News U Can Use
November 16, 2018
The Week that was…
12
th
November to 16
th
November
2
Indian Economy
• Government data showed that the consumer price index-based inflation or retail inflation
came in at a 13-month low of 3.31% in Oct 2018 compared with 3.70% in the previous
month and 3.58% in the same month of the previous year. The consumer food price index-
based inflation subsequently stood at -0.86% in Oct 2018 compared with 0.51% in the
previous month and 1.90% in the same month of the previous year.
• Index of Industrial Production (IIP) slowed to 4.5% in Sep 2018 from 4.7% in the previous
month but rose from 4.1% in the same period of the previous year. For the period from Apr
to Sep of 2018, IIP grew 5.1% from 2.6% in the same period of the previous year. On the
sectoral front, the manufacturing sector grew 4.6% in Sep 2018 from 3.8% in the same
month of the previous year.
• Government data showed that India’s Wholesale Price Index-based inflation (WPI) stood
at 5.28% in Oct 2018 compared to 5.13% in Sep 2018. WPI grew as fuel and power and
manufactured products inflation went up compared with the past month. Wholesale price
inflation was at 3.68% in Oct 2017. Inflation in fuel and power stood at 18.44% in Oct 2018
compared to 16.65% in Sep 2018. Inflation in manufactured products stood at 4.49%
compared to 4.22% in Sep 2018.
• India’s trade deficit in Oct 2018 increased to $17.13 billion from $13.98 billion in Sep 2018.
Exports increased 17.86% in Oct against a decrease of 2.15% in Sep 2018. Imports also
increased 17.62% in Oct 2018 compared with a rise of 10.45% in Sep 2018.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
16-Nov-18
1 Week Return
YTD Return
S&P BSE Sensex
35,457.16 0.85% 4.11%
Nifty 50
10,682.20 0.92% 1.44%
S&P BSE Mid
-Cap 14,997.81 0.36% -15.85%
S&P BSE Small
-Cap 14,485.88 -1.27% -24.67%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
12-Nov-18 669 1144 0.58
13-Nov-18 904 899 1.01
14-Nov-18 788 1002 0.79
15-Nov-18 797 1013 0.79
16-Nov-18 746 1042 0.72
Source: NSE
• Domestic market got support on
some positive economic data
including the consumer price index-
based inflation. CPI or retail inflation
came in at a 13-month low in Oct
2018 and exports increased in Oct
against a decrease in Sep 2018. The
index of industrial production (IIP)
,although slowed compared with the
previous month, but rose from the
same period of the previous year.
• Weakness in global crude oil prices
over the week lent support to oil
marketing companies and lowered
concerns of higher fiscal deficit and
inflationary pressure to some extent.
• Nonetheless, market participants
continued to monitor the
development over the tussle between
the government and the Reserve
Bank of India.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
23.31 25.69 32.23 -70.80
P/B
3.02 3.38 2.66 2.20
Dividend Yield
1.23 1.24 0.93 0.83
Source: BSE, NSE Value as on Nov 16, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
20,516.51
-1.58%
0.24%
S&P BSE
Bankex
29,519.42 1.45% 2.92%
S&P BSE CD
20,126.05 3.15% 8.28%
S&P BSE CG
18,411.97 0.91% 8.15%
S&P BSE FMCG
11,339.26 1.15% 1.91%
S&P BSE HC
14,348.76
-2.34%
-3.52%
S&P BSE IT
14,019.40
-1.17%
-4.48%
S&P BSE Metal
12,567.11
-2.30%
-3.84%
S&P BSE Oil & Gas
13,628.95 0.33% 0.39%
S&P BSE Realty
1,728.14
-1.96%
5.14%
Source: Thomson Reuters Eikon
*Value as on Nov
16, 2018
• On the BSE sectoral front, the indices
witnessed a mixed trend. S&P BSE HC
was the major loser (-2.34%) followed by
S&P BSE Metal (-2.30%) and S&P BSE
Realty (-1.96%).
• Meanwhile, S&P BSE CD (3.15%) stood
as the major gainer followed by S&P BSE
Bankex (1.45%) and S&P BSE FMCG
(1.15%). The S&P BSE Oil & Gas (0.33%)
gained as global crude oil prices witnessed
fall over the week.
Indian Derivatives Market Review
• Nifty Nov 2018 Futures were at 10,687.25, a premium of 5.05 points, above the spot
closing of 10,682.20. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 44.51 lakh crore as against Rs. 26.15 lakh crore for the week to Nov 9.
• The Put-Call ratio stood at 1.05 compared with the previous week’s close of 0.95.
• The Nifty Put-Call ratio stood at 1.64 against the previous week’s close of 1.60.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
6.36 6.47 6.54 5.89
91 Day T
-Bill
6.82 6.95 6.93 6.32
7.80% 2021, (5
Yr GOI)
7.40 7.57 7.69 7.74
7.17% 2028, (10
Yr GOI)
7.82 7.76 7.87 7.90
Source: Thomson Reuters
Eikon
Value as on Nov 16, 2018
• Bond yields rose as market
participants resorted to profit booking.
• Yields rose further as market
participants preferred to remain on
the sidelines ahead of the Reserve
Bank of India’s (RBI) board meeting
scheduled on Nov 19. The board
meeting is expected to be a key
factor for the domestic debt market.
Investors were also cautious after a
major credit rating agency indicated
potential macro risks for the
economy.
• However, gains in rupee against the
greenback and fall in crude oil prices
over the week restricted the losses as
it reduced concerns over expanding
current account deficit and
inflationary pressure to some extent.
7.70
7.78
7.86
12-Nov 13-Nov 14-Nov 15-Nov 16-Nov
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 7.48 8.71 123
3 Year 7.70 8.65 96
5 Year 7.84 8.62 78
10 Year 7.97 8.56 59
Source: Thomson Reuters Eikon
Value as on Nov 16
, 2018
• Yields on gilt securities increased across
the maturities by up to 7 bps barring 6-,
11- and 30-year papers that fell in the
range of 2 bps to 4 bps.
• Corporate bond yields increased across
the maturities by up to 11 bps barring 1-
year paper that fell 2 bps.
• Difference in spread between AAA
corporate bond and gilt expanded across
2 to 6 years’ papers and 10-year
maturities by up to 7 bps and contracted
by up to 2 bps on the remaining
maturities.
-14
-7
-1
6
6.30
7.30
8.30
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 16-Nov-18 09-Nov-18
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• According to media reports, the Central government proposed changing norms that will
enable closer supervision of the Reserve Bank of India (RBI). The government has
recommended panels to be set up which will oversee functions that includes transmission of
monetary policy, financial stability, and foreign exchange management.
• The Securities and Exchange Board of India (SEBI) tightened disclosure and review
requirements for credit rating agencies. This comes after agencies could not detect debt
defaults by a leading finance and infrastructure company. SEBI told credit rating agencies to
analyse deterioration in the liquidity conditions of an issuer they are rating, monitor its
repayment schedules and examine any asset-liability disparities. The regulator added that
the agencies should reveal parameters like liquid investments or cash balances, access to
any unutilised credit lines and adequacy of cash flows in a specific section on liquidity in
their announcements. SEBI stated credit rating agencies could treat sharp bond yield
deviations from their benchmarks as a ‘material event’.
• SEBI asked listed companies to disclose their risk management activities during the year in
a more transparent, detailed and uniform manner which includes commodity hedging
positions. The objective of the move is to bring in clarity in disclosures and thereby benefit
shareholders.
Regulatory Updates in India (contd..)
• According to the secretary of the Department of Industrial Policy and Promotion (DIPP), the
government will soon come out with a new industrial policy. The new policy could include a
dedicated chapter on the importance of design. The secretary highlighted the importance of
design and innovation in the country’s economic progress and extended support to
establishing a National Design Centre as early as possible.
• According to media reports, the board of RBI may ease rules that governs transfer of
surplus funds to the government. RBI may also liberalise norms for weak banks in order to
boost lending in the economy. RBI is also considering reviewing norms for capital and risk
weight for Indian banks that are more stringent than the Basel guidelines. Other proposals
on the central bank’s agenda include restructuring of loans of up to Rs. 250 million ($3.5
million) that are availed by micro, small and medium enterprises.
• As per media reports, the Insurance Regulatory and Development Authority (IRDAI) is
working on procedures to pay off huge amount of unclaimed deposits to policyholders or
their nominees. According to data from IRDAI, over Rs. 15,000 crore deposits are still lying
with life insurers. For amounts trapped in pension schemes, the insurance regulator has
requested life insurers to repay them as lumpsum payments. Earlier, IRDAI had asked life
insurance companies to provide a search facility on their website so that policyholders or
their nominees could get information about the unclaimed amount by putting in their
Aadhaar or PAN details.
9
Global News/Economy
• According to the Labor Department, consumer prices in the U.S. increased in line with
expectations in Oct 2018. Consumer Price Index (CPI) increased 0.3% in Oct 2018 after
rising 0.1% in Sep 2018.
• According to the Commerce Department, U.S. retail sales increased more than expected in
Oct 2018. Retail sales improved by 0.8% in Oct 2018 following 0.1% drop in Sep 2018. The
growth was helped by spike in sales by motor vehicle and parts dealers, which increased
1.1% in Oct 2018 after decreasing 0.1% in Sep 2018.
• A Labor Department report showed first-time claims for U.S. unemployment benefits
increased a tad in the week ended Nov 10, 2018. Initial jobless claims increased to 216,000,
an addition of 2,000 from the previous week's 214,000 as against expectations for a decline.
The department said the less volatile four-week moving average also increased to 215,250,
an increase of 1,500 from the previous week's 213,750.
• A report from the Eurostat showed that euro zone’s GDP grew 0.2% in the third quarter 2018
from the second quarter 2018. The economy grew 0.4% in the second quarter. GDP grew
1.7% YoY in the third quarter as against a gain of 2.2% in the second quarter of 2018.
• A report from the Office for National Statistics showed that U.K.’s CPI grew 2.4% YoY in Oct
2018, thereby remaining unchanged against Sep 2018. The CPI inched up 0.1% MoM in Oct
2018.
10
Global Equity Markets
11
Global Indices
Indices
16-Nov-18
1-Week
Return
YTD
Return
Dow Jones
25,413.22 -2.22% 2.81%
Nasdaq 100
6,867.02 -2.45% 7.36%
FTSE 100
7,013.88 -1.29% -8.77%
DAX Index
11,341.00 -1.63% -12.21%
Nikkei Average
21,680.34 -2.56% -4.76%
Straits Times
3,083.60 0.18% -9.38%
Source: Thomson Reuters
Eikon
Value as on Nov 16, 2018
U.S.
• U.S. market traded lower as buying
interest waned amid concerns over
global economic outlook.
• Markets were hit by selling pressure in a
major U.S. multinational technology
company after a global investment and
financial advisory services firm
downgraded its rating on the company's
stock to Neutral from Buy.
Europe
• European markets fell following the announcement of some high-profile U.K. government
resignations in protest against the draft Brexit agreement drawn up by U.K. Prime Minister.
Concern over global growth outlook further hit the markets as International Monetary Fund
said that higher U.S. interest rates, a stronger U.S. dollar and financial market volatility
could put pressure on some emerging-market and developing economies.
Asia
• Majority of the Asian markets witnessed positive trend over the week. Investor sentiment
was buoyed by Chinese government’s support for the economy. Optimism over resolution
of the ongoing trade turf between U.S. and China boosted investor sentiment following
media reports that U.S. and China have intensified efforts to reach a trade agreement at
the G20 summit, scheduled later this month.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
fell 12 bps to close at 3.07% from the
previous close of 3.19%.
• U.S. Treasury prices rose due to
renewed weakness in the U.S. equity
markets amid concerns over global
economic outlook after International
Monetary Fund said that higher U.S.
interest rates, a stronger U.S. dollar and
financial market volatility could put
pressure on some emerging-market and
developing economies.
• Further, political uncertainty surrounding
Britain's exit from the European Union
prompted investors to pursue the safety
of U.S. Treasuries.
• However, in-line U.S. core inflation data
for Oct 2018 raised the possibility of
increase in interest rates in Dec 2018
which capped the gains.
3.05
3.10
3.15
3.20
13-Nov 14-Nov 15-Nov 16-Nov
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)
64.13 68.10
Gold ($/Oz)
1,221.39 1,209.21
Gold (Rs/10 gm)
30,912 31,773
Silver ($/Oz)
14.41 14.16
Silver (Rs/Kg)
36,747 38,205
Source: Thomson Reuters
Eikon *Value as on Nov 16, 2018
Gold
• Gold prices rose after the unexpected
resignations by British ministers in
opposition to the newly proposed Brexit
deal. Investors were rattled by the
resignations, which added to
uncertainties and made the bullion more
appealing.
Brent Crude
• Brent crude prices fell amid fears of
oversupply and the slowdown in the
global economy owing to geopolitical
factors. According to media reports, oil
demand may get slower from China and
U.S. in 2019. Simultaneously, supply
has been rising with massive growth in
U.S. crude inventories, and high
production in Saudi Arabia and Russia.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
7.67
8.54
9.41
10.28
16-Oct-18 26-Oct-18 5-Nov-18 15-Nov-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-5.83%
1.01%
1.80%
16-Nov-18
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
71.80 72.73
Pound Sterling
91.92 94.87
EURO
81.46 82.52
100 JPY
63.37 63.84
Source: RBI Figures in INR , *
Value as on
Nov 16, 2018
Rupee
• The Indian rupee rose against the
greenback following decline in global
crude oil prices and subsequent gains in
the domestic equity market.
Euro
• The euro rose against the greenback as
Italian budget woes eased to some
extent amid reports that the Italian Prime
Minister was looking to work with the
European Union (EU) over his
government’s 2019 budget.
Pound
• The pound, amid significant volatility, fell
against the greenback after British
ministers resigned in a protest against a
draft Brexit agreement.
Yen
• The yen rose against the greenback as
its safe haven appeal improved on
worries of political uncertainty in Britain.
9.24
9.56
9.88
10.20
16-Oct-18 26-Oct-18 5-Nov-18 15-Nov-18
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-1.28%
-3.11%
-1.28%
-0.74%
16-Nov-18
15
The Week that was…
12
th
Nov to 16
th
Nov
The Week that was (Nov 12 – Nov 16)
16
Date Events
Present
Value
Previous
Value
Monday,
November 12, 2018
• India Consumer Price Index (Oct)
3.31% 3.70%
• India Index of Industrial Production (Sep)
4.50% 4.70%
• Japan Machine Tool Orders (YoY) (Oct P)
-1.10% 2.90%
Tuesday,
November 13, 2018
• China New Yuan Loans CNY (Oct)
697.0b 1380.0b
• Japan Gross Domestic Product Annualized (
QoQ) (3Q P) -1.20% 3.00%
• Germany ZEW Survey Expectations (Nov)
-24.10 -24.70
• Eurozone ZEW Survey (Economic Sentiment) (Nov)
-22.00 -19.40
Wednesday,
November 14, 2018
• Germany Gross Domestic Product (YoY) (3Q P)
1.10% 2.30%
• U.K. Consumer Price Index (YoY) (Oct)
2.40% 2.40%
• Eurozone Gross Domestic Product (YoY) (3Q P)
1.70% 1.70%
• U.S. Consumer Price Index (YoY) (Oct)
2.50% 2.30%
• China Retail Sales (YoY) (Oct)
8.60% 9.20%
Thursday,
November 15, 2018
• India Trade Deficit (Oct)
$17.13b $13.98b
• U.S. Retail Sales Advance (MoM) (Oct)
0.80% -0.10%
• U.S. Initial Jobless Claims (Nov 10)
216k 214k
• China New Home Prices (MoM) (Oct)
1.02% 1.00%
Friday,
November 16, 2018
• Eurozone Consumer Price Index (YoY) (Oct F)
2.20% 2.10%
• U.S. Industrial Production (MoM) (Oct)
0.10% 0.20%
17
The Week Ahead
19
th
Nov to 23
rd
Nov
18
The Week Ahead
Day Event
Monday,
November 19, 2018
•
U.K. Rightmove House Prices (YoY) (Nov)
•
U.S. NAHB Housing Market Index (Nov)
Tuesday,
November 20, 2018
•
U.S. Housing Starts (MoM) (Oct)
•
U.S. Building Permits (MoM) (Oct)
Wednesday,
November 21, 2018
•
U.S. Durable Goods Orders (Oct P)
•
Japan National Consumer Price Index (YoY) (Oct)
•
Japan All Industry Activity Index (MoM) (Sep)
•
U.K. Public Finances (PSNCR) (Pounds) (Oct)
•
U.S. Initial Jobless Claims (Nov 17)
•
U.S. Existing Home Sales (MoM) (Oct)
•
U.S. University of Michigan Sentiment (Nov F)
Thursday,
November 22, 2018
•
Japan Machine Tool Orders (YoY) (Oct F)
Friday,
November 23, 2018
•
Japan Nikkei Manufacturing PMI (Nov P)
•
Germany Gross Domestic Product (YoY) (3Q F)
•
Eurozone Markit Composite PMI (Nov P)
•
U.S. Markit Composite PMI (Nov P)
Disclaimer
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19
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