News U Can Use
May 18, 2018
The Week that was…
May to 18
Indian Economy
The Consumer Price Index (CPI)-based inflation or retail inflation grew 4.58% in Apr 2018,
up from 4.28% in Mar 2018 and from 2.99% in Apr 2017. The increase reflects increase in
prices of fruits and vegetables by 9.65% and 7.29%, respectively. However, prices of
pulses and products, and sugar and confectionery, declined 12.35% and 4.05%,
respectively. The retail inflation growth remained above the Reserve Bank of India’s (RBI)
medium-term target of 4% for the sixth consecutive month. The Consumer Food Price
Index also grew 2.80% in Apr 2018, down from 2.81% in the previous month and up from
0.61% in the same month of the previous year.
Government data showed that India’s Wholesale Price Index-based inflation (WPI) sharply
rose to four-month high to 3.18% in Apr 2018 from a provisional 2.47% in Mar 2018, but
down from 3.85% in Apr 2017. The WPI Food Index also increased to 0.67% in Apr 2018
from -0.07% in Mar 2018. The inflation for fuel items surged to 7.85% in Apr 2018 from
4.70% in Mar 2018.
India’s export during the month of Apr 2018 grew 5.17% YoY to $25.91 billion from $24.64
billion in Apr 2017. Meanwhile, imports grew 4.60% YoY to $39.63 billion in Apr 2018 from
$37.88 billion in the same period of the previous year. Trade deficit widened to $13.72
billion in Apr 2018 as against $13.25 billion in Apr 2017 and $13.69 billion in Mar 2018.
The government has announced a national wind-solar hybrid policy to promote new
projects and for hybridisation of the existing ones. The government targets to achieve 175
gigawatt of installed capacity from renewable energy sources by 2022.
Indian Equity Market
Domestic Equity Market Indices
Indices 18-May-18 1 Week Return YTD Return
S&P BSE Sensex 34,848.30 -1.93% 3.06%
Nifty 50 10,596.40 -1.94% 1.54%
S&P BSE Mid-Cap 15,895.68 -2.74% -10.88%
S&P BSE Small-Cap 17,326.78 -2.76% -10.13%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
14-May-18 523 1,283 0.41
15-May-18 594 1,200 0.50
16-May-18 646 1,143 0.57
17-May-18 932 860 1.08
18-May-18 467 1,335 0.35
Source: NSE
Indian equity markets slipped for the
fourth consecutive session on May
18 to end the week on a subdued
note. Increase in both wholesale and
retail-price based inflation in Apr
2018 raised concerns over probable
rate hike by the Monetary Policy
Committee in its forthcoming
Market participants also maintained a
cautious stance over development in
U.S.-China trade negotiations.
Growing speculations over faster
pace of rate hike by the U.S. Federal
Reserve renewed concerns over
foreign fund outflow from the
domestic economy. The recent
strength in global crude oil prices,
with Brent crude surpassing the $80
per barrel level, resulted in fiscal
deficit worries which added to the
Nifty 50
Mid Cap
Small Cap
23.49 26.27 31.90 77.14
3.03 3.64 2.72 2.48
Dividend Yield
1.18 1.21 0.92 0.68
Source: BSE, NSE Value as on May 18
, 2018
Indian Equity Market (contd.)
Sectoral Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
24,348.41 -3.68% -3.98%
S&P BSE Bankex
28,944.66 -2.51% 2.79%
21,547.46 -1.90% -5.35%
18,438.81 -4.06% -3.75%
11,340.69 1.14% 2.94%
13,018.30 -2.63% -5.23%
13,204.35 0.01% 4.73%
S&P BSE Metal
13,615.47 -3.10% -4.09%
S&P BSE Oil & Gas
14,299.61 -3.07% -2.17%
Source: Thomson Reuters Eikon
*Value as on May 18, 2018
On the BSE sectoral front, barring S&P
BSE FMCG and S&P BSE IT, all the
indices closed in the red. S&P BSE Capital
Goods was the major loser, down 4.06%,
followed by S&P BSE Auto and S&P BSE
Metal, which fell 3.68% and 3.10%,
respectively. S&P BSE Oil & Gas and S&P
BSE Healthcare slipped 3.07% and 2.63%,
Rate sensitive sector came under pressure
amid speculation over probable rate hike
by the Monetary Policy Committee in its
forthcoming meeting, owing to increase in
retail price inflation.
Indian Derivatives Market Review
Nifty May 2018 Futures were at 10,597.05 points, a premium of 0.65 points, above the
spot closing of 10,596.40. The turnover on NSE’s Futures and Options segment stood at
Rs. 46.07 lakh crore as against Rs. 31.04 lakh crore on May 11.
The Put-Call ratio stood at 0.85 compared with the previous week’s close of 0.89.
The Nifty Put-Call ratio stood at 1.36 compared with the previous week’s close of 1.66.
Domestic Debt Market
Debt Indicators
Call Rate
5.97 5.92 5.88 5.88
91 Day T-Bill
6.40 6.26 6.07 6.11
7.80% 2021, (5 Yr GOI)
7.60 7.62 7.20 6.79
7.17% 2028, (10 Yr GOI)
7.83 7.73 7.54 --
Source: Thomson Reuters
Value as on May 18, 2018
Bond yields rose following increase in
consumer and wholesale price
inflation in Apr 2018, which increased
concerns of rate hike in the near
term. Yields rose further following
political uncertainty in Karnataka after
outcome of its legislative assembly
Also, investors remained cautious on
the back of increasing U.S. Treasury
yields and global crude oil prices.
However, losses were restricted after
the RBI’s Open Market Operation to
purchase bonds was fully accepted.
Yield on the 10-year benchmark
paper (7.17% GS 2028) rose 10 bps
to close at 7.83% from the previous
week’s close of 7.73% after trading in
a range of 7.71% to 7.95%.
14-May 15-May 16-May 17-May 18-May
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
G-Sec Yield
Corporate Yield
1 Year 6.90 8.35 145
3 Year 7.60 8.46 86
5 Year 7.77 8.56 79
10 Year 7.84 8.52 69
Source: Thomson Reuters Eikon
Value as on May 18, 2018
Yields on gilt securities increased across
the maturities by up to 17 bps, barring 3 to
5 years’ maturities that fell by up to 3 bps.
Corporate bond yields expanded across
the maturities in the range of 5 bps to 11
bps. The maximum increase was
witnessed on 1-year paper.
Spread between AAA corporate bond and
gilt expanded across the maturities in the
range of 2 bps to 8 bps, barring 7-,8- and
15-year maturities that contracted in the
range of 5 bps to 10 bps. Spread closed
steady on 10-year paper.
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 18-May-18 11-May-18
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
The Union Cabinet has approved the National Policy on Biofuels made by Ministry of New
and Renewable Energy during the year 2009. The policy categorises biofuels into three
generations. Basic Biofuels are the First Generation (1G) that produces bioethanol from
molasses and biodiesel from non-edible oilseeds. Advanced Biofuels are the Second
Generation that produces ethanol from municipal solid waste. Third Generation (3G) fuels
produces bio-CNG. This policy aims to enable extension of appropriate financial and fiscal
incentives under each category.
The Union cabinet has approved a new two-tier mechanism to quickly resolve commercial
disputes of central public-sector enterprises, curtailing the need to file cases before courts.
The new mechanism will replace the existing Permanent Machinery of Arbitration
mechanism. A committee of secretaries of relevant administrative and secretary department
of legal affairs will look at the matter at the first-tier level. If the dispute remains unresolved,
it will be referred to the Cabinet Secretary at the second level (tier) and the decision will be
The Union cabinet has approved signing of Exchange of Information and Assistance in
Collection agreement between India and Brunei. This will enable both the countries to
exchange information relevant to the administration and enforcement of the domestic tax
Regulatory Updates in India (contd..)
RBI has issued detailed guidelines on Net Stable Funding Ratio (NSFR). The guidelines
come on the wake of maintaining a stable funding profile against the composition of their
assets and off-balance sheet activities. Amid global financial crisis that started in 2007, the
Basel Committee on Banking Supervision had proposed certain reforms to strengthen
global capital and liquidity regulations. The reforms aim at promotion of a more resilient
banking sector. The detailed guidelines issued on NFSR are in line with global norms
prescribed by the Basel Committee.
RBI has modified the norms for setting up of International Financial Services Centres
Banking Units (IBUs). It stated that the parent bank will have to provide and maintain a
minimum capital of $20 million to its IBU at all times. A scheme for setting up of IBUs by
banks in IFSCs were framed by RBI in Apr 2015. RBI stated that the modifications have
been made based on suggestions from stakeholders to consider minimum prescribed
regulatory capital at the parent level rather than at the IBU level.
The food minister announced that the government has decided not to increase the prices of
food grains sold through public distribution system (PDS) for one more year. As per the
National Food Security Act, food grains via ration shops are supplied at a highly subsidised
rate. Rice is supplied for Rs. 3 per kg, wheat for Rs. 2 and coarse grains for Rs. 1 per kg via
Global News/Economy
A report from the Commerce Department showed that U.S. retail sales came in line with
market expectations and grew 0.3% in Apr 2018 as against an upwardly revised growth of
0.8% in Mar 2018 (0.6% gain originally reported). The slowdown in retail sales growth came
in as sales for motor vehicle and parts dealers inched up 0.1% in Apr down from a gain of
2.1% in Mar 2018.
A report from the Commerce Department showed that U.S. housing starts fell 3.7% to an
annual rate of 1.287 million in Apr 2018 as against a gain of 3.6% to an upwardly revised
1.336 million (1.319 million originally reported) in Mar 2018. Housing starts missed market
expectations due to significant decline in multi-family starts that plunged 11.3% to a rate of
393,000 in Apr as against a gain of 13.6% to 443,000 in Mar.
According to data from Destatis, Gross Domestic Product (GDP) growth rate of Germany
slowed to 0.3% in the first quarter of 2018 from 0.6% in the last quarter of 2017. The
slowdown in growth rate was due to weak foreign trade where both exports and imports
decreased. On a yearly basis, GDP rose 2.3% in first quarter of 2018 following 2.9% growth
in the fourth quarter of 2017.
A preliminary report from the Cabinet Office showed that Japan's GDP was down 0.2% QoQ
in the first three months of 2018 as against downwardly revised gain of 0.1% in the prior
three months period (0.4% gain originally reported).
Global Equity Markets
Global Indices
Dow Jones
24,715.09 -0.47% -0.44%
Nasdaq 100
6,866.25 -1.24% 5.45%
FTSE 100
7,778.79 0.70% 1.71%
DAX Index
13,077.72 0.59% 1.60%
Nikkei Average
22,930.36 0.76% 0.73%
Straits Times
3,529.27 -1.15% 3.71%
Source: Thomson Reuters Eikon
Value as on May 18, 2018
U.S. markets fell during the week under
review due to rise in U.S. Treasury
yields that touched the highest level
since 2011.
Market participants also remained
cautious over the outcome of trade talk
between the U.S. and China and
ongoing geopolitical tensions. The
Federal Reserve’s rate hike proposition
also dented sentiment.
European markets traded up on stronger corporate earning numbers and economic
reports. However, rising U.S. Treasury yields and ongoing geopolitical concerns restricted
gains. Uncertainty on U.S. and China trade talks and political development in Italy also
dented sentiment.
Asian markets witnessed a mixed trend during the week. Initially market sentiment was
boosted following higher than expected growth in China’s industrial production for Apr.
Later, investors became cautious over outcome of trade talks between the U.S. and
China. Uncertainty over the fate of planned summit between Korea and U.S. in Jun 2018
also kept investors on the side lines.
Global Debt (U.S.)
Yield on the 10-year U.S. Treasury bond
rose 10 bps to close at 3.07% from the
previous week’s close of 2.97%.
U.S. Treasury prices fell as trade
tensions eased to some extent after the
U.S. President pledged to help a
Chinese telecommunications company
that has been penalised for violating
U.S. sanctions with Iran.
Prices fell further due to surge in U.S.
retail sales in Apr 2018 that came in line
with market expectations, thereby
indicating a pick-up in U.S. economy
growth in the second quarter of 2018.
However, further losses were restricted
as market participants bought U.S.
treasuries on worries about borrowing
by the U.S. government.
14-May 15-May 16-May 17-May 18-May
Yield in %
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
Performance of various commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel)
79.37 78.36
Gold ($/Oz)
1,291.50 1,317.68
Gold (Rs/10 gm)
30,921 31,379
Silver ($/Oz)
16.42 16.62
Silver (Rs/Kg)
39,650 39,687
Eikon *Value as on May 18, 2018
Gold prices traded lower as growing
speculation over faster pace of rate hike
by the U.S. Federal Reserve weighed
on the precious metal. Nonetheless,
gold prices found support from
uncertainty over the fate of planned
summit between North Korea and U.S.
in Jun 2018.
Brent crude prices continued to gain,
trading above $80 per barrel level.
Concerns over fall in global supply
following U.S. sanctions on Iran
continued to lend support to oil prices.
Decline in Venezuela's crude production
further supported prices.
Baltic Dry Index
The Baltic Dry Index fell 13.52% WoW
due to sluggish capsize and panama
18-Apr-18 28-Apr-18 8-May-18 18-May-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
Currencies Markets
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
67.96 67.22
Pound Sterling
91.88 90.88
80.28 80.09
100 JPY
61.31 61.43
Source: RBI Figures in INR , *Value as on May 18, 2018
The Indian rupee fell against the U.S.
dollar following surge in global oil prices.
Political uncertainty in Karnataka further
dampened sentiment.
Euro weakened against the greenback
following increase in U.S. retail sales in
Apr 2018. Softer than expected growth in
Germany in the first quarter of 2018 and
political uncertainty in Italy pulled down
the euro further.
Pound fell against the U.S. dollar
following doubts on whether the Bank of
England will increase interest rates this
year and weak U.K. wage growth in three
months to Mar 2018.
Yen weakened against the U.S. dollar
following rise in U.S. Treasury yields
during the week. Rise in U.S. retail sales
in Apr 2018 added to the pain.
18-Apr-18 3-May-18 18-May-18
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
The Week that was…
May to 18
The Week that was (May 14 May 18)
Date Events Present Value Previous Value
May 14, 2018
Japan Machine Tool Orders (YoY) (Apr) 22.0% 28.1%
India WPI Inflation (Apr) 3.18% 2.47%
May 15, 2018
• China Retail Sales (YoY) (Mar) 9.4% 10.1%
• China Industrial Production (YoY) (Mar) 7.00% 6.00%
• Japan Tertiary Industry Index (MoM) (Apr)
-0.30% 0.00%
Germany Gross Domestic Product w.d.a (YoY) (Q1) (P) 2.3% 2.9%
• U.K. ILO Unemployment Rate (3M) (Mar) 4.2% 4.2%
India Trade Deficit (Apr)
May 16, 2018
• China House Price Index (Apr)
4.70% 4.90%
• Euro Zone Consumer Price Index - Core (MoM) (Apr) 0.2% 1.4%
• U.S. Housing Starts Change (Apr) -3.7% 3.6%
May 17, 2018
• U.S. Initial Jobless Claims (May 11)
222K 211K
• Euro Zone Construction Output w.d.a (YoY) (Mar)
0.8% 0.2%
China Foreign Direct Investment (YTD) (YoY) (Apr)
0.1% 0.5%
• U.S. Philadelphia Fed Manufacturing Survey (May) 34.40 23.20
• Japan National Consumer Price Index (YoY) (Apr) 0.6% 1.1%
May 18, 2018
• India Forex Reserves, USD $417.70B $418.94B
• Germany Wholesale Price Index (YoY) (Apr) 1.4% 1.2%
The Week Ahead
May to 25
The Week Ahead
Day Event
May 21, 2018
U.S. Chicago Fed National Activity Index (Apr)
May 22, 2018
U.K. Public Sector Net Borrowing (Apr)
U.S. Redbook index (YoY) (May 18)
U.S. API Weekly Crude Oil Stock
May 23, 2018
Japan Nikkei Manufacturing PMI (May) (P)
Germany Markit Manufacturing PMI (May) (P)
Euro Zone Markit Manufacturing PMI (May) (P)
U.S. Markit Manufacturing PMI (May) (P)
Euro Zone Consumer Confidence (May) (P)
May 24, 2018
Japan Leading Economic Index (Mar)
U.K. Gfk Consumer Confidence Survey (Jun)
U.K. Retail Sales (YoY) (Feb)
U.S. Initial Jobless Claims (May 18)
May 25, 2018
U.K. Gross Domestic Product (YoY) (Q1) (P)
U.K. BBA Mortgage Approvals (Apr)
U.S. Durable Goods Orders (Apr)
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