The Week that was…
06
th
May to 10
th
May
2
Indian Economy
• Government data showed that India’s Index of Industrial Production (IIP) growth fell 0.1%
YoY in Mar 2019 as against a growth of 0.1% in Feb 2019 and 5.3% in Mar 2018. The
downside reflects fall in the manufacturing sector. The manufacturing sector dropped 0.4%
in Mar 2019 compared with a rise of 5.7% a year ago. Cumulatively, during Apr 2018 to
Mar 2019, industrial production increased 3.6%, slower than 4.4% growth in the same
period of the previous year.
• Data from a private survey showed that activity in India’s service sector fell to a seven-
month low in Apr 2019, which can be attributed to modest rise in new businesses and
disruptions arising ahead of the general elections. The seasonally adjusted Nikkei India
Services Business Activity Index fell from 52 in Mar 2019 to 51 in Apr 2019. The seasonally
adjusted Nikkei India Composite PMI Output Index that considers both the manufacturing
sector and the services sector also came down to 51.7 in Apr 2019 from 52.7 in Mar 2019.
• Data from the Income Tax Department showed that e-filing of income tax returns (ITRs)
witnessed an increase 19% over the year. During FY18, 6.74 ITRs were e-filed out of
which 5.47 crore ITRs were filed for the assessment year (A.Y.) 2017-18. In FY19, 6.68
crore ITRs were e-filed out of which 6.49 crore ITRs were filed for the assessment year
(A.Y.) 2018-19. This implies that the number of taxpayers who filed their ITRs electronically
in FY19 grew 19% compared with that of FY18.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
10-May-19
1 Week Return
YTD Return
S&P BSE Sensex
37,462.99 -3.85% 3.87%
Nifty 50
11,278.90 -3.70% 3.83%
S&P BSE Mid
-Cap 14,389.76 -2.66% -6.79%
S&P BSE Small
-Cap 14,105.73 -3.04% -4.09%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
06-May-19 574 1,237 0.46
07-May-19 544 1,260 0.43
08-May-19 441 1,370 0.32
09-May-19 753 1,044 0.72
10-May-19 861 899 0.96
Source: NSE
• Renewed U.S.-China trade tensions
dominated market sentiment for the
entire week, dragging the benchmark
indices down.
• During the week, the U.S. President
said that the U.S. government will
increase tariffs on Chinese imports
worth $200 billion to 25% and further
tariffs on another $325 billion imports
soon. This raised fears that China could
cancel its next round of talks as a
retaliatory measure. The two countries
have gone back to exchange of strong
words with the U.S. President saying
he would be happy to increase tariff on
Chinese imports and blaming China for
breaking the ‘deal’.
• Apart from this, a survey showed that
India’s private sector expanded at the
slowest pace in seven months in Apr
2019 as growth in services activity
softened.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
28.44 28.14 27.89 94.86
P/B
2.91 3.61 2.41 2.03
Dividend Yield
1.23 1.17 1.05 0.95
Source: BSE, NSE Value as on May 10, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,251.47
-3.43%
-6.41%
S&P BSE
Bankex
32,385.11
-3.17%
-3.54%
S&P BSE CD
23,312.86
-1.64%
0.31%
S&P BSE CG
17,739.37
-1.94%
-3.51%
S&P BSE FMCG
11,403.66
-1.64%
-1.85%
S&P BSE HC
13,797.30
-2.51%
-4.48%
S&P BSE IT
15,502.46
-1.01%
-0.68%
S&P BSE Metal
10,701.18
-6.90%
-7.74%
S&P BSE Oil & Gas
14,576.58
-4.54%
-0.57%
S&P BSE Realty
1,943.70
-4.78%
-9.12%
S&P BSE Power
1,890.29
-4.89%
-6.56%
Source: Thomson Reuters Eikon
*Value as on May
10, 2019
• On the BSE sectoral front, the indices closed
in the red. S&P BSE Metal was the major
loser, down 6.90%, followed by S&P BSE
Power and S&P BSE Realty, which slumped
4.89% and 4.78%, respectively. S&P BSE Oil
Gas and S&P BSE Auto too fell 4.54% and
3.43%, respectively.
• The metal sector is under pressure because
of the worsening U.S.-China trade relations.
Other sectors remained weak as uncertainty
prevails over the outcome of Lok Sabha
elections, oil price trajectory, and U.S.-China
trade talks.
Indian Derivatives Market Review
• Nifty May 2019 Futures were at 11,307.20, a premium of 28.30 points, above the spot
closing of 11,278.90. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 29.91 lakh crore as against Rs. 40.43 lakh crore for the week to May 3.
• The Put-Call ratio stood at 0.87 compared with the previous week’s close of 0.80.
• The Nifty Put-Call ratio stood at 1.30 against the previous week’s close of 1.49.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
5.95 6.03 5.99 6.47
91 Day T
-Bill
6.45 6.47 6.22 6.95
07.32% 2024, (5 Yr GOI)
7.25 7.31 7.13 --
07.26% 2029, (10
Yr
GOI)
7.41 7.39 7.37 --
Source: Thomson Reuters Eikon
Value as on May 10
, 2019
• Bond yields rose due to the
depreciation in Indian rupee against
the U.S. dollar. However, losses were
limited following decline in global
crude oil prices.
• Market participants remained wary of
the escalating trade tension between
U.S. and China. They are closely
tracking the two-day trade discussion
at Washington.
• Yields on the 10-year benchmark
paper (7.26% GS 2029) rose 2 bps to
close at 7.41% compared with the
previous close of 7.39% after trading
in the range of 7.37% to 7.43%.
• RBI conducted auction for sale of
7.32% GS 2024, 7.26% GS 2029,
7.69% GS 2043 and 7.72% GS 2049
for notified amount of Rs. 17,000
crore. The entire amount was
accepted.
7.36
7.38
7.40
7.42
6-May 7-May 8-May 9-May 10-May
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 6.67 8.31 164
3 Year 7.15 8.44 129
5 Year 7.38 8.54 116
10 Year 7.55 8.67 112
Source: Thomson Reuters Eikon
Value as on May 10
, 2019
• Yields on gilt securities fell across the
maturities in the range of 3 bps to 13 bps
barring 2-, 7- and 10-year papers that
increased by up to 2 bps.
• Corporate bond yields increased across the
maturities by up to 20 bps barring 1-year
paper that fell 1 bps.
• Difference in spread between AAA corporate
bond and gilt expanded across the
maturities in the range of 2 bps to 23 bps.
The maximum increase was witnessed on
3-year paper and the minimum increase
was witnessed on 7-year paper.
-9
-5
-1
3
5.50
6.50
7.50
8.50
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 10-May-19 03-May-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• According to media reports, the tax department stated that the builders will have to refund
Goods and Services Tax (GST) paid by home buyers in case they cancel the flat booked in
FY19. Meanwhile, the builders will be allowed to avail credit adjustment for such refunds.
The clarification comes as a part of the FAQ released by the Central Board of Indirect Taxes
and Customs on real estate sector.
• The Reserve Bank of India (RBI) is considering assigning a ‘lower risk weight’ on loans to
companies against which banks have taken action under Insolvency & Bankruptcy Code
(IBC) of 2016. A lower risk weightage would help banks in conserving the capital and
maintain the required capital adequacy ratio. This is imperative as the capital adequacy
ratio determines the amount of loan that a bank can give out at a given level of capital. It
needs to be noted that multiple business restrictions is imposed on a bank once its capital
adequacy falls below the floor mandated by the RBI.
• According to media reports, the Securities and Exchange Board of India (SEBI) may give
approval to foreign portfolio investors to invest in shares of unlisted entities. Such a move if
adopted is expected to benefit the start-up companies and other unlisted entities as they will
get access to a broader pool of capital. Also the move will bring about greater participation
of foreign portfolio investors in the Indian capital market.
Regulatory Updates in India (contd..)
9
• According to media reports, as a part of a new initiative by the Ministry of Corporate Affairs
(MCA), all independent directors may have to register. The registration is proposed to be
made compulsory through an online facility. It will be in addition to the Directors
Identification Number, where a KYC process was undertaken recently. Meanwhile, MCA is
planning to bring in online training modules on various issues that are dealt by these board
members. These online training modules are being prepared by Indian Institute of
Corporate Affairs and the training through electronic modules will be totally voluntary.
• According to media reports, the Ministry of Finance may ask SEBI to relax its norms for
entities that requires promoters to have 75% holdings in them. Presently the government’s
stake in many of the state-run banks are more than 75% and the government is considering
lowering its shareholdings to 52%. The objective of the move is to further enable the
recapitalisation of state-run banks. State run banks are considering approaching the market
for raising required funds and thus lower government’s stake in them.
• Bottling companies and distributors of certain FMCG and consumer durable firms have
come under the scanner of the GST authorities because of alleged post-sale discounts
offered by manufacturers, media reports said. The authorities have asked why GST was not
paid on these discounts, treating them as services by distributors. In some cases,
authorities have sought sales details for the past five years from distributors.
Global News/Economy
• A report from the Labor Department showed that U.S. consumer price index (CPI) rose 0.3%
in Apr 2019 as against an increase of 0.4% in Mar 2019. Energy prices surged 2.9% in Apr
2019 as against an increase of 3.5% in Mar 2019. Meanwhile, the Labor Department said
the less volatile four-week moving average rose to 220,250, an increase of 7,750 from the
previous week's unrevised average of 212,500.
• A Labor Department report showed first-time claims for U.S. unemployment benefits pulled
back by less than expected in the week ended May 4, 2019. The report said initial jobless
claims dipped to 228,000, a decrease of 2,000 from the previous week's 230,000.
• According to a preliminary report from Office for National Statistics, U.K.’s gross domestic
product (GDP) came in line with market expectations and grew 0.5% in the first quarter of
2019 on a sequential basis from the fourth quarter of 2019, when it grew 0.2%. The upside
was driven by growth in manufacturing and business investment that came ahead of the
original Brexit deadline towards the end of Mar 2019.
• The National Bureau of Statistics data showed China's CPI rose to a six-month high in Apr
2019 and producer prices increased more than expected at the fastest pace in four months.
The consumer price index rose 2.5% YoY in Apr 2019, following a 2.3% increase in Mar
2019, in line with expectations.
10
Global Equity Markets
11
Global Indices
Indices
10-May-19
1-Week
Return
YTD
Return
Dow Jones
25,942.37 -2.12% 11.21%
Nasdaq 100
7,586.53 -3.30% 19.85%
FTSE 100
7,203.29 -2.40% 7.06%
DAX Index
12,059.83 -2.84% 14.21%
Nikkei Average
21,344.92 NA 6.65%
Straits Times
3,273.50 -3.50% 6.67%
Source: Thomson Reuters Eikon
Value as on
May 10, 2019
U.S.
• U.S. markets remained jittery
throughout the week on concerns over
U.S.-China trade talks.
• Investor sentiment dampened further
after U.S.-China trade talks ended
without any deal and the U.S. President
threatened to increase tariffs on
Chinese imports worth $200 billion and
additional goods valuing $325 billion.
Europe
• European markets remained subdued on trade tensions between the U.S. and China after
U.S. President said they will increase tariffs on Chinese imports. Weak economic data
from Germany and France also dented sentiment as German manufacturing orders grew
less than forecasted in Mar 2019 and France's trade deficit widened during the same
period following higher growth in imports as against that of exports.
Asia
• Asian markets followed global peers after U.S.-China trade relations worsened. Mixed
Chinese trade data weighed on sentiment as export data unexpectedly fell 2.7% in Apr
2019 although imports rose for the first time in five months.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond fell 7 bps to 2.46% compared with
the previous week’s close of 2.53%.
• U.S. Treasury prices rose initially during
the week as its safe haven appeal
improved on growing trade tensions
between U.S. and China and its impact
on global economic growth.
• Gains were extended after consumer
price index in U.S. grew less than
expected in Apr 2019 that reinforced the
notion that the U.S. Federal Reserve
might leave interest rates unchanged in
2019. U.S. Treasury prices rose further
after the U.S. escalated a tariff war with
China by raising duties on $200 billion
worth of Chinese goods.
• However, further losses were restricted
after initial jobless claims in U.S. for the
week ended May 4 fell less than
expected.
2.42
2.45
2.48
2.51
6-May 8-May 10-May
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
72.07 72.09
Gold ($/Oz)
1,285.60 1,278.94
Gold (Rs/10 gm)
31,751.00 31,220.00
Silver ($/Oz)
14.75 14.93
Silver (Rs/Kg)
36,983.00 36,354.00
Source: Thomson Reuters Eikon *
Value as on
May 10, 2019
Gold
• Gold prices increased following renewed
U.S.-China trade tensions as the U.S.
President said they would increase tariff
on Chinese imports. This dampened the
risk appetite of investors and added to the
safe haven appeal of the bullion. Market
participants are awaiting the outcome of
the two-day trade discussions at
Washington for further cues.
Brent Crude
• Brent crude prices marginally fell on rising
concerns over U.S.-China trade dispute
and decline in exports from China for Apr
2019. This aggravated worries over global
economic growth. However, U.S. sanction
on Iran and Venezuela capped the
downside.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
9.50
9.80
10.10
10.40
10-Apr-19 20-Apr-19 30-Apr-19 10-May-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-0.03%
0.52%
-1.17%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
69.92 69.27
Pound Sterling
90.93 90.24
EURO
78.49 77.34
100 Yen
63.72 62.13
Source: RBI Figures in INR , *
Value as on
May 10, 2019
Rupee
• The Indian rupee weakened against the
greenback on growing U.S.-China trade
concerns after the U.S. levied fresh
tariffs on Chinese imports.
Euro
• The euro rose against the U.S. dollar as
the latter came under pressure against a
safe haven yen on growing concerns that
the ongoing trade conflict between U.S.
and China may escalate further.
Pound
• The pound weakened against the
greenback on growing concerns over
prolonged political uncertainty in Britain
and worries that the Brexit negotiations
between the ruling party and the
opposition party may reach a dead end.
Yen
• The yen rose against the greenback as
the former’s safe haven appeal improved
on growing U.S. and China trade
concerns.
9.80
10.00
10.20
10.40
10-Apr-19 20-Apr-19 30-Apr-19 10-May-19
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of
INR)
Rebased to 10
Currency Movement
0.94
0.76
1.49
2.56
15
The Week that was…
06
th
May to 10
th
May
The Week that was (May 06 – May 10)
16
Date Events
Present
Value
Previous
Value
Monday,
May 06, 2019
•
India Nikkei Service PMI (Apr) 51.00 52.00
•
Eurozone Retail Sales (YoY) (Mar)
1.90%
3.00%
•
China Caixin Composite PMI (Apr) 52.70 52.90
Tuesday,
May 07, 2019
•
Germany Factory Orders (YoY) (Mar)
-6.00%
-8.10%
•
Germany Markit Construction PMI (Apr) 53.00 55.60
•
Japan Monetary Base (YoY) (Apr)
3.10%
3.80%
Wednesday,
May 08, 2019
•
Japan Nikkei Composite PMI (Apr) 50.80 50.40
•
China Trade Balance CNY (Apr)
93.57b
221.23b
•
Germany Industrial Production (YoY) (Mar)
-0.90%
0.20%
Thursday,
May 09, 2019
•
China Producer Price Index (YoY) (Apr)
0.90%
0.40%
•
Japan Consumer Confidence Index (Apr) 40.40 40.50
•
U.S. Trade Balance (Mar)
-$50.0b
-$49.3b
•
U.S. Initial Jobless Claims (May 4) 228k 230k
•
Japan Overall Household Spending (YoY) (Mar)
2.10%
1.70%
Friday,
May 10, 2019
•
India’s Index of Industrial Production (Mar)
-0.10%
0.10%
•
U.K. Gross Domestic Product (YoY) (1Q P)
1.80%
1.40%
•
U.S. Consumer Price Index (YoY) (Apr)
2.00%
1.90%
•
U.K. Industrial Production (YoY) (Mar)
1.30%
0.40%
17
The Week ahead
13
th
May to 17
th
May
18
The Week Ahead
Day Event
Monday,
May 13, 2019
•
India Consumer Price Index (Apr 19)
•
Japan Leading Index CI (Mar P)
•
Japan Trade Balance - BOP Basis (Yen) (Mar P)
Tuesday,
May 14, 2019
•
India Wholesale Price Index (Apr 19)
•
Germany ZEW Survey Expectations (May)
•
Eurozone ZEW Survey (Economic Sentiment) (May)
•
Germany Consumer Price Index (YoY) (Apr F)
•
Eurozone Industrial Production (YoY) (Mar)
Wednesday,
May 15, 2019
•
Germany Gross Domestic Product (YoY) (1Q P)
•
Eurozone Gross Domestic Product (YoY) (1Q P)
•
U.S. Retail Sales Advance (MoM) (Apr)
•
China Retail Sales (YoY) (Apr)
•
U.S. Industrial Production (MoM) (Apr)
Thursday,
May 16, 2019
•
China New Home Prices (MoM) (Apr)
•
U.S. Initial Jobless Claims (May 11)
•
U.S. Housing Starts (Apr)
Friday,
May 17, 2019
•
U.S. University of Michigan Sentiment (May P)
•
Japan Tertiary Industry Index (MoM) (Mar)
Disclaimer
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19
