan) 0.30% 0.00%
•
Euro Zone Trade Balance (Jan) €17.0B €13.2B
Tuesday,
March 19, 2019
•
Germany ZEW Survey - Economic Sentiment (Mar) -3.60 -13.40
•
Eurozone Construction Output (YoY) (Jan) -0.70% 0.70%
•
U.K. Claimant Count Change (Feb) 27.0K 15.7K
•
U.K. ILO Unemployment Rate (3M) (Jan) 3.90% 4.00%
•
U.S. Factory Orders (MoM) (Jan) 0.10% 0.10%
Wednesday,
March 20, 2019
•
U.S. Federal Reserve Interest Rate Decision 2.50% 2.50%
•
U.K. Consumer Price Index (YoY) (Feb) 1.90% 1.80%
•
U.K. Retail Price Index (YoY) (Feb) 2.50% 2.50%
•
Germany Producer Price Index (YoY) (Feb) -0.10% 0.40%
Thursday,
March 21, 2019
•
Bank of England Rate Decision 0.75% 0.75%
•
U.K. Retail Sales (YoY) (Feb) 4.00% 4.10%
•
U.S. Initial Jobless Claims (Mar 15) 221K 230K
Friday,
March 22, 2019
•
Eurozone Markit PMI Composite (Mar) Preliminary 51.30 51.90
•
Germany Markit PMI Composite (Mar) Preliminary 51.50 52.80
17
The Week Ahead
25
th
March to 29
th
March
18
The Week Ahead
Day Event
Monday,
March 25, 2019
•
Germany IFO - Business Climate (Mar)
•
U.S. Chicago Fed National Activity Index (Feb)
•
Japan All Industry Activity Index (MoM) (Jan)
Tuesday,
March 26, 2019
•
Germany Gfk Consumer Confidence Survey (Apr)
•
U.K. BBA Mortgage Approvals (Feb)
•
U.S. Housing Starts Change (Feb)
Wednesday,
March 27, 2019
•
U.S. MBA Mortgage Applications (Mar 22)
•
U.S. Trade Balance (Jan)
Thursday,
March 28, 2019
•
Euro Zone Economic Sentiment Indicator (Mar)
•
U.S. Initial Jobless Claims (Mar 22)
•
U.S. Gross Domestic Product Annualized (Q4)
•
U.S. Pending Home Sales (YoY) (Feb)
•
Japan Unemployment Rate (Feb)
Friday,
March 29, 2019
•
U.K. Gross Domestic Product (YoY) (Q4)
•
U.K. GfK Consumer Confidence (Mar)
•
U.S. Personal Income (MoM) (Feb)
•
U.S. Michigan Consumer Sentiment Index (Mar)
Disclaimer
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19
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