News U Can Use
May 17, 2019
The Week that was…
13
th
May to 17
th
May
2
Indian Economy
India’s consumer inflation accelerated to 2.92% YoY in Apr 2019 from 2.86% in Mar 2019
but slowed compared with 4.58% in Apr 2018. This marked a six-month high. Food
inflation grew 1.10% in Apr 2019 compared with a growth of 0.30% in Mar 2019 and a
growth of 2.80% in the same month of the previous year. Fuel and light inflation also
accelerated to 2.56% YoY from 2.42% in Mar 2019.
India’s Wholesale Price Index (WPI) - based inflation slowed down to 3.07% in April 2019
from 3.18% in Mar 2019 and 3.62% in Apr 2018. Fuel and power inflation came in at
3.84% in Apr 2019 as against 5.41% in Mar 2019. Inflation for manufactured products
came in at 1.72% as against 2.16% in the previous month. Meanwhile, food articles
inflation came in at 7.37% in Apr 2019 as against 5.68% in Mar 2019.
Government data showed that India’s trade deficit widened to a five-month high of $15.33
billion in Apr 2019 from $10.89 billion in the previous month and $13.72 billion in the same
month of the previous year. India’s trade deficit widened as imports grew 4.48% in Apr
2019, significantly higher than exports growth of 0.64%. Exports had grown 11.02% in Mar
2019. India’s exports lost momentum in Apr 2019 amid rising trade tensions between U.S.
and China. Import of pulses grew 134.14% over the year in Apr 2019 while gold imports
grew 53.99% over the same time period.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
17-May-19
1 Week Return
YTD Return
S&P BSE Sensex
37,930.77 1.25% 5.16%
Nifty 50
11,407.15 1.14% 5.01%
S&P BSE Mid
-Cap 14,308.36 -0.57% -7.32%
S&P BSE Small
-Cap 13,887.14 -1.55% -5.57%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
13-May-19 350 1,492 0.23
14-May-19 859 963 0.89
15-May-19 657 1,159 0.57
16-May-19 846 959 0.88
17-May-19 1,022 774 1.32
Source: NSE
Indian equity markets closed on a
positive note in the week ended May
17, 2019. Investors looked forward to
exit polls, likely expecting a stable
government post elections. Gains were
extended on expectations of a rate cut
in the upcoming bi-monthly policy
meeting in Jun 2019. Speculations of
rate-cut were boosted by India’s retail
inflation of 2.92% for Apr 2019, which
came in much below than the central
bank’s target of 4%.
However, reports showing weak index
of industrial production data for Mar
2019 and car sales coming in subdued
for Apr 2019, restricted the gains.
Widening of trade deficit in Apr 2019 to
$15.33 billion, weakness in rupee
against the greenback and surge in
crude oil prices dampened market
sentiment. On the global front, renewed
U.S.-China trade tensions added to the
losses.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
27.83 28.44 27.63 77.31
P/B
2.88 3.65 2.36 1.96
Dividend Yield
1.24 1.15 1.00 0.95
Source: BSE, NSE Value as on May 17, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,229.17
-9.92%
S&P BSE
Bankex
32,878.92 1.52% -4.30%
S&P BSE CD
23,759.21 1.91% 0.56%
S&P BSE CG
17,738.58 0.00% -4.45%
S&P BSE FMCG
11,601.02 1.73% -3.09%
S&P BSE HC
13,201.18
-9.09%
S&P BSE IT
15,409.12
-1.17%
S&P BSE Metal
10,459.50
-10.99%
S&P BSE Oil & Gas
14,661.59 0.58% -1.58%
Source: Thomson Reuters Eikon
*Value as on May
17, 2019
On the BSE sectoral front, the indices closed
on a mixed note. S&P BSE Consumer
Durables was the major gainer that grew
1.91% followed by S&P BSE FMCG that
grew 1.73%. Gains in S&P BSE FMCG came
in after a major Indian multinational
conglomerate decided to transfer the
branded food business from one of its
subsidiary to another.
However, S&P BSE Healthcare was the
major loser that fell 4.32% followed by S&P
BSE Metal that fell 2.26%. Metal sector
remained under pressure on concerns over
renewed U.S.-China trade tensions.
Indian Derivatives Market Review
Nifty May 2019 Futures were at 11,425.80, a premium of 18.65 points, above the spot
closing of 11,407.15. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 30.43 lakh crore as against Rs. 29.91 lakh crore for the week to May 11.
The Put-Call ratio stood at 0.69 compared with the previous week’s close of 0.87.
The Nifty Put-Call ratio stood at 1.36 against the previous week’s close of 1.30.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
5.99 5.95 6.04 6.36
91 Day T
-Bill
6.35 6.45 6.34 6.82
07.32% 2024, (5 Yr GOI)
7.12 7.25 7.23 --
07.26% 2029, (10
Yr
GOI)
7.36 7.41 7.39 --
Source: Thomson Reuters Eikon
Value as on May 17
, 2019
Bond yields fell on expectations of a
rate-cut in the upcoming policy
meeting in Jun 2019. Speculations of
rate cut were boosted by India’s retail
inflation of 2.92% for Apr 2019, which
came in much below the central
bank’s target of 4%.
Market sentiment were further
boosted after the Reserve Bank of
India announced to conduct purchase
of government securities under open
market operations for an aggregate
amount of Rs. 12,500 crore.
At the end, yields fell further as
market participants purchased notes
ahead of the results of country’s
general election.
Yields on the 10-year benchmark
paper (7.26% GS 2029) fell 5 bps to
close at 7.36% compared with the
previous close of 7.41% after trading
in the range of 7.35% to 7.42%.
7.28
7.35
7.42
13-May 14-May 15-May 16-May 17-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 6.57 8.28 171
3 Year 7.05 8.27 122
5 Year 7.24 8.42 118
10 Year 7.50 8.62 112
Source: Thomson Reuters Eikon
Value as on May 17
, 2019
Yield on gilt securities fell in the range of 3
to 14 bps across maturities, barring 2-year
paper that increased 1 bps. Yield declined
the most on 4- & 5-year papers, while fell
the least on 14-year paper.
Corporate bond yields plunged in the range
of 3 to 19 bps across the curve. Highest fall
was seen on 5-year paper while lowest
decline was seen on 15-year paper.
Spread between AAA corporate bond and
gilt contracted in the range of 2 to 8 bps on
3- to 6-year papers while 7-year paper was
flat. Spread on remaining securities
expanded by up to 2 bps.
-16
-8
0
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 17-May-19 10-May-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
According to Reserve Bank of India (RBI), non-banking financial companies with an asset
size of more than Rs. 5,000 crore need to appoint a chief risk officer. The objective of the
move is to tighten regulations and increase risk management practices following a series of
defaults at a major leasing and financial services company. RBI mandated that the chief risk
officer should be appointed for a fixed period of time and cannot be removed without the
approval of the board.
As per reports, the Department for Promotion of Industry and Internal Trade has proposed
relaxation in the income tax laws pertaining to sale of residential properties and carrying
forward of losses for start up entities. The objective of the move is to help start-ups raise
funds. According to the new norms, entrepreneurs often sell their residential properties to
support their business and the proceeds on sale of such residential properties will be
exempted from capital gains tax if they are used to fund a start-up.
According to media reports, the government is working on rules that gives it the authority to
close firms on grounds of national security, sovereignty and integrity. The other grounds on
which the government can consider closing a company is if the affairs of the company are
conducted in a fraudulent manner.
Regulatory Updates in India (contd..)
9
The Central Electricity Authority (CEA) which is also the apex technical body for the
domestic power sector has set up a new division which will look after the capacity addition,
grid integration of renewable power and other day to day developments. The objective of
the move is to map the intermittent wind and solar energy as the share of renewable power
in the country’s energy generation is going up. The CEA is also considering coming out with
daily data on green power as is the case for thermal, hydro power and coal-based power.
According to the media reports, the government is set to review investments by central
public sector enterprises (CPSEs) in state-level entities. This comes as part of a
restructuring exercise to confirm that these CPSEs are not burdened with unrelated
ventures or loss-making firms.
According to corporate affairs secretary, India has started work on a universal debt relief
scheme for small borrowers aimed at micro enterprises, small farmers and artisans. It
should be ready for implementation when the next government is in place. Individuals below
a specified income and asset threshold will be eligible for debt relief. People with annual
income of Rs. 60,000 or less, outstanding loans of Rs. 35,000 or less, and assets worth Rs.
20,000 or less may be eligible. The scheme is being worked on by the Ministry of Corporate
Affairs (MCA) and will be one of the key features of changes being considered to the
Insolvency and Bankruptcy Code (IBC).
Global News/Economy
According to the Organisation for Economic Co-operation and Development (OECD), the
composite leading indicator made to forestall turning points in economic activity suggested
easing growth momentum in most major economies. The leading indicator fell to 99.0 in Mar
2019 from 99.1 in Feb 2019.
A Commerce Department report showed an unexpected drop in U.S. retail sales in Apr 2019.
Retail sales edged down 0.2% in Apr after increasing 1.7% in Mar 2019. The unexpected
pullback in retail sales came as sales by motor vehicle and parts dealers slumped by 1.1% in
Apr after soaring 3.2% in Mar.
Eurostat figures showed euro zone's quarterly economic growth rate doubled in the first
three months of 2019. This confirmed the initial estimate released in late Apr 2019. Gross
domestic product grew 0.4% from the fourth quarter of 2018, when the euro area economy
expanded 0.2%. The pace of growth was the strongest since the second quarter of 2018.
National Bureau of Statistics data showed China's industrial production and retail sales
growth eased more than expected in Apr 2019, suggesting weak economic activity at the
start of second quarter. Industrial production advanced 5.4% YoY in Apr 2019, following
Mar's 8.5% increase. Likewise, annual growth in retail sales eased to 7.2% from 8.7% a
month ago.
10
Global Equity Markets
11
Global Indices
Indices
17-May-19
1-Week
Return
YTD
Return
Dow Jones
25,764.00 -0.69% 10.44%
Nasdaq 100
7,503.68 -1.09% 18.54%
FTSE 100
7,348.62 2.02% 9.22%
DAX Index
12,238.94 1.49% 15.91%
Nikkei Average
21,250.09 -0.44% 6.17%
Straits Times
3,205.46 -2.08% 4.45%
Source: Thomson Reuters Eikon
Value as on
May 17, 2019
U.S.
Renewed concerns over U.S.- China
trade war loomed large, resulting in U.S.
markets ending the week in the red.
In retaliation to U.S. President's recent
decision to raise tariffs on $200 billion
worth of Chinese goods to 25%, China
announced plans to raise tariffs on $60
billion worth of U.S. goods. Sentiment
dampened further in reaction to a report
showing an unexpected fall in U.S.
industrial production in Apr.
Europe
European markets ended the week in the green with investors taking positive cues from
the U.S. President’s decision to delay imposing auto tariffs. Further, eurozone's quarterly
economic growth rate doubled over the year in the first three months of 2019 which added
to the gains. However, trade differences between U.S. and China limited the upside.
Asia
Asian markets too bore the brunt of trade difference between U.S. and China. Market
sentiments were further dampened after both industrial production and retail sales growth
in China posted significant declines in Apr 2019.
Global Debt (U.S.)
12
Yield on the 10-year U.S. Treasury bond
fell 7 bps to 2.39% compared with the
previous week’s close of 2.46%.
U.S. Treasury prices rose initially during
the week as its safe haven appeal
improved after China announced plans
to impose additional tariffs on U.S.-
made goods in retaliation for an
increase in duties on Chinese imports
by U.S. in the previous week.
Gains were extended after retail sales
and industrial output declined in U.S. in
Apr 2019. U.S. Treasury prices rose
further after China struck a more
aggressive tone in its trade war with the
U.S. and urged the latter to show
"sincerity" in talks.
However, further losses were restricted
following a series of upbeat economic
data initial jobless claims in U.S. fell
more than expected in the week ended
May 11 and housing starts in U.S.
surged in Apr 2019.
2.36
2.40
2.44
13-May 15-May 17-May
Yield in %
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
74.93 72.07
Gold ($/Oz)
1,277.15 1,285.60
Gold (Rs/10 gm)
31,911 31,751
Silver ($/Oz)
14.39 14.75
Silver (Rs/Kg)
36,383 36,983
Source: Thomson Reuters Eikon *
Value as on
May 17, 2019
Gold
Gold prices moved down after the U.S.
President indicated resolving trade
tensions with China. Release of upbeat
U.S. economic data, including consumer
sentiment index rising to 15-year high in
May 2019, also boosted investors’ risk-
taking appetite.
Brent Crude
Brent crude prices remained strong after
Saudi Arabia reported an attack on two of
its oil tankers close to the Strait of
Hormuz. Saudi Arabia vice-minister of
defence commented that Iran had
instructed the drone attack. This ignited
worries that the oil-producing nations may
head towards a war.
Baltic Dry Index
The Baltic Dry Index registered a rise on
the back of improved capesize and
panamax activities.
9.55
9.90
10.25
10.60
17-Apr-19 2-May-19 17-May-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
3.97%
-0.66%
-2.44%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
70.17 69.92
Pound Sterling
89.73 90.93
EURO
78.43 78.49
100 Yen
64.03 63.72
Source: RBI Figures in INR , *
Value as on
May 17, 2019
Rupee
The Indian rupee weakened against the
greenback following increase in global
crude oil prices and escalation in trade
tensions between U.S. and China.
Euro
The euro fell against the U.S dollar amid
concerns over European parliamentary
elections, due next week, and after the
Italian deputy Prime Minister opined that
European Union rules harm the country.
Pound
The pound plunged after cross-party
Brexit talks collapsed and concern grew
about the impact of U.K. Prime Ministers
likely resignation on Brexit.
Yen
The yen rose initially against the
greenback as trade tensions between
U.S. and China escalated. However, the
trend reversed following a slew of upbeat
U.S. economic data.
9.80
10.00
10.20
10.40
16-Apr-19 26-Apr-19 6-May-19 16-May-19
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of
INR)
Rebased to 10
Currency Movement
0.35%
-1.32%
-0.07%
0.49%
17-May-19
15
The Week that was…
13
th
May to 17
th
May
The Week that was (May 13 May 17)
16
Date Events
Present
Value
Previous
Value
Monday,
May 13, 2019
India Consumer Price Index YoY (Apr)
2.92%
2.86%
Tuesday,
May 14, 2019
India Wholesale Price Index YoY (Apr)
3.07%
3.18%
Germany ZEW Survey Expectations (May) -2.10 3.10
Eurozone ZEW Survey (Economic Sentiment) (May)
-1.60 4.50
Japan Eco Watchers Survey Current (Apr) 45.30 44.80
U.K. ILO Unemployment Rate 3Mths (Mar)
3.80%
3.90%
Wednesday,
May 15, 2019
Germany Gross Domestic Product (YoY) (1Q P)
0.70%
0.60%
Eurozone Gross Domestic Product (YoY) (1Q P)
1.30%
1.20%
U.S. Retail Sales Advance (MoM) (Apr)
-0.20%
1.70%
China Retail Sales (YoY) (Apr)
7.20%
8.70%
China Industrial Production (YoY) (Apr)
5.40%
8.50%
U.S. Industrial Production (MoM) (Apr)
-0.50%
0.20%
Thursday,
May 16, 2019
China New Home Prices (MoM) (Apr)
0.62%
0.60%
U.S. Housing Starts (MoM) (Apr)
5.70%
1.70%
U.S. Building Permits (MoM) (Apr)
0.60%
-1.70%
Friday,
May 17, 2019
U.S. University of Michigan Sentiment (May P)
102.40
97.20
Japan Tertiary Industry Index (MoM) (Mar)
-0.40%
-0.60%
Eurozone Consumer Price Index (YoY) (Apr F)
1.70%
1.40%
17
The Week ahead
20
th
May to 24
th
May
18
The Week Ahead
Day Event
Monday,
May 20, 2019
Japan Industrial Production (YoY) (Mar F)
Japan Housing Loans (YoY) (1Q)
Tuesday,
May 21, 2019
OECD Economic Outlook
Eurozone Consumer Confidence (May A)
U.S. Existing Home Sales (MoM) (Apr)
Japan Trade Balance (Apr)
Japan Machine Orders (YoY) (Mar)
Wednesday,
May 22, 2019
U.K. Consumer Price Index (YoY) (Apr)
U.S. Federal Reserve Monetary Policy Meeting Minutes
U.K. House Price Index (YoY) (Mar)
Thursday,
May 23, 2019
Japan National Consumer Price Index (YoY) (Apr)
Japan Nikkei Manufacturing PMI (May P)
Germany Gross Domestic Product (YoY) (1Q F)
Eurozone Markit Composite PMI (May P)
U.S. New Home Sales (MoM) (Apr)
Friday,
May 24, 2019
U.S. Durable Goods Orders (Apr P)
Japan All Industry Activity Index (MoM) (Mar)
Disclaimer
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19
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