Mutual Fund News of 8th March 2019 – Reliance Mutual Fund

News U Can Use

March 8, 2019

The Week that was…

March to 8

March

Indian Economy

• The Nikkei India Services Purchasing Managers' Index (PMI) grew to 52.5 in Feb 2019

from 52.2 in Jan 2019. New work led to faster increase in output and solid job creation.

Business sentiment improved and rates of both input cost and output charge inflation

eased. However, international trade was weak. Seasonally adjusted Nikkei India

Composite PMI Output Index grew to 53.8 in Feb 2019 from 53.6 in Jan 2019.

• Data from the Society of Indian Automobile Manufacturers (SIAM) showed that sales of

passenger vehicles fell in Feb 2019 on account of high insurance costs and tightened

liquidity in the market. Passenger vehicle sales fell 1.11% to 2,72,284 units. Sales of

commercial vehicles decreased 0.43% to 87,436 units while that of three-wheeler sales fell

4.14% to 59,875 units. Sales of two-wheelers also came down 4.22% to 16,15,071 units.

Overall, vehicle sales across categories declined 3.65% to 20,34,768 units.

• The Reserve Bank of India (RBI) announced that Rs. 12,500 crore would be injected into

the financial system through open market operations (OMOs). Also, it stated that the

announcement is based on an assessment of liquidity conditions and durable liquidity

needs.

• According to data from Tea Board, tea production fell to 13.96 million kg in India in Jan

2019 as against production of 17.68 million kg in the year-ago period. South India was the

biggest contributor and there was no production in north India in Jan 2019 due to ban

imposed on plucking.

Indian Equity Market

Domestic Equity Market Indices

Indices 08-Mar-19 1 Week Return YTD Return

S&P BSE Sensex 36,671.43 1.68% 1.67%

Nifty 50 11,035.40 1.58% 1.59%

S&P BSE Mid-Cap 14,804.21 2.08% -4.11%

S&P BSE Small-Cap 14,529.06 3.91% -1.21%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines

Advance/Decline Ratio

05-Mar-19 1540 336 4.58

06-Mar-19 1246 617 2.02

07-Mar-19 871 940 0.93

08-Mar-19 800 1006 0.80

Source: NSE

• Indian equity markets closed on a

positive note in the week ended Mar 8,

2019. Decline in oil prices due to global

growth concerns and reports of rise in

U.S. crude inventory boosted the

indices. Surge in Nikkei Services PMI

reading for Feb 2019 and strength in

rupee against the greenback added to

the gains. Reports that China’s

government would implement

measures to boost domestic

consumption also boosted investor

sentiment. However, concerns over

reports that the U.S. President plans to

end key trade benefits for India

restricted the gains.

• Further, weak global cues kept the

markets under pressure as

Organization for Economic Co-

operation and Development again cut

its global growth forecasts for 2019 and

2020.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

27.17 27.05 32.11 -123.3

P/B

3.09 3.48 2.57 2.24

Dividend Yield

1.17 1.22 0.99 0.89

Source: BSE, NSE Value as on Mar

8, 2019

Indian Equity Market (contd.)

Sectoral Indices

Indices

Last Returns (in %)

Closing* 1-Wk 1-Mth

S&P BSE Auto

19,332.23 2.15% 2.05%

S&P BSE Bankex

31,086.39 2.52% 1.77%

S&P BSE CD

22,317.21 3.81% 3.06%

S&P BSE CG

17,762.92 2.55% 5.44%

S&P BSE FMCG

11,597.56 1.63% 0.13%

S&P BSE HC

13,972.89 0.62% -0.07%

S&P BSE IT

15,032.21 -2.13% -3.79%

S&P BSE Metal

11,025.33 0.82% 7.39%

S&P BSE Oil & Gas

14,309.84 2.67% 4.84%

BSE Power

1,917.27 3.70% 7.62%

BSE PSU

7,088.19 3.31% 6.13%

Source: Thomson Reuters Eikon

*Value as on Mar 8, 2019

• On the BSE sectoral front, indices closed on

a positive note. S&P BSE Consumer

Durables was the major gainer, up 3.81%

followed by S&P BSE Power that grew

3.70%. Cabinet’s decision to reportedly

provide additional funds for sugar mills likely

boosted consumer durable stocks. S&P BSE

Oil & Gas and S&P BSE Capital Goods grew

2.67% and 2.55%, respectively.

• S&P BSE Bankex and S&P BSE Auto grew

2.52% and 2.15%, respectively. S&P BSE

information technology was the major loser

that fell 2.13%.

Indian Derivatives Market Review

• Nifty Mar 2019 Futures were at 11,076.05, a premium of 40.65 points, over the spot

closing of 11,035.40. The total turnover on NSE’s Futures and Options segment for the

week stood at Rs. 41.06 lakh crore as against Rs. 53.99 lakh crore for the week to Mar 1.

• The Put-Call ratio stood at 0.87 compared with the previous week’s close of 0.92.

• The Nifty Put-Call ratio stood at 1.60 against the previous week’s close of 1.69.

Domestic Debt Market

Debt Indicators

(%)

Current

Value

1-Wk

Ago

1-Mth

Ago

6-Mth

Ago

Call Rate

6.15 6.20 6.35 6.34

91 Day T-Bill

6.41 6.42 6.38 6.85

07.32% 2024, (5 Yr GOI)

7.03 7.05 7.15 7.96

07.26% 2029, (10 Yr GOI)

7.37 7.38 7.33 --

Source: Thomson Reuters Eikon

Value as on Mar 8, 2019

• Initially, bond yields rose on

expectations of heavy debt supply in

Mar 2019. In addition, market

participants are also staying cautious

ahead of Feb 2019 retail inflation

data, due on Mar 12, 2019. However,

losses reversed following overnight

decline in U.S. Treasury yields and

optimism on another rate cut by the

Monetary Policy Committee in its Apr

2019 meeting.

• Yields on the existing 10-year

benchmark paper (7.17% GS 2028)

fell 3 bps to close at 7.53% from the

last week’s close at 7.56%, after

trading in a range of 7.52% to 7.59%.

• Yield on the upcoming new 10-year

benchmark paper (7.26% GS 2029)

fell 1 bps to close at 7.37% as

compared with the previous session’s

close of 7.38% after trading in the

range of 7.36% to 7.41%.

7.30

7.34

7.38

7.42

5-Mar 6-Mar 7-Mar 8-Mar

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

Domestic Debt Market (Spread Analysis)

Maturity

G-Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 6.66 8.15 149

3 Year 6.84 8.33 149

5 Year 7.16 8.36 120

10 Year 7.67 8.72 105

Source: Thomson Reuters Eikon Value as on Mar 8, 2019

• Yields on gilt securities fell across the

maturities by up to 4 bps barring 2-year

paper that increased 1 bps and 30-year

paper that closed steady.

• Corporate bond yields increased on 1-, 5-,

6- and 15-year maturities in the range of 4

bps to 6 bps. Yields fell across the

remaining maturities in the range of 2 bps to

7 bps barring 2- and 7-year papers that

closed steady.

• Difference in spread between AAA corporate

bond and gilt expanded across the

maturities by up to 10 bps barring 3- and 10-

year papers that contracted 1 bps and 3

bps, respectively.

-5

-3

-1

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 08-Mar-19 01-Mar-19

Yield in %

Change in

bps

Source: Thomson Reuters Eikon

Regulatory Updates in India

• The Cabinet Committee on Economic Affairs (CCEA) permitted Alternative Mechanism to

decide on the timing, price and quantum of shares of a state-run company to be put on the

block for outright sale. This comes in order to fast track strategic disinvestment of Central

Public Sector Enterprises (CPSEs).

• The Cabinet approved the continuation of Atal Innovation Mission (AIM). Expenditure up to

Rs. 1,000 crore were approved for expansion of Atal Tinkering Labs (ATL) to 10,000 schools

till FY20 with the help of AIM. For maintenance of the ATL equipment and operational

expenses, each ATL receives grant of Rs. 12 lakh in the first year and up to Rs. 2 lakh per

year for following four years.

• The finance minister announced that the Cabinet has approved interest subvention worth

Rs. 2,790 crore for extending loans by banks to sugar mills. Cabinet Committee had already

approved Rs. 1,332 crore in Jun 2018.

• The Union cabinet announced that it has given approval to grant coal supply to power

plants with short term power purchase agreements. Additionally, besides giving renewable

status to hydroelectric plants, it has cleared investment of Rs. 21,000 crore for setting up

two new coal-based plants in Uttar Pradesh and Bihar.

Regulatory Updates in India (contd..)

• According to media reports, the government brought in stiff localisation riders for the

automotive industry in order to avail the incentives upfront under the Faster Adoption and

Manufacturing of hybrid and Electric Vehicles (FAME) II Initiative. This comes on the wake

of promoting local manufacturing of electric vehicles. In order to qualify for the scheme,

vehicle makers have to confirm minimum localisation content of 40% on ex-factory price of

the vehicle in case of buses and 50% for all other categories of vehicles.

• The government allowed rebate for all state and Central embedded levies on apparel and

made-up textile segments, making shipments zero-rated. The announcement came in order

to boost the country's competitiveness in export markets.

• The Reserve Bank of India (RBI) eased norms/business guidelines for white label ATMs.

Under the new norms, white label ATM operators (WLAO) can source cash directly from

RBI or any scheduled banks including rural banks and cooperative banks. In addition,

WLAOs can offer bill payment and deposit services and may also display advertisements of

non-finance products provided it doesn’t run on the screen when the customer is conducting

a transaction.

Global News/Economy

• According to a report from the Labor Department, U.S. non-farm payroll employment rose

marginally by 20,000 jobs, much less than expected, in Feb 2019 following upwardly revised

311,000 jobs increase in Jan 2019. However, the unemployment rate fell to 3.8% in Feb

2019 from 4.0% in Jan 2019.

• According to the Institute for Supply Management, U.S. non-manufacturing index rose more

than expected to 59.7 in Feb 2019 from 56.7 in Jan 2019. The major reason for increase

was due to significant increase in the pace of new orders growth.

• The European Central Bank (ECB) kept interest rates on hold in its monetary policy review

as expected. The main refinance rate is currently at a record low of 0% and the deposit rate

at -0.40%. The marginal lending facility rate stands at 0.25%. ECB also lowered the growth

forecasts and inflation outlook for this year and the next for the euro zone economy amid

persisting global uncertainties. The growth forecast for 2019 was downgraded to 1.1% from

the earlier projection of 1.7%.

• According to data from the Cabinet Office, Japan's GDP rose 0.5% QoQ in the fourth quarter

of 2018 as against 0.3% rise in the previous reading. On YoY basis, GDP rose 1.9%

following 1.4% rise in the previous reading.

Global Equity Markets

Global Indices

Indices

08-Mar-19

1-Week

Return

YTD

Return

Dow Jones

25,450.24 -2.21% 9.10%

Nasdaq 100

7,015.69 -1.90% 10.83%

FTSE 100

7,104.31 -0.03% 5.59%

DAX Index

11,457.84 -1.24% 8.51%

Nikkei Average

21,025.56 -2.67% 5.05%

Straits Times

3,195.87 -0.76% 4.14%

Source: Thomson Reuters Eikon

Value as on Mar 8, 2019

U.S.

• U.S. markets ended the week in the red

as geo political concerns kept investors

jittery following media reports that North

Korea is rebuilding its nuclear test

facility.

• Sentiment dampened further after ECB

slashed euro zone economic growth

forecasts for this year and the next and

the U.S. jobs data for Feb 2019 came

well below market expectations.

Europe

• European markets were hit as initial hopes that the U.S. and China will agree on a trade

deal anytime soon waned. Also, ECB trimmed its euro zone economic growth forecast for

this year and the next citing external uncertainties. However, it assured of providing new

loans to banks in order to stimulate growth.

Asia

• Asian markets were no exception to the weakness seen in global peers. Chinese and

Hong Kong markets were hit with official data showing that Chinese exports plunged the

most in three years and imports fell for a third straight month in Feb 2019. Growth worries

intensified after ECB downgraded the euro zone economic growth forecast for this year

and the next citing external uncertainties.

Global Debt (U.S.)

• Yields on the 10-year U.S. Treasury

bond plunged 13 bps to close at 2.63%

compared with the previous close of

2.76%.

• U.S. Treasury prices surged after ECB

kept interest rates on hold in its

monetary policy review and indicated

that interest rates will remain

unchanged for the rest of the year.

• Also, ECB announced a new round of

long-term loans for banks to boost

lending in the slowing euro zone

economy and lowered the growth

forecasts and inflation outlook of the

euro zone economy for this year and the

next amid persisting global

uncertainties.

• Gains were extended following

downbeat U.S. nonfarm payroll data for

Feb 2019. However, gains were capped

after business activity jumped in non-

manufacturing sectors in the U.S. in Feb

2019.

2.60

2.65

2.70

2.75

4-Mar 5-Mar 6-Mar 7-Mar 8-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) 63.07 63.15

Gold ($/Oz) 1,298.01 1,293.31

Gold (Rs/10 gm) 32,123 32,819

Silver ($/Oz) 15.31 15.20

Silver (Rs/Kg) 37,826 39,195

Source: Thomson Reuters Eikon *Value as on Mar 8, 2019

Gold

• Gold prices inched up as global growth

concerns resurfaced after ECB cut the

2019 growth forecast for the euro zone.

Also, China reported 20.7% drop in

export for Feb 2019 amid the ongoing

trade tension with U.S. Lower than

expected U.S. jobs data for Feb 2019

also supported prices.

Brent Crude

• Brent crude prices marginally moved

down on global growth concerns, which

aggravated after ECB trimmed

eurozone’s growth forecast for 2019 and

China lowered its economic growth

target to 6% in 2019 compared with

6.5% in 2018 due to increasing debt and

the trade dispute with U.S.

Baltic Dry Index

• The Baltic Dry Index fell on the back of

lower capesize and panamax activities.

9.00

9.50

10.00

10.50

11.00

11.50

9-Feb-19 18-Feb-19 27-Feb-19 8-Mar-19

Global Commodity Movement

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

Global Commodity Prices

Rebased to 10

Source: Thomson Reuters Eikon

-0.13%

0.36%

0.71%

Currencies Markets

Movement of Rupee vs Other Currencies

Currency Last Closing* 1-Wk Ago

US Dollar

70.10 70.97

Pound Sterling

91.80 94.09

EURO

78.55 80.72

100 Yen

63.13 63.49

Source: RBI Figures in INR , *Value as on Mar 8, 2019

Rupee

• The rupee rose against the greenback

following gains in domestic equity market

and weak U.S. private jobs data for Feb

2019. However, greenback demand by

state-run bank capped the gains.

Euro

• The euro fell against the U.S. dollar after

ECB indicated that interest rates will

remain unchanged for the rest of the

year and announced a new round of

long-term loans for banks.

Pound

• The pound fell against the dollar

following decline in U.K. construction

activity in Feb 2019.

Yen

• The yen rose against the greenback after

U.S. jobs data came much less than

expected in Feb 2019. However,

expectations that U.S. and China are

moving closer to a trade deal capped the

gains.

9.60

9.70

9.80

9.90

10.00

10.10

10.20

10.30

8-Feb-19 15-Feb-19 22-Feb-19 1-Mar-19 8-Mar-19

USD GBP Euro JPY

Source: RBI

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

-2.44%

-1.22%

-2.69%

-0.57%

The Week that was…

March to 8

March

The Week that was (Mar 4 – Mar 8)

Date Events Present Value Previous Value

Monday,

March 04, 2019

• U.K Markit/CIPS UK Construction PMI (Feb) 49.50 50.60

• U.S. Construction Spending (MoM) (Dec) -0.60% 0.80%

Tuesday,

March 05, 2019

• India Nikkei Services PMI (Feb) 52.50 52.20

• U.S. ISM Non-Manufacturing/Services Composite (Feb) 59.70 56.70

• Eurozone Retail Sales (YoY) (Jan) 2.20% 0.30%

• U.K. Markit/CIPS Services PMI (Feb) 51.30 50.10

• Japan Nikkei Services PMI (Feb) 52.30 51.60

Wednesday,

March 06, 2019

• Germany Markit Construction PMI (Feb) 54.70 50.70

• U.S. MBA Mortgage Applications (Mar 01) -2.50% 5.30%

• U.S. ADP Employment Change (Feb) 183k 300k

• U.S. Trade Balance (Dec) -$59.8B -$50.3B

Thursday,

March 07, 2019

• European Central Bank Rate Decision (Mar 07) 0.00% 0.00%

• Japan Leading Index CI (Jan P) 95.90 97.50

• Eurozone Gross Domestic Product (YoY) (4Q F) 1.10% 1.20%

• U.S. Initial Jobless Claims (Mar 02) 223k 226k

Friday,

March 08, 2019

• U.S. Change in Non-farm Payrolls (Feb) 20k 311k

• U.S. Unemployment Rate (Feb) 3.80% 4.00%

• China Trade Balance (Feb) $4.12b $39.16b

The Week Ahead

March to 15

March

The Week Ahead

Day Event

Monday,

March 11, 2019

• U.S. Retail Sales Advance (MoM) (Jan)

• Japan Machine Tool Orders (YoY) (Feb P)

• U.S. Business Inventories (Dec

Tuesday,

March 12, 2019

• India Consumer Price Index (Feb)

• India Index of Industrial Production (Jan)

• U.S. Consumer Price Index (YoY) (Feb)

• U.K. Trade Balance (Jan)

Wednesday,

March 13, 2019

• U.S. Durable Goods Orders (Jan P)

• Eurozone Industrial Production (YoY) (Jan)

Thursday,

March 14, 2019

• India Wholesale Price Index (Feb 19)

• China Retail Sales YTD (YoY) (Feb)

• U.S. Initial Jobless Claims (Mar 09)

Friday,

March 15, 2019

• India Trade Deficit (Feb)

• Japan Bank Rate Decision (Mar 15)

• U.S. University of Michigan Sentiment (Mar P)

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