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Nov 08, 2019

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The Week that was…
4
th
Nov to 08
th
Nov
2
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Indian Economy
• Results of a private survey showed that the India’s service sector activity declined for the
second straight month in Oct 2019. The IHS Markit Services Purchasing Managers' Index
(PMI) continued to remain below 50 as it stood at 49.2 in Oct 2019 as compared to 48.7 in
Sep 2019. The Composite PMI Output Index also subsequently fell to 49.6 in Oct 2019
from 49.8 in Sep 2019.
• A major global rating agency has downgraded its outlook for India’s sovereign rating
(Baa2) to negative from stable, media reports showed. The agency said India’s economic
downturn could be structural. There are increasing risks that economic growth will remain
materially lower than in the past, partly reflecting lower government and policy
effectiveness at addressing long-standing economic and institutional weaknesses. This will
lead to a gradual rise in debt burden, which is already at high levels.
• A major domestic credit rating agency raised its projection for India’s fiscal deficit to 3.6%
of GDP for this fiscal from its earlier projection of 3.4%. This can be attributed to weak
goods and services tax (GST) and corporate income tax collections resulting from subdued
economic growth and reduction in corporate tax rate.
• According to a major credit rating agency, growth in bank credit may fall sharply to a range
of 8%-8.5% in FY20 from 13.3% in FY19. The decline reflects fall in incremental credit in
first half of FY20. It expects YoY growth in volume of bonds outstanding to moderate to
approximately 4% in FY20 as against 12% in FY19.
3
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4
Domestic Equity Market Indices
Indices 08-Nov-19 1 Week Return YTD Return
S&P BSE Sensex
40,323.61 0.39% 11.80%
Nifty 50
11,908.15 0.15% 9.63%
S&P BSE Mid-Cap
14,731.11 -1.07% -4.58%
S&P BSE Small-Cap
13,474.75 -0.93% -8.38%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines Advance/Decline Ratio
04-Nov-19 1075 774 1.39
05-Nov-19 690 1147 0.60
06-Nov-19 891 940 0.95
07-Nov-19 945 884 1.07
08-Nov-19 684 1134 0.60
Source: NSE
• Indian equity markets closed with
modest gains in the week with Sensex
closing at record highs and Nifty
regaining its 12,000 mark in one of the
sessions.
• Commitment from the finance minister
to speed up reforms in the near term
boosted market sentiment.
• Gains were extended on reports that
the government has announced a Rs.
25,000 crore fund to help stalled
residential projects boosted market
sentiments.
• However, gains were restricted after a
major global rating agency
downgraded its outlook for India’s
sovereign rating (Baa2) to negative
from stable, citing structural weakness.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
27.59 27.51 27.49 43.22
P/B
2.92 3.68 2.39 1.77
Dividend Yield
1.15 1.25 1.11 1.11
Source: BSE, NSE Value as on Nov 08, 2019
Indian Equity Market
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5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,358.96 -2.36% 11.51%
S&P BSE Bankex
34,836.20 1.83% 11.00%
S&P BSE CD
24,942.56 -6.17% -3.02%
S&P BSE CG
18,326.98 -1.93% 3.28%
S&P BSE FMCG
12,094.26 -1.69% 5.73%
S&P BSE HC
13,089.52 -1.58% 9.29%
S&P BSE IT
15,235.34 -0.25% -0.95%
S&P BSE Metal
9,748.08 2.20% 15.37%
S&P BSE Oil & Gas
15,168.80 -2.97% 4.28%
Source: Thomson Reuters Eikon *Value as on Nov 08, 2019
• S&P BSE Realty was the major gainer that
grew 3.64% followed by S&P BSE Metal and
S&P BSE Bankex that grew 2.20% and 1.83%,
respectively. The realty sector has been
buoyed by the government’s announcement
of a Rs. 25,000 crore package for the sector to
restart stalled projects.
• However, S&P BSE Consumer Durables was
the major loser that fell 6.17% followed by
S&P BSE Oil & Gas that fell 2.97%. S&P BSE
Auto and S&P BSE Capital Goods fell 2.36%
and 1.93%, respectively.
Indian Derivatives Market Review
• Nifty Nov 2019 Futures stood at 11,945.35, a premium of 37.20 points above the spot
closing of 11,908.15. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 71.19 lakh crore as against Rs. 46.40 lakh crore for the week to Nov 1.
• The Put-Call ratio stood at 0.84 compared with the previous week’s close of 0.90.
• The Nifty Put-Call ratio stood at 1.26 against the previous week’s close of 1.41.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.02 5.07 5.12 5.96
91 Day T-Bill
5.08 5.04 5.18 6.46
07.32% 2024, (5 Yr GOI)
6.27 6.23 6.26 7.24
06.45% 2029, (10 Yr GOI)
6.56 6.45 6.48 --
Source: Thomson Reuters Eikon Value as on Nov 08, 2019
• Bond yields increased after a major
global rating agency lowered India’s
rating outlook to negative. Besides,
rise in the U.S. Treasury yields and
surge in crude oil prices on optimism
over U.S.-China trade truce also
pushed the yield higher. Ongoing
concerns over a fiscal slippage also
dampened domestic bond market
sentiments.
• Yield on the new 10-year benchmark
paper (6.45% GS 2029) rose 11 bps to
6.56% compared with the previous
close of 6.45% after trading in a range
of 6.47% to 6.55%.
• Yield on the 10-year benchmark paper
(7.26% GS 2029) increased 9 bps to
6.75% compared with the previous
close of 6.66% after trading in a range
of 6.66% to 6.77%.
Domestic Debt Market
6.45
6.50
6.55
6.60
4-Nov 5-Nov 6-Nov 7-Nov 8-Nov
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year
5.56 6.89 133
3 Year
6.16 7.18 102
5 Year
6.47 7.45 97
10 Year
6.66 7.79 113
Source: Thomson Reuters Eikon
ValueasonNov08,2019
• Yields on gilt securities increased across
the maturities by up to 16 bps barring 11-
year paper which fell 2 bps.
• Corporate bond yields increased on 1-year
paper and 5 to 9-year maturities by up to
12bps.Yieldsfellacrosstheremaining
maturities by up to 63 bps barring 4-year
paper which closed steady.
• Difference in spread between AAA
corporate bond and gilt expanded on 1-
year paper by 11 bps and contracted on
the remaining maturities by up to 70 bps.
Domestic Debt Market (Spread Analysis)
-8
0
8
16
24
4.00
5.20
6.40
7.60
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-Nov-19 01-Nov-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
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8
• The government has created a Rs. 25,000 crore alternative investment fund (AIF) for
affected homebuyers in which the government will contribute Rs. 10,000 crore. The
remaining investments will come from institutions like LIC and the SBI. The fund will also be
open to other sovereign funds to add to the corpus. The move comes as the finance ministry
noted that more than 1,600 housing projects are stalled in which 4.58 lakh housing units are
stuck in various stages of completion. The move is expected to provide some relief to the
realty sector which has been in doldrums due to stalled housing projects and slowing
consumption. The finance ministry added that those projects which has been declared as
bad loans by banks and are facing bankruptcy proceedings under NCLT but has not been
referred for liquidation will also be included in the scheme.
• Securities and Exchange Board of India has come out with consolidated operational
guidelines for foreign portfolio investors (FPIs) and designated depository participants
(DDPs). Under the new norms, all insurance entities and funds that belong to FATF (Financial
Action Task Force) member countries will be classified as category-I FPIs. In case of
unregulated funds or entity where the regulated investment manager is from non-FATF
member country, they will be classified as category-II FPIs. An FPI who wants to make a
transition from category-II to I can do so after providing requisite information and applicable
fees to the DDP. SEBI further barred FPIs from issuing offshore derivative instruments
(ODIs) referencing derivatives or to hedge their ODIs with derivative positions on stock
exchanges in India. However, an FPI coming under category I can do so through a separate
FPI registration.
Regulatory Updates in India
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9
• SEBI revived Aadhaar-based eKYC for mutual funds. This time SEBI did not specify any
upper monetary limit contrary to the previous version of eKYC which had an investment
limit of up to Rs. 50,000. Under the new norms mutual fund distributors and advisors who
are registered with SEBI can complete the eKYC process by registering themselves with a
KYC user agency (KUA) as a sub-KUA. This KUA would be registered with Unique
Identification Authority of India. Only resident Indians will be eligible for the eKYC process.
Else, an investor will also be able to complete the KYC on a registered or whitelisted device
that is operated by the intermediary using biometric details.
• According to SEBI, the chief executive officer of a credit rating agency (CRA) cannot be a
member of the rating committee. The objective of the move is to improve the governance
norms. SEBI further mandated that if the board of the CRA is chaired by an executive
director, then half of the board should comprise of independent directors while if the
board of the CRA is chaired by an non-executive director then one-third of the CRA should
comprise of independent directors.
• According to media reports, SEBI has directed companies that are listed on the stock
exchanges depositories and registrar and transfer agents (RTAs) to strengthen their due
diligence process in order to improve the integrity of the system regarding
dematerialization request in respect of remaining physical shares. The directive comes as
the transfer of securities held in physical mode will not be permissible from Apr 1, 2020.
Regulatory Updates in India (contd..)
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• According to a report from the Institute for Supply Management, U.S. non-manufacturing
index surpassed market expectations and grew to 54.7 in Oct 2019 from 52.6 in Sep 2019.
The upside was driven by surge in business activity index that grew to 57.0 in Oct from 55.2
in Sep. New orders index surged to 55.6 from 53.7 in Sep.
• According to preliminary data released by the University of Michigan, consumer sentiment
in the U.S. has seen a slight improvement in Nov 2019 to 95.7 after rising to 95.5 in Oct
2019.
• Germany’s factory order surpassed expectations and grew 1.3% MoM in Sep as against a
decline of 0.4% in Aug 2019. Domestic orders grew 1.6% and foreign demand surged 1.1%.
New orders from eurozone fell 1.8%, however, it grew 3% from other countries.
• The Bank of England left its interest rate unchanged in a split vote as two members sought
a rate cut. Seven members of the Monetary Policy Committee voted to maintain the bank
rate at 0.75%, while two members preferred a quarter-point reduction.
• Survey data from HIS Markit showed that the U.K. IHS Markit/Chartered Institute of
Procurement & Supply construction Purchasing Managers' Index (PMI) stood at 44.2 in Oct
2019 as compared to 43.3 in Sep 2019. The U.K. construction sector contracted due to the
prolonged uncertainty over Brexit.
• China's exports fell less than expected in Oct 2019 and imports declined for the sixth
month in a row. In dollar terms, exports decreased 0.9% YoY in Oct.
10
Global News/Economy
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11
Global Indices
Indices
08-Nov-19
1-Week
Return
YTD
Return
Russell 3000 1,347.99 0.58% 26.85%
Nasdaq 100 8,255.89 1.16% 30.43%
FTSE 100 7,359.38 0.78% 9.38%
DAX Index 13,228.56 2.06% 25.28%
Nikkei Average 23,391.87 2.37% 16.87%
Straits Times 3,264.30 1.08% 6.37%
Source: Thomson Reuters Eikon Value as on Nov 08, 2019
U.S.
• U.S. equity markets witnessed buying
spree on U.S.-China trade optimism as
reports showed both sides have agreed
to cancel some existing tariffs on each
other’s goods. Strong earnings reports
and rebound in jobs data also
contributed to the rally.
• Meanwhile, survey results showing
strong growth in U.S. service sector
raised concerns over the outlook for
U.S. Federal Reserve’s interest rate.
Europe
• European markets gained led by strong optimism over the possibility of a breakthrough in
the trade deal between U.S. and China. The U.S. Commerce Secretary said that licenses
would be granted shortly for American firms to sell to one of the major Chinese
telecommunications giants.
Asia
• Asian markets followed their global peers and gained in the period. Investors took positive
cues from the upbeat U.S. jobs data and U.S.- China trade deal optimism. Gains were
limited as conflicting reports about development in U.S.-China trade relations emanated.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury bond
surged 18 bps to close at 1.91%
compared to the previous week’s close
of 1.73%.
• U.S treasury prices fell earlier during the
week as its safe haven appeal dwindled
on expectations the U.S. and China are
inching closer to a trade deal. Upbeat
U.S. service sector data for Oct 2019
also contributed to the downside.
• U.S. Treasury prices plunged further on
reports that both U.S. and China have
agreed to roll back trade tariffs which
boosted global economic growth
expectations.
• However, further losses were restricted
at the end of the week after the U.S.
President disagreed to roll back existing
tariffs it imposed on China.
Global Debt (U.S.)
1.75
1.82
1.89
1.96
4-Nov 5-Nov 6-Nov 7-Nov 8-Nov
US 10-Year Treasury Yield Movement
Source: Thomson Reuters EikonSource: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities Last Closing* 1-Week Ago
Brent Crude($/Barrel) 62.29 60.36
Gold ($/Oz) 1458.41 1513.55
Gold (Rs/10 gm) 37919 38703
Silver ($/Oz) 16.80 18.09
Silver (Rs/Kg) 44240 46736
Source: Thomson Reuters Eikon *Value as on Nov 08, 2019
Gold
• Gold prices tumbled as market
participants cheered China and US’
agreement to cancel some tariffs in
phases. This also eased concerns over
global economic slowdown to some
extent, which in turn, lowered the
appeal of the bullion.
Brent Crude
• Brent crude prices strengthened after
the Chinese commerce ministry said that
China and the US have agreed in the past
two weeks to cancel tariffs in different
phases, but without giving any timeline.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
Commodities Market
9.20
9.60
10.00
10.40
10.80
9-Oct-19 19-Oct-19 29-Oct-19 8-Nov-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
‐7.13%
3.20%
‐3.64%
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
71.25 70.88
Pound Sterling
91.27 91.85
EURO
78.73 79.12
100 Yen
65.21 65.65
Source: RBI Figures in INR , *Value as on Nov 08, 2019
Rupee
• The rupee weakened against the
greenback after a major global credit
rating agency cut India’s ratings outlook
to “negative” from “stable”.
Euro
• The euro fell against the greenback
following upbeat U.S. non-farm payrolls
report for Oct 2019.
Pound
• The pound fell against the greenback
after two Bank of England officials
unexpectedly voted to cut interest rates
this month even though the central bank
kept interest rates on hold.
Yen
• The yen fell against the greenback on
expectations the U.S. and China are
inching closer to a trade deal.
Currencies Markets
9.60
10.00
10.40
10.80
9-Oct-19 19-Oct-19 29-Oct-19 8-Nov-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
-0.63%
0.52%
-0.67%
-0.49%
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15
The Week that was…
04
th
Nov to 08
th
Nov
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17
The Week Ahead
11
th
Nov to 15
th
Nov
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18
Day Event
Monday,
Nov 11, 2019
• India Index of Industrial Production (Sep)
• U.K. Gross Domestic Product (YoY) (Q3) P
• China Foreign Direct Investment (YTD) (YoY) (Oct)
• U.K. Industrial production (MoM) (Sep)
Tuesday,
Nov 12, 2019
• U.K. ILO Unemployment Rate (3M) (Sep)
• Germany ZEW Survey - Economic Sentiment (Nov)
• Eurozone ZEW Survey - Economic Sentiment (Nov)
Wednesday,
Nov 13, 2019
• India Consumer Price Index (Oct)
• Germany Harmonized Index of Consumer Prices (YoY) (Oct)
• U.K. Consumer Price Index (YoY) (Oct)
• U.S. Consumer Price Index ex Food & Energy (YoY) (Oct)
• Japan Gross Domestic Product (QoQ) (Q3) P
Thursday,
Nov 14, 2019
• India Wholesale Price Index (Oct)
• Germany Gross Domestic Product (QoQ) (Q3) P
• Eurozone Gross Domestic Product (YoY) (Q3) P
Friday,
Nov 15, 2019
• U.S. Retail Sales Control Group (Oct)
• Japan Industrial Production (YoY) (Sep)
The Week Ahead
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The information herein is meant only for general reading purposes and contains all factual and statistical information pertaining to Industry and
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