Mutual Fund News of 1 November 2019 – Nippon India Mutual Fund

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NEWS U CAN USE

Nov 01, 2019

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The Week that was…

Oct to 01

Nov

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Indian Economy

• Government data showed that India’s fiscal deficit widened in Sep 2019 compared to that

of the previous month. India’s fiscal deficit for the period from Apr to Sep of 2019 widened

to Rs. 6.52 lakh crore or 92.6% of the budget estimate from 78.7% of the budget estimate

during the period from Apr to Aug of 2019. However, fiscal deficit was lower compared to

the corresponding period of the previous year when fiscal deficit stood at 95.3% of the

budget estimate. Revenue receipts stood at 41.6% of the budgeted target of Rs 19.6 lakh

crore of which tax revenue stood at 36.8% of the budgeted target of Rs. 16.5 lakh crore

while the non-tax revenue stood at 66.7% of the budgeted target of Rs 3.13 lakh crore.

• Government data showed that the growth of the index of eight core industries contracted

significantly by 5.2% in Sep 2019 compared to a growth of 0.1% in the previous month and

4.3% in the same period of the previous year. All the sectors barring the fertilizer sector

contracted over the month of which the coal sector witnessed the maximum contraction

of 20.5%. The fertilizers sector witnessed expansion over the month which witnessed a

growth of 5.4% in Sep 2019.

• Nikkei India Manufacturing Purchasing Managers' Index (PMI) fell to 50.6 in Oct 2019 from

51.4 in Sep 2019 and Aug 2019. This marked a two-year low. New orders and output rose

at a slower pace. Business confidence fell to its lowest level in more than two-and-a-half

years and job creation weakened to six-month low. Though sales grew for the twenty-

fourth consecutive month, the increase was the slowest over this period.

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Domestic Equity Market Indices

Indices

01-Nov-19

1 Week Return

YTD Return

S&P BSE Sensex

40,165.03 2.83% 11.36%

Nifty 50

11,890.60 2.65% 9.46%

S&P BSE Mid

-Cap

14,890.58 3.83% -3.55%

S&P BSE Small

-Cap

13,600.92 3.41% -7.52%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date

Advances

Declines

Advance/Decline Ratio

29-Oct-19 1,076 773 1.39

30-Oct-19 1,030 792 1.30

31-Oct-19 1,138 690 1.65

01-Nov-19 1,074 791 1.36

Source: NSE

• Indian equity markets regained its

40,000 mark and closed on a positive

note in the week ended Nov 01, 2019.

Media reports showing the government

is considering more measures to

support the economy such as scrapping

of the dividend distribution tax buoyed

markets.

• On the global front, China’s upbeat

manufacturing activity data for Oct

2019 and the European Union

extending Brexit by three months

supported buying interest.

• Further, 25 basis points interest rate

cut by U.S. Federal Reserve (Fed) led to

expectations of similar easing by other

global banks, thereby adding to the

gains.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

27.33 27.47 27.72 44.46

P/B

2.95 3.67 2.43 1.80

Dividend Yield

1.15 1.26 1.10 1.09

Source: BSE, NSE Value as on Nov

01, 2019

Indian Equity Market

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Sectoral Indices

Indices

Last Returns (in %)

Closing* 1-Wk 1-Mth

S&P BSE Auto

18,803.3 5.03% 12.64%

S&P BSE

Bankex

34,208.7 2.82% 5.65%

S&P BSE CD

26,582.4 -1.02% 2.75%

S&P BSE CG

18,688.5 2.38% 1.01%

S&P BSE FMCG

12,302.4 2.71% 5.57%

S&P BSE HC

13,300.1 3.12% 7.63%

S&P BSE IT

15,272.8 4.79% -0.87%

S&P BSE Metal

9,538.1 6.40% 6.86%

S&P BSE Oil & Gas

15,633.1 2.91% 6.71%

Source: Thomson Reuters Eikon

*Value as on Nov 01, 2019

• S&P BSE Metal was the major gainer that

surged 6.40% followed by S&P BSE Auto that

grew 5.03%. Announcement of several

measures to bring the economy back from the

slowdown phase helped the auto sector.

• S&P BSE Oil & Gas and S&P BSE Bankex grew

2.91% and 2.82%, respectively. A leading

private sector bank has announced selection

of a potential successor to its current

Managing Director and Chief Executive Officer

whose tenure will end in March 2020.

However, S&P BSE Consumer Durables was

the only loser that fell 1.02%.

Indian Derivatives Market Review

• Nifty Nov 2019 Futures stood at 11,928.25, a premium of 37.65 points above the spot

closing of 11,890.60. The total turnover on NSE’s Futures and Options segment for the

week stood at Rs. 46.40 lakh crore as against Rs. 10.27 lakh crore for the week to Oct 25.

• The Put-Call ratio stood at 0.90 compared with the previous week’s close of 0.93 .

• The Nifty Put-Call ratio stood at 1.41 against the previous week’s close of 1.02.

Indian Equity Market (contd.)

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Debt Indicators

(%)

Current

Value

Ago

Mth

Ago

Mth

Ago

Call Rate

5.07 5.10 5.26 6.15

91 Day T

-Bill

5.04 5.10 5.30 6.40

07.32% 2024, (5 Yr GOI)

6.23 6.27 6.30 7.34

06.45% 2029, (10

Yr GOI)

6.45 6.50 6.66

Source: Thomson Reuters Eikon

Value as on Nov 01, 2019

• Bond yields rose initially on concerns

that the government might breach its

budgeted fiscal deficit target for this

financial year due to fiscal costs of the

corporate tax reduction coupled with

lower than budgeted collection of direct

and indirect taxes.

• However, the trend reversed, and bonds

yields came down following fall in U.S.

Treasury yields amid concerns that China

and the U.S. may not have a long-term

trade deal. Fall in global crude oil prices

over the week also boosted market

sentiments. Meanwhile, the U.S. Fed also

cut its policy rate for third time in 2019

which contributed to the upside.

• Yield on the new 10-year benchmark

paper (6.45% GS 2029) fell 4 bps to

6.45% compared with the previous close

of 6.49% after trading in a range of

6.42% to 6.52%.

Domestic Debt Market

6.40

6.45

6.50

6.55

29-Oct 30-Oct 31-Oct 1-Nov

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

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Maturity

G-

Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year

5.61 6.79 119

3 Year

6.16 7.24 109

5 Year

6.38 7.47 108

10 Year

6.55 7.82 127

Source: Thomson Reuters Eikon

Value as on Nov 01, 2019

• Yields on gilt securities fell across the

maturities in the range of 2 bps to 23 bps

barring 3, 11, 15 and 30-year paper which

increased in the range of 4 bps to 13 bps.

• Corporate bond yields increased on 3 and 15-

year paper by 1 bps and 10 bps respectively

while it closed steady on 2-year paper. Yields

fell across the remaining maturities in the

range of 3 bps to 36 bps.

• Difference in spread between AAA corporate

bond and gilt expanded on 2, 4 and 15-year

paper by up to 2 bps while it contracted across

the remaining maturities by up to 29 bps.

Domestic Debt Market (Spread Analysis)

-24

-14

-4

4.00

5.10

6.20

7.30

3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs

India Yield Curve Shift (%) (W-o-W)

Change in bps 01-Nov-19 25-Oct-19

Yield

in %

Change

in bps

Source: Thomson Reuters Eikon

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• The Securities and Exchange Board of India (SEBI) has put stricter framework and directed

all listed banks that within 24 hours of receiving RBI's risk assessment report, they need to

disclose any divergence in bad loan provisioning. The decision is in consultation with RBI.

• Effective immediately, RBI has reorganised its supervision and regulatory departments. The

central bank stated that besides having unified departments for all supervisory activities, it

will also have unified departments for all regulatory activities. Post reorganization, the

supervision department and the regulatory department will be 'activity based' and the

supervision department will be graded based on size and complexity of entity.

• The national stock exchange has asked trading members to take steps to protect the data of

the clients registered with them and not to share such data with unauthorised persons. The

announcement comes after SEBI communicated to the NSE that certain fraudsters are

collecting data of clients who are already into trading in exchanges and sending them bulk

messages on the pretext of providing investment tips and lure them to invest in their bogus

firms by promising huge profits.

• According to media reports, the Prime Minister's Office (PMO) and the finance ministry are

working on certain measures that may include doing away dividend distribution tax (DDT).

The Department of Economic Affairs (DEA) and Revenue Department officials in the finance

ministry have held meetings with PMO officials in this regard.

Regulatory Updates in India

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• The Department for Promotion of Industry and Internal Trade has started an exercise to

relax India’s foreign direct investment rules. The department held an inter-ministerial

meeting to discuss further opening up in sectors, especially where 100% FDI is not allowed

on the automatic route.

• Media reports showed a high-level advisory group on trade and policy has recommended

simpler regulatory and tax framework for overseas investment funds. It would allow

individual investment from abroad in Indian debt and capital markets, and state-specific

policies to facilitate foreign direct investment in agro-processing. The group favours a

single ministry for the regulation of medical devices across the value chain, an

independent commission on pharmaceuticals and biotechnology, a simpler medical visa

regime and health insurance portability of social security entitlements across countries.

• According to media reports, the government could soon announce an amnesty scheme for

gold to bring black money used in buying gold. The new scheme will allow gold hoarders

to come clean on investment made using black money by declaring their possession and

paying tax on it. The tax will have to be paid on entire value of gold declared by an

individual that has been purchased without any receipt. The government is yet to work out

the rate of tax, chances are the rate could be around 30% level with an effective rate of

around 33% including education cess.

Regulatory Updates in India (contd..)

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• Data from the U.S. Labor Department showed that non-farm payroll employment grew

more than expected by 128,000 jobs in Oct 2019. Job growth in Sep 2019 and Aug 2019

were upwardly revised by 180,000 jobs and 219,000 jobs respectively. Employment gains in

Sep 2019 and Aug 2019 combined were 95,000 more than previously reported. However,

the unemployment rate inched up to 3.6% in Oct 2019 from 3.5% in Sep 2019.

• Data from IHS Markit showed that U.K. manufacturing activity decreased at the slowest

pace in six months in Oct 2019. The seasonally adjusted IHS Markit/CIPS PMI, stood at 49.6

in Oct 2019 compared to 48.3 in Sep 2019.

• The Bank of Japan maintained its policy rates, but signalled further monetary easing going

forward as the economy is set to expand at a slower pace amid weaker inflation outlook.

The central bank said short and long-term interest rates are expected to remain at their

current or lower levels as long as it is necessary to achieve the price stability target.

• The U.S. Federal Reserve in its monetary policy review lowered interest rates for the third

time in this year as it lowered its benchmark funds rate by 25 basis points to a range of

1.50% to 1.75%, as expected. However, the U.S. Federal Reserve indicated that further rate

cuts in the near-term are unlikely.

• Preliminary flash estimate from Eurostat showed gross domestic product expanded 0.2%

in the third quarter sequentially, the same rate as seen in the second quarter and more

than expected. Separate data showed that inflation in the region eased to the lowest level

in nearly three years in Oct 2019.

Global News/Economy

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Global Indices

Indices

01-Nov-19

1-Week

Return

YTD

Return

Russell 3000

1,340.19 1.70% 26.11%

Nasdaq 100

8,161.17 1.64% 28.93%

FTSE 100

7,302.42 -0.30% 8.54%

DAX Index

12,961.05 0.52% 22.75%

Nikkei Average

22,850.77 0.22% 14.17%

Straits Times

3,229.43 1.38% 5.24%

Source: Thomson Reuters Eikon

Value as on Nov 01, 2019

U.S.

• U.S. markets traded higher with

investors reacting positively to the

outcome of U.S. Fed latest policy

meeting held during the week. The U.S.

central bank announced its widely

expected decision to lower the target

range for the interest rate by 25 bps.

• However, the U.S. central bank Chief

also said that the Fed will not go for

rate cut any time soon.

Europe

• European markets closed on a mixed note. Upbeat manufacturing data from China for Oct

2019 boosted market sentiments. However, the fate of the long term trade deal between

the two nations remained uncertain which contributed to the downside.

Asia

• Asian markets joined the rally after the U.S. Fed cut interest rates, as widely expected but

indicated it is ready to hold off on further rate cuts for now. Buying interest found

additional support from private survey showing that manufacturing activity in China

expanded more than expected in Oct.

Global Equity Markets

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• Yields on the 10-year U.S. Treasury bond

fell 7 bps to close at 1.73% compared to

the previous week’s close of 1.80%.

• U.S treasury prices grew after the U.S. Fed

in its monetary policy review cut interest

rates for the third time in 2019. Further,

reports that Chinese officials have

indicated concerns whether it would be

possible to reach a comprehensive long-

term trade deal with U.S. boosted the safe

haven appeal of the bullion.

• Also, reports from Institute for Supply

Management showing weak U.S.

manufacturing data for Oct 2019 under

pressure from the U.S.-China trade war

added to the gains.

• However, gains were restricted following

reduced uncertainty over Brexit

developments and reports of stronger

than expected U.S. job growth data in Oct.

Global Debt (U.S.)

1.65

1.72

1.79

1.86

28-Oct 29-Oct 30-Oct 31-Oct 1-Nov

US 10-Year Treasury Yield

Movement

Source: Thomson Reuters EikonSource: Thomson Reuters Eikon

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Performance of various commodities

Commodities

Last Closing*

1-Week Ago

Brent Crude($/Barrel)

60.36 62.90

Gold ($/Oz)

1,513.55 1,504.33

Gold (Rs/10 gm)

38,703 38,630

Silver ($/Oz)

18.09 18.02

Silver (Rs/Kg)

46,736 46,820

Source: Thomson Reuters Eikon *

Value as on

Nov 01, 2019

Gold

• Gold prices were up during the week after

media reports stated that Chinese official

remained doubtful about reaching a

comprehensive long-term trade deal with

their U.S. counterparts. Gains were

extended after the U.S. Fed in its

monetary policy review cut interest rates

for the third time this year.

Brent Crude

• Brent crude prices fell following an

unexpected increase in U.S. crude

stockpile for the week to Oct 25. Concerns

on possible delay in the U.S.- China trade

war resolution also weighed on the

demand outlook of the commodity.

Baltic Dry Index

• The Baltic Dry Index fell on the back of

lower capesize and panamax activities.

Commodities Market

9.80

10.00

10.20

10.40

10.60

10.80

2-Oct-19 12-Oct-19 22-Oct-19 1-Nov-19

Global Commodity Movement

Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)

Global

Commodity Prices

Rebased to 10

Source: Thomson Reuters Eikon

0.36%

-4.04%

0.61%

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Movement of Rupee vs Other Currencies

Currency

Last Closing*

1-Wk Ago

US Dollar

70.88 70.96

Pound Sterling

91.85 91.19

EURO

79.12 78.81

100 Yen

65.65 65.30

Source: RBI Figures in INR , *

Value as on

Nov 01, 2019

Rupee

• The Indian rupee rose against the U.S. dollar

following equity-related greenback inflows.

Euro

• Euro rose against the weak U.S. dollar after

data showed that economic growth of the

euro zone economy was unchanged in the

third quarter, beating market expectations

that it would slow.

Pound

• Pound gained against the weak U.S. dollar as

the latter came under pressure after the

U.S. Fed in its monetary policy review cut

interest rates for the third time this year.

Yen

• Yen gained against the U.S. dollar after Bank

of Japan kept interest rates steady while the

U.S. Fed cut interest rates for the third time

this year.

Currencies Markets

9.60

9.80

10.00

10.20

10.40

10.60

4-Oct-19 11-Oct-19 18-Oct-19 25-Oct-19 1-Nov-19

USD GBP Euro JPY

Source: Thomson Reuters Eikon

Currency

Prices (

in terms of INR)

Rebased to 10

Currency Movement

0.39%

0.72%

-0.11%

0.54%

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The Week that was…

Oct to 01

Nov

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The Week that was (Oct 28 – Nov 01)

Date Events

Present

Value

Monday,

October 28, 2019

• Japan Tokyo CPI ex Fresh Food (YoY) (Oct)

0.5% 0.5%

• U.S. Chicago Fed National Activity Index (Sep)

-0.45 0.15

• U.S. Wholesale Inventories (Aug) (P)

-0.3% 0.0%

Tuesday,

October 29, 2019

• U.S. Pending Home Sales (MoM) (Sep)

1.5% 1.4%

• Japan Retail Trade (YoY) (Sep)

9.1% 1.8%

Wednesday,

October 30, 2019

• U.S. Fed Interest Rate Decision

1.8% 2.0%

• U.S. Gross Domestic Product Annualized (Q3) (P)

1.9% 2.0%

• Germany Harmonized Index of Consumer Prices (YoY) (Oct)

0.9% 0.9%

• Germany Unemployment Rate (Oct)

5.0% 5.0%

• Japan Industrial Production (YoY) (Sep) (P)

1.1% -4.7%

Thursday,

October 31, 2019

• Bank of Japan Interest Rate Decision

-0.1% -0.1%

• U.K. GfK Consumer Confidence (Oct)

-14 -12

• Germany Retail Sales (MoM) (Sep)

0.1% -10.0%

• U.S. Initial Jobless Claims (Oct 25)

218K 213K

Friday,

November 01, 2019

• India Manufacturing PMI (Oct)

50.6 51.4

• U.S. ISM Manufacturing PMI (Oct)

48.3 47.8

• China Caixin Manufacturing PMI (Oct)

51.7 51.4

• U.S. Nonfarm Payrolls (Oct)

128K 180K

• U.K. Markit Manufacturing PMI (Oct)

49.6 48.3

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

The Week Ahead

Nov to 08

Nov

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Day Event

Monday,

Nov 04, 2019

•

Germany Markit Manufacturing PMI (Oct)

•

Eurozone Markit Manufacturing PMI (Oct)

•

U.K. Markit Construction PMI (Oct)

•

U.S. Factory Orders (MoM) (Sep)

Tuesday,

Nov 05, 2019

•

U.S. Markit PMI Composite (Oct)

•

U.S. ISM Non-Manufacturing PMI (Oct)

•

U.K. Markit Services PMI (Oct)

•

Bank of England Interest Rate Decision

•

China Caixin Services PMI (Oct)

Wednesday,

Nov 06, 2019

•

U.S. Nonfarm Productivity (Q3) P

•

Euro zone Markit PMI Composite (Oct)

•

Euro zone Retail Sales (YoY) (Sep)

Thursday,

Nov 07, 2019

•

U.S. Initial Jobless Claims (Nov 1)

•

Japan Overall Household Spending (YoY) (Sep)

Friday,

Nov 08, 2019

•

U.S. Michigan Consumer Sentiment Index (Nov) P

•

China Trade Balance U.S. (Oct)

•

Japan Leading Economic Index (Sep) P

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

markets which have been obtained from independent third party sources and which are deemed to be reliable. The information provided cannot be

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