The Week that was…
29
th
April to 3
rd
May
2
Indian Economy
• The Nikkei India Manufacturing Purchasing Managers' Index (PMI) fell to 51.8 in Apr 2019
from 52.6 in Mar 2019. This marked eight-month low amid softer increase in new orders.
New business growth moderated at the beginning of FY20 due to political uncertainty and
a challenging economic environment.
• Government data showed that the growth of eight core sectors grew 4.7% in Mar 2019 as
against upwardly revised growth of 2.2% (2.1% growth originally reported) in the previous
month and 4.5% in the same month of the previous year. The growth came due to 15.7%
and 9.1% surge in the cement and coal sector in the reported period as against surge of
8% and 7.4% in the previous month.
• According to the President of Asian Development Bank, India was the biggest recipient of
funds from the bank in 2018. This multilateral funding institution had committed $3 billion in
sovereign loans to India in 2018. This marked the highest level of assistance since
sovereign operations began in the country in 1986. Also, the President stated that it would
continue to get sovereign loans in excess of $3 billion in 2019 also.
• According to oil ministry data, India’s natural gas consumption rose 1.5% YoY in FY19 to
53.05 billion cubic metres (BCM) from 52.25 BCM in the previous year period. As per the
ministry, higher imported gas prices limited the demand from the power sector and other
industries.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
03-May-19
1 Week Return
YTD Return
S&P BSE Sensex
38,963.26 -0.27% 8.03%
Nifty 50
11,712.25 -0.36% 7.82%
S&P BSE Mid
-Cap 14,783.35 -1.86% -4.24%
S&P BSE Small
-Cap 14,548.15 -1.79% -1.08%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
30-Apr-19 482 1404 0.34
02-May-19 719 1110 0.65
03-May-19 713 1099 0.65
Source: NSE
• Indian equity markets closed in the red
in the week ended May 03, 2019.
Surge in crude oil prices continue to
weigh on the indices. A big loss by a
leading private sector bank in the
quarter ended Mar 2019 dampened
market sentiment. Further, investors
stayed on the sidelines in a holiday-
truncated 3-day week and thin trading
in the Asian region.
• The week was a mixed bag of
economic data. While Nikkei India
Manufacturing Purchasing Managers'
Index (PMI) fell in Apr 2019, eight core
sectors grew 4.7% in Mar 2019 as
against upwardly revised growth of
2.2% in the previous month. Reports of
positive developments in U.S. and
China trade relations supported buying
interest.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
28.86 29.24 28.74 116.39
P/B
3.05 3.74 2.54 2.12
Dividend Yield
1.18 1.12 0.99 0.91
Source: BSE, NSE Value as on
May 03,
2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,900.14
-1.38%
-1.37%
S&P BSE Bankex
33,445.09
-0.88%
-1.19%
S&P BSE CD
23,700.81 0.23% 0.94%
S&P BSE CG
18,090.62
-0.45%
-1.89%
S&P BSE FMCG
11,593.82
-2.12%
-0.50%
S&P BSE HC
14,152.57
-2.16%
-0.55%
S&P BSE IT
15,659.96
-2.40%
0.26%
S&P BSE Metal
11,494.36 1.27% -0.35%
S&P BSE Oil & Gas
15,270.42 0.59% 2.76%
Source: Thomson Reuters Eikon
*Value as on May 03,
2019
• S&P BSE Information Technology was the
major loser that fell 2.40% followed by S&P
BSE Healthcare that fell 2.16%. Gains in
domestic currency led to losses in the
information technology sector as it derives a
lion's share of revenue from exports.
• S&P BSE Auto and S&P BSE Bankex fell
1.38% and 0.88%, respectively. Auto sector
remained under pressure following reports
that passenger vehicle sales crashed 17% in
Apr 2019, thereby marking the sharpest
decline in nearly eight years.
Indian Derivatives Market Review
• Nifty May 2019 Futures were at 11,764.30, a premium of 52.05 points, above the spot
closing of 11,712.25. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 40.43 lakh crore as against Rs. 67.61 lakh crore for the week to Apr 26.
• The Put-Call ratio stood at 0.80 compared with the previous week’s close of 0.83.
• The Nifty Put-Call ratio stood at 1.49 against the previous week’s close of 1.63.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
6.03 6.12 6.20 6.41
91 Day T
-Bill
6.47 6.39 6.22 6.96
07.32% 2024, (5 Yr GOI)
7.31 7.33 6.89 --
07.26% 2029, (10 Yr GOI)
7.39 7.41 7.27 --
Source: Thomson Reuters Eikon
Value as on May 03,
2019
• Bond yields in a truncated week
inched down 2 bps after the Reserve
Bank of India (RBI) infused liquidity
through open market purchase of
government securities. However, lack
of clarity on the quantum of bond
purchase and volatility in global oil
prices capped the gains.
• Yields on the 10-year benchmark
paper (7.26% GS 2029) inched down
2 bps to close at 7.39% compared
with the previous close of 7.41% after
trading in the range of 7.37% to
7.42%.
• RBI on May 2 conducted auction of
state development loans of six state
governments for notified amount of
Rs. 4,900 crore. The amount
accepted stood at Rs. 5,200 crore.
7.36
7.39
7.42
7.45
30-Apr 2-May 3-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 6.73 8.33 160
3 Year 7.18 8.24 106
5 Year 7.44 8.48 103
10 Year 7.53 8.63 109
Source: Thomson Reuters Eikon
Value as on May 03,
2019
• Yields on gilt securities fell across 4 to 7
years maturities, 10 to 12 years’ paper and
15- and 19-year maturities by up to 7 bps.
Yields increased across the remaining
maturities by up to 7 bps.
• Corporate bond yields fell across 4 to 7
years’ maturities by up to 4 bps.
• Difference in spread between AAA corporate
bond and gilt expanded across the
maturities in the range of 2 bps to 19 bps
barring 4- and 5-year papers that contracted
2 bps each.
-18
-9
0
9
6.00
6.70
7.40
8.10
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 03-May-19 26-Apr-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• According to the media reports, the central government is taking into consideration a sharp
reduction in the import duty on gold from current 10% to 4%. This comes as a part of the
discussion on the ‘integrated gold policy’ under preparation. Central Board of Indirect Taxes
and Customs is taking care of the matter and an internal meeting was called by the
chairman of the board on May 2, 2019 for discussion on the reduction of basic duty on
precious metals.
• The Reserve Bank of India (RBI) could approach the Election Commission to put in place a
new circular on bad debt resolution, according to media reports. This would pave the way
for smooth implementation of the Insolvency & Bankruptcy Code and loan restructuring by
banks. The move is crucial after the Supreme Court set aside the circular issued by the
previous RBI governor. RBI was initially planning to issue the revised circular that is
expected to give more flexibility in restructuring stressed loans as against the rigid timelines
for initiating bankruptcy under the older directive.
• The Centre has increased the import duty on wheat to 40% from 30% in order to boost
offtake of domestically produced grain. The decision comes at the backdrop of the
government’s plan of sell wheat in the open market to offload excess grain from the storage
units of Food Corporation of India and state agencies.
Regulatory Updates in India (contd..)
9
• The inter-governmental agreement with the U.S. has been notified by India regarding
income allocation and taxes paid in order to help check cross-border tax evasion. The
agreement is for exchange of country-by-country reports on multinational companies and
was signed by Central Board of Direct Taxes chairman and U.S. ambassador to India in Mar
2019 and notified by the revenue department in Apr 2019. This deal will enable both the
countries to automatically exchange country-by-country reports filed by the ultimate parent
entities of multinational enterprises in the respective jurisdictions, pertaining to the years
commencing on or after Jan 1, 2016.
• According to the media reports, the government has once again extended its deadline from
May 2, 2019 to May 16, 2019 to impose retaliatory import duties on 29 U.S. products.
These products included almond, walnut and pulses. The deadlines have been extended
several times since Jun 2018. The country had decided to levy these duties as against a
move by the U.S. to impose high customs duties on certain steel and aluminium products.
Global News/Economy
• The U.S. Federal Reserve (Fed) left interest rates unchanged, as was widely expected. The
Fed maintained the target range for the federal funds rate at 2.25 to 2.50% for the third
consecutive meeting. The central bank said information received since its previous meeting
in Mar 2019 showed economic activity rose at a solid rate. After the meeting held in Mar
2019, the Fed noted the pace of economic growth had slowed from the solid rate in the
fourth quarter. The Fed said in its latest statement that the labor market remains strong but
pointed out slower first quarter growth in household spending and business fixed investment.
• According to payroll processor ADP, private sector employment increased much more than
expected in Apr 2019. ADP said private sector employment surged by 275,000 jobs in Apr
2019 after climbing by 151,000 jobs in Mar 2019.
• Bank of England policymakers raised the growth outlook and signaled that interest rates may
need to be tightened more than what markets currently expect. The 9-member Monetary
Policy Committee held the bank rate unchanged at 0.75%, in line with expectations. The
previous change in the bank rate was a quarter-point hike in Aug 2018 and the rate is now at
its highest level since 2009.
• According to the Statistics Bureau, China's manufacturing activity fell for the second straight
month in Apr 2019, raising doubts on the strength of the recovery in the economy. The
official PMI for the manufacturing sector fell to 50.1 in Apr from 50.5 in Mar 2019, the bureau
said. Expectations were for the measure to remain steady.
10
Global Equity Markets
11
Global Indices
Indices
03-May-19
1-Week
Return
YTD
Return
Dow Jones
26,504.95 -0.14% 13.62%
Nasdaq 100
7,845.73 0.24% 23.95%
FTSE 100
7,380.64 -0.64% 9.70%
DAX Index
12,412.75 0.79% 17.56%
Nikkei
Average
NA NA NA
Straits Times
3,392.29 1.05% 10.54%
Source: Thomson Reuters Eikon ;
Value as on
May 03, 2019
U.S.
• U.S. markets witnessed initial pressure
as investor sentiment dampened by
remarks of U.S. Federal Reserve
chairman that the central bank is not
likely to lower interest rates soon, as
some had hoped. Market participants
shrugged off much of the concerns on
the last day of the week after data
showed that U.S. job creation was
stronger than expected in Apr.
Europe
• European markets largely remained under pressure as disappointing eurozone economic
data and the U.S. Fed's comments ruling out any interest rate cuts in the foreseeable
future triggered a sell-off. Survey data from IHS Markit showed that eurozone's
manufacturing sector shrunk for a third successive month in Apr 2019, albeit at a slower
pace.
Asia
• Asian markets managed to witness gains amid thin trade with Chinese and Japanese
markets closed on account of public holidays. Although, the recent comments of U.S. Fed
chief on future rate-cut played spoilsport, nonetheless, buying interest found underlying
support from developments in the U.S.–China trade deal.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond rose 3 bps to 2.53% compared
with the previous week’s close of 2.50%.
• U.S. Treasury prices fell after data
showed that U.S. consumer spending
increased by the most in more than 9-
1/2 years in Mar 2019.
• Treasury prices further declined on
expectations that the U.S. Federal
Reserve (Fed) will not cut rates in 2019,
after bullish economic comments from
Fed chairman post policy meeting.
• However, losses were limited after a
Chicago manufacturing index fell to its
lowest level in more than two years and
also was far below market forecast,
which raised some concerns about the
economy.
2.48
2.51
2.54
2.57
29-Apr 1-May 3-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)
72.09 70.72
Gold ($/Oz)
1,278.94 1,285.85
Gold (Rs/10 gm)
31,220 31,764
Silver ($/Oz
) 14.93 15.06
Silver (Rs/Kg)
36,354 37,532
Source: Thomson Reuters Eikon ;
Value as on May 03,
2019
Gold
• Gold prices inched down over the week
after U.S. Federal Reserve (Fed)
showed little interest in cutting interest
rates anytime soon. This boosted the
greenback, while adversely impacting
the bullion.
Brent Crude
• Brent crude prices remained strong on
expected supply shortage owing to U.S.
sanction against oil exports from Iran
and Venezuela. However, the upside
was capped after American Petroleum
Institute (API) reports revealed a rise in
U.S. crude inventories.
Baltic Dry Index
• The Baltic Dry Index grew on the back
of improved capesize and panamax
activities.
9.50
10.00
10.50
11.00
3-Apr-19 13-Apr-19 23-Apr-19 3-May-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
1.94%
-0.54%
-0.90%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
69.27 70.14
Pound Sterling
90.24 90.53
EURO
77.34 78.13
100 Yen
62.13 62.80
Source: RBI Figures in INR , *
Value as on May 03,
2019
Rupee
• The Indian rupee surged against the U.S.
dollar on speculations of the continuation
of the current government for the second
term.
Euro
• Euro rose against the U.S. dollar on
expectations of a stable government in
Spain and after upbeat euro zone
economic growth for the Mar quarter
2019.
Pound
• Pound jumped against the greenback on
increasing expectations about signs of
progress in Brexit talks.
Yen
• Yen rose against the greenback after a
range bound movement. U.S. dollar
weakened, following mixed batch of U.S.
economic data.
9.90
10.00
10.10
10.20
10.30
3-Apr-19 13-Apr-19 23-Apr-19 3-May-19
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-0.32%
-1.25%
-1.01%
-1.07%
The Week that was…
29
th
April to 3
rd
May
15
The Week that was (Apr 29 – May 03)
16
Date Events
Present Value
Previous Value
Monday,
April 29, 2019
•
U.S. Personal Consumption Expenditure Core (YoY) (Mar) 1.60% 1.70%
•
U.K. GfK Consumer Confidence (Apr) -13 -13
Tuesday,
April 30, 2019
•
China Manufacturing PMI (Apr) 50.1 50.5
•
Germany Unemployment Change (000's) (Apr) -12K -7K
•
Eurozone Gross Domestic Product (YoY) (1Q A) 1.20% 1.10%
•
India Eight Core Industries (Mar) 4.70% 2.20%
•
U.S. Consumer Confidence Index 129.2 124.1
Wednesday,
May 01, 2019
•
U.S. Employment Change (Apr) 275K 151K
•
U.S. ISM Manufacturing (Apr) 52.8 55.3
•
U.S. ISM Employment (Apr) 52.4 57.5
•
U.S. FOMC Rate Decision (Upper Bound) 2.50% 2.50%
•
U.S. FOMC Rate Decision (Lower Bound) 2.25% 2.25%
Thursday,
May 02, 2019
•
Bank of England Rate Decision 0.75% 0.75%
•
India Nikkei Manufacturing PMI (Apr) 51.8 52.6
•
U.S. Factory Orders (Mar) 1.90% -0.30%
•
U.K. Markit Construction PMI (Apr) 50.5 49.7
Friday,
May 03, 2019
•
Eurozone Consumer Price Index Estimate (YoY) (APR) 1.70% 1.40%
•
U.S. Change in Non-farm Payrolls (Apr) 263K 189K
•
U.S. Unemployment Rate (Apr) 3.60% 3.80%
•
U.S. ISM Non-Manufacturing PMI (Apr) 55.5 56.1
17
The Week Ahead
6
th
May to 10
th
May
18
The Week Ahead
Day Event
Monday,
May 06, 2019
•
India Nikkei Services PMI (Apr)
•
China Caixin Composite PMI (Apr)
•
Eurozone Retail Sales (YoY) (Mar)
Tuesday,
May 07, 2019
•
Japan Nikkei Composite PMI (Apr)
•
German Factory Orders (YoY) (Mar)
•
Germany Markit Construction PMI (Apr)
•
Bank of Japan’s Minutes of March Policy Meeting
Wednesday,
May 08, 2019
•
China Trade Balance (Apr)
•
Germany Industrial Production (YoY) (Mar)
•
U.S. MBA Mortgage Applications (May 3)
Thursday,
May 09, 2019
•
China Consumer Price Index (YoY) (Apr)
•
China Producer Price Index (YoY) (Apr)
•
Japan Consumer Confidence Index (Apr)
•
U.S. Trade Balance (Mar)
Friday,
May 10, 2019
•
India Index of Industrial Production (Mar)
•
U.K. Gross Domestic Product (YoY) (1Q P)
Disclaimer
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19
