Mutual Fund News of 29th March 2019

News U Can Use

March 29, 2019

The Week that was…

March to 29

March

Indian Economy

• Data from Reserve Bank of India showed that India’s Current Account Deficit (CAD)

narrowed to $16.9 billion (2.5% of GDP) in Q3FY19 from $19.1 billion (2.9% of GDP) in the

previous quarter. However, CAD widened from $13.7 billion (2.1% of GDP) in the same

period of the previous year. CAD widened on a yearly basis as trade deficit widened to

$49.5 billion in Q3FY19 from $44.0 billion in the same period of the previous year. For the

period from Apr to Dec of 2018, CAD widened to 2.6% of GDP from 1.8% in the

corresponding period of the previous year as trade deficit widened to $145.3 billion in Apr

to Dec of 2018 from $118.4 billion in the same period of the previous year.

• Government data showed that India’s fiscal deficit for the period from Apr 2018 to Feb

2019 stood at Rs. 8.51 lakh crore or 134.2% of the budget estimate compared with

120.3% of the budget estimate in the corresponding period of the previous year. The

revenue deficit in the same period stood at Rs. 6.50 lakh crore or 157.8% of the budget

estimate compared with 119.3% of the budget estimate in the corresponding period of the

previous year.

• According to the Economic Affairs Secretary, the government will raise Rs. 4.42 lakh crore

through government securities in the first half for FY20. Borrowing by the government in

the second half of FY20 will be at Rs. 2.68 lakh crore. The Finance Minister in the Union

Budget had pegged gross borrowing at Rs. 7.1 lakh crore for FY20.

Indian Equity Market

Domestic Equity Market Indices

Indices 29-Mar-19 1 Week Return YTD Return

S&P BSE Sensex 38,672.91 1.33% 7.22%

Nifty 50 11,623.90 1.46% 7.01%

S&P BSE Mid-Cap 15,479.62 2.67% 0.27%

S&P BSE Small-Cap 15,027.36 1.82% 2.18%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines

Advance/Decline Ratio

25-Mar-19 468 1,403 0.33

26-Mar-19 1,039 809 1.28

27-Mar-19 857 988 0.87

28-Mar-19 1,174 642 1.83

29-Mar-19 1,042 792 1.32

Source: NSE

• Indian equity markets closed on a

positive note in the week ended Mar

29, 2019. Reports that the Monetary

Policy Committee (MPC) is expected to

cut rates in the first bi-monthly

monetary policy meeting of FY20

improved market sentiment. Gains

were extended on reports of Reserve

Bank of India injecting liquidity into the

system through a forex swap auction of

$5 billion for which RBI received bids

for $16.3 billion.

• Further, media reports stating

successful launch of the country's anti-

satellite missile system demonstrated

the nation's capability to defend its

assets in outer space. This added to

the gains. The high probability of the

ruling party coming back to power and

strong foreign fund inflows also

contributed to the upside.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

28.04 29.01 31.83 -149.94

P/B

3.15 3.71 2.65 2.26

Dividend Yield

1.13 1.13 0.94 0.87

Source: BSE, NSE Value as on Mar

29, 2019

Indian Equity Market (contd.)

Sectoral Indices

Indices

Last Returns (in %)

Closing* 1-Wk 1-Mth

S&P BSE Auto

18,824.89 0.14% 0.10%

S&P BSE Bankex

34,141.94 2.99% 13.70%

S&P BSE CD

23,856.65 3.09% 11.43%

S&P BSE CG

18,471.99 0.72% 8.10%

S&P BSE FMCG

11,741.51 0.42% 3.42%

S&P BSE HC

14,407.89 1.59% 4.70%

S&P BSE IT

15,280.30 0.26% 0.17%

S&P BSE Metal

11,355.12 1.82% 5.47%

S&P BSE Oil & Gas

15,269.70 3.08% 10.63%

Source: Thomson Reuters Eikon

*Value as on Mar 29, 2019

• On the BSE sectoral front, indices closed on

a positive note. S&P BSE Consumer

Durables was the major gainer, up 3.09%,

followed by S&P BSE Oil & Gas that grew

3.08%. S&P BSE Bankex and S&P BSE

Metal grew 2.99% and 1.82%, respectively.

• Surge in one of the major PSU banks

following reports that the government has

decided to infuse funds worth Rs. 5,042 crore

as capital ahead of its merger with two other

public sector lenders led to gains in the

financial sector. Gains in metal stocks

reflected progress in U.S. and China trade

discussions.

Indian Derivatives Market Review

• Nifty Apr 2019 Futures were at 11,679.90, a premium of 56.00 points, above the spot

closing of 11,623.90. The total turnover on NSE’s Futures and Options segment for the

week stood at Rs. 64.92 lakh crore as against Rs. 48.98 lakh crore for the week to Mar 22.

• The Put-Call ratio stood at 0.96 compared with the previous week’s close of 1.04.

• The Nifty Put-Call ratio stood at 1.49 against the previous week’s close of 1.60.

Domestic Debt Market

Debt Indicators

(%)

Current

Value

1-Wk

Ago

1-Mth

Ago

6-Mth

Ago

Call Rate

8.49 6.19 6.26 6.51

91 Day T-Bill

6.12 6.28 6.42 6.97

07.32% 2024, (5 Yr GOI)

6.93 6.97 7.09 --

07.26% 2029, (10 Yr GOI)

7.35 7.34 7.41 --

Source: Thomson Reuters Eikon

Value as on Mar 29, 2019

• Bond yields inched up during the

week under review as market

participants remained on the sidelines

and awaited the borrowing schedule

of the government for the period Apr-

Sep of 2019.

• However, further losses were

restricted on hopes that the MPC

might lower key policy repo rate in

the upcoming policy review meeting

on Apr 4, 2019.

• Yields on the 10-year benchmark

paper (7.26% GS 2029) rose 1 bps to

close at 7.35% from the last week’s

close of 7.34%, after trading in the

range of 7.30% to 7.36%.

• Data from RBI showed that India’s

foreign exchange reserves for the

week ended Mar 22 grew $1.03

billion to $406.67 billion from $405.64

billion in the previous week.

7.30

7.33

7.36

25-Mar 26-Mar 27-Mar 28-Mar 29-Mar

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

Domestic Debt Market (Spread Analysis)

Maturity

G-Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 6.54 8.03 149

3 Year 6.77 8.11 134

5 Year 7.05 8.36 131

10 Year 7.48 8.54 106

Source: Thomson Reuters Eikon Value as on Mar 29, 2019

• Yields on gilt securities increased on 2- and

3-year maturities by 1 bps and 4 bps,

respectively. Yield fell across the remaining

maturities by up to 16 bps barring 12-year

paper that closed steady.

• Corporate bond yields fell across the

maturities in the range of 2 bps to 11 bps.

• Difference in spread between AAA corporate

bond and gilt expanded on 1-, 10- and 15-

year papers in the range of 2 bps to 14 bps.

Difference in spread between AAA corporate

bond and gilt contracted across the

remaining maturities by up to 7 bps barring

5-year paper that closed steady.

-24

-12

6.00

7.00

8.00

3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs

India Yield Curve Shift (%) (W-o-W)

Change in bps 29-Mar-19 22-Mar-19

Yield in %

Change in bps

Source: Thomson Reuters Eikon

Regulatory Updates in India

• Capital markets regulator Securities and Exchange Board of India (SEBI) barred foreign

portfolio investors (FPIs) from making any fresh investments in the domestic capital markets

who have not submitted the names of beneficial owners to custodians. However, those FPIs

will be available to sell their holdings. SEBI in this regard had directed custodians to share

the list of non-compliant FPIs with stock exchanges and has asked brokers not to execute

trades on their behalf. It needs to be noted that SEBI in Sep 2018 had asked FPIs to submit

Know Your Customer (KYC) details of beneficial owners by Mar 20. However, several top

investors based in U.S. and Europe haven’t provided the KYC details by the deadline.

• SEBI have barred several websites that were engaged in the business of fraudulent

investment advisory activity. The move comes after SEBI received complaints from

investors.

• SEBI came out with guidelines for business continuity plan (BCP) and disaster recovery site

(DRS) for stock exchanges and depositories. The objective of the move is to maintain data

and transaction integrity and ensure that there is no loss in data.

• According to media reports, the Ministry of Finance has given its approval for setting up a

precious metals’ board. The board will take decisions on regulatory and developmental

aspects and bring in clarity as to how the new comprehensive gold policy will be

implemented.

Regulatory Updates in India (contd..)

• According to media reports, RBI is working on regulatory norms for financial technology

companies. The central bank governor will hold discussion with the chiefs of payment banks

in order to understand their issues, concerns and worries. A regulatory sandbox is expected

to be issued in the next two months so as to promote financial technology in the country. A

sandbox approach is experimenting and learning before finally adopting a system or

technology. Such an approach helps to put a check on failures.

• According to media reports, the Ministry of Commerce came out with an online system to

help exporters to obtain export license for restricted category goods. The objective of the

move is to promote paperless work and boost ease of doing business within the country.

The move is expected to simplify the application process, expedite the process and issue of

export authorisation. Presently application for export of such goods need to be done in hard

copy and discussion with concerned agencies is done manually.

• According to media reports, from Apr 1, 2019 electric 3- and 4-wheelers will require a valid

permit from a government agency in order to avail incentives under the Rs. 10,000 crore

Faster Adoption and Manufacturing of and Electric Vehicles (FAME) scheme. The permit will

state that the vehicle will be used only for public transportation purposes.

Global News/Economy

• Data from the U.S. Commerce Department showed that the economic growth of the U.S.

economy witnessed a growth of 2.2% in the fourth quarter of 2018, down from the previous

estimate of 2.6% and slower than the growth of 3.4% in the third quarter of 2018. The growth

of the U.S. economy in 2018 stood at 2.9% compared to a growth of 2.2% in 2017.

• A report from the Commerce Department showed that personal income in the U.S. rose

0.2% in Feb 2019 as against a fall of 0.1% in Jan 2019. Disposable personal income also

rose 0.2% in Feb 2019 as against a fall of 0.2% in Jan 2019.

• The President of European Central Bank (ECB) stated at the ECB Watchers conference in

Frankfurt that the bank's monetary policy stance remained accommodative due to weaker

growth outlook for the eurozone. Also, the President stated that weakness in external

demand is unlikely to be severe. The ECB chief also indicated that external demand may be

affecting investment via manufacturing value chains within the eurozone. However, currently

the expectations for investment are relatively robust as the fundamentals are in position for

investment to rebound, if global growth stabilizes.

• According to a report from the Ministry of Economy, Trade and Industry, Japan’s industrial

production came in line with market expectations and grew 1.4% MoM in Feb 2019 as

against a decline of 3.4% in Jan 2019. Industrial production fell 1% YoY as against a gain of

0.3% in Jan 2019.

Global Equity Markets

Global Indices

Indices

29-Mar-19

1-Week

Return

YTD

Return

Dow Jones 25,928.68 1.67% 11.15%

Nasdaq 100 7,378.77 0.72% 16.57%

FTSE 100 7,279.19 0.99% 8.19%

DAX Index 11,526.04 1.42% 9.16%

Nikkei Average 21,205.81 -1.95% 5.95%

Straits Times 3,212.88 0.02% 4.70%

Source: Thomson Reuters Eikon

Value as on

Mar 29, 2019

U.S.

• U.S. markets rose on optimism

regarding the development of the next

round of U.S. – China trade talks, which

commenced this week. As per media

reports, the U.S. Treasury Secretary

described the latest round of high-level

U.S. trade talks as "constructive.“

• However, concerns about an impending

U.S. recession capped the gains.

Europe

• European markets moved higher as latest round of meeting between the U.S. and China

raised hope for an eventual trade deal between the two nations. On the data front, U.K.

GDP grew by annual 1.4% in the final quarter of 2018, an upward revision from the

preliminary estimate of 1.3% which contributed to the upside. However, reports that

lawmakers rejected U.K. Prime Minister’s Brexit deal for the third time capped the gains.

Asia

• Asian markets reflected broader weakness during the week. Positive impact of a report

showing both U.S. and China have made headway in their trade talks was overshadowed

by Brexit uncertainty. Concerns over potential U.S. recession also weighed on market

sentiment.

Global Debt (U.S.)

• Yields on the 10-year U.S. Treasury

bond fell 5 bps to close at 2.41%

compared with the previous close of

2.46%. Also, yields fell to its lowest

since Dec 18, 2017 in one of the

sessions during the week.

• U.S. Treasury prices rose during the

week under review as the yield curve

inverted on Mar 22 which fuelled

concerns over potential U.S. recession

and boosted the safe haven appeal of

the U.S. Treasuries.

• Reports that U.S.’ GDP for fourth

quarter 2018 was downwardly revised to

more than market expectations and U.S.

consumer spending rebounded less

than market expectations in Jan 2019,

added to the gains. However, reports

that the latest round of discussions

between U.S. and China ended on a

positive note capped the gains.

2.35

2.40

2.45

25-Mar 27-Mar 29-Mar

Yield in %

US 10-Year Treasury Yield Movement

Source: Thomson Reuters Eikon

Commodities Market

Performance of various commodities

Commodities

Last Closing* 1-Week Ago

Brent Crude($/Barrel) 68.52 66.73

Gold ($/Oz) 1291.90 1313.13

Gold (Rs/10 gm) 31,601 32,007

Silver ($/Oz) 15.14 15.41

Silver (Rs/Kg) 37,270 38,160

Source: Thomson Reuters Eikon *Value as on Mar 29, 2019

Gold

• Gold prices initially went up on rising

concerns over global economic growth

and Brexit uncertainties. However, later,

the trend reversed on reports

suggesting U.S and China’s likely

conclusion of trade negotiation in Apr

2019 which dented the safe appeal of

the bullion.

Brent Crude

• Brent crude prices grew amid supply

cuts by OPEC and its allies along with

U.S. sanctions against Iran and

Venezuela. However, concerns over the

adverse impact of global economic

slowdown on demand capped the gains.

Baltic Dry Index

• The Baltic Dry Index fell on the back of

lower capesize and panamax activities.

9.80

10.40

11.00

1-Mar-19 15-Mar-19 29-Mar-19

Global Commodity Movement

Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)

Global Commodity Prices

Rebased to 10

Source: Thomson Reuters Eikon

2.68%

-1.62%

-1.82%

Currencies Markets

Movement of Rupee vs Other Currencies

Currency Last Closing* 1-Wk Ago

US Dollar

69.17 68.66

Pound Sterling

90.48 90.28

EURO

77.70 78.14

100 Yen

62.52 61.97

Source: RBI Figures in INR , *Value as on Mar 29, 2019

Rupee

• The Indian rupee depreciated against the

greenback as concerns of slowing global

economy weighed on the market

sentiment.

Euro

• The euro fell against the greenback as

better than expected U.S. trade deficit

data for Jan 2019 strengthened the latter.

However, further losses were restricted

after U.S GDP slowed in the fourth

quarter of 2018.

Pound

• Sterling fell against the U.S. dollar due to

persisting worries over Brexit after

lawmakers rejected U.K. Prime Minister’s

Brexit deal for the third time.

Yen

• Yen weakened against the greenback on

better than expected U.S. trade deficit

data for Jan 2019 and decline in initial

weekly U.S. jobless claims for the week

ended Mar 23.

9.50

9.75

10.00

1-Mar-19 15-Mar-19 29-Mar-19

USD GBP Euro JPY

Source: RBI

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

0.74%

0.22%

-0.56%

0.89%

The Week that was…

March to 29

March

The Week that was (Mar 25 – Mar 29)

Date Events

Present Value

Previous Value

Monday,

March 25, 2019

• Japan All Industry Activity Index (MoM) (Jan) -0.20% -0.60%

• Germany IFO Business Climate (Mar) 99.6 98.5

Tuesday,

March 26, 2019

• U.S. Consumer Confidence Index (Mar) 124.1 131.4

• U.S. House Price Index (MoM) (Jan) 0.60% 0.30%

• Germany GfK Consumer Confidence (Apr) 10.4 10.7

• France Gross Domestic Product (YoY) (4Q F) 1.00% 0.90%

Wednesday,

March 27, 2019

• U.S. Trade Balance (Jan) ($51.1B) ($59.9B)

• U.S. MBA Mortgage Applications (Mar 22) 8.90% 1.60%

Thursday,

March 28, 2019

• U.S. Gross Domestic Product Annualized (QoQ) (4Q T) 2.20% 2.60%

• Germany Consumer Price Index (YoY) (Mar P) 1.30% 1.50%

• U.S. Personal Consumption (4Q T) 2.50% 2.80%

• U.S. Pending Home Sales (YoY) (Feb) -5.00% -3.30%

• Japan Jobless Rate (Feb) 2.30% 2.50%

• Japan Retail Trade (YoY) (FEB) 0.40% 0.60%

Friday,

March 29, 2019

• India Current Account Deficit (YoY) (Q3FY19) 2.50% 2.90%

• India Fiscal Deficit (YoY) (Apr 19-Feb 19) (% of FY19) 134.20% 120.30%

• Germany Unemployment Change (000's) (Mar) (7K) (20K)

• U.S. Personal Consumption Expenditure Core (YoY)

(Jan)

1.40% 1.90%

• U.K. GfK Consumer Confidence (Mar) -13 -13

• Japan Housing Starts (YoY) (Feb) 4.20% 1.10%

• U.K. Gross Domestic Product (YoY) (4Q F) 1.40% 1.30%

The Week Ahead

April to 5

April

The Week Ahead

Day Event

Monday,

April 1, 2019

• India Nikkei Manufacturing PMI (Mar)

• India Index of Eight Core Industries (Mar)

• U.S. ISM Manufacturing PMI (Mar)

• China Caixin Manufacturing PMI (Mar)

Tuesday,

April 2, 2019

• U.S. Durable Goods Orders (Feb P)

• U.K. Markit/CIPS Construction PMI (Mar)

• Eurozone Unemployment Rate (Feb)

Wednesday,

April 3, 2019

• India Nikkei Service PMI (Mar)

• U.S. ADP Employment Change (Mar)

• U.K. Markit/CIPS Composite PMI (Mar)

• Japan Nikkei Composite PMI (Mar)

Thursday,

April 4, 2019

• India Monetary Policy Committee Rate Decision

• Germany Factory Orders (YoY) (Mar)

• Germany Markit Construction PMI (Mar)

Friday,

April 5, 2019

• U.S. Change in Non-farm Payrolls (Mar)

• U.S. Unemployment Rate (Mar)

• Germany Industrial Production (YoY) (Feb)

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