News U Can Use
November 23, 2018
The Week that was…
19
th
November to 23
rd
November
2
Indian Economy
• India’s Current Account Deficit (CAD) is being seen to touch 2.6% of gross domestic
product in 2018-19 compared with an earlier estimate of 2.8% following decline in oil
prices, a report said. Fiscal deficit in first half of 2018-19 has already touched 95.3% of full-
year budget estimates (BE). Total receipts for the six-month period is Rs. 7.09 lakh crore
(39% of BE) and the total expenditure is estimated at Rs. 13.04 lakh crore (53.4% of BE).
• Tax evasion worth Rs. 29,088 crore have been detected by the investigation arm of the
finance ministry in 1,835 cases during Apr-Oct 2018, according to media reports. Of this,
the Directorate General of GST Intelligence (DGGI) has detected evasion of Goods and
Services Tax (GST) worth Rs. 4,562 crore in 571 cases. The bulk of evasion has been
detected in service tax with total number of cases at 1,145 involving Rs. 22,973 crore.
Central excise duty has 119 cases where tax evaded was worth Rs. 1,553 crore. Ministry
officials said the total amount of detection could be more as the data does not include
detection by field offices of the Central Board of Indirect Taxes and Customs, the report
said.
• According to media reports, the Comptroller and Auditor General (CAG) of India is
conducting performance audit of GST and could finalise its report soon. The performance
audit report on implementation of GST could be tabled in Parliament in the forthcoming
Winter session, which starts from Dec 11, 2018. The process of auditing has been going
on since GST’s implementation on Jul 1, 2017. The audit will include registration, refund,
input tax credit, transition credit mechanism, ease of payment of taxes and the impact on
the economic activity, according to the report.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 22-Nov-18 1 Week Return YTD Return
S&P BSE Sensex 34981.02 -1.34% 2.71%
Nifty 50 10526.75 -1.46% -0.04%
S&P BSE Mid-Cap 14880.34 -0.78% -16.51%
S&P BSE Small-Cap 14350.83 -0.77% -25.38%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
19-Nov-18 933 847 1.10
20-Nov-18 490 1327 0.37
21-Nov-18 898 875 1.03
22-Nov-18 695 1079 0.64
Source: NSE
• Indian equity markets witnessed loss
during the truncated trading week as
domestic market remained closed on
Nov 23, 2018, on account of Guru
Nanak Jayanti. U.S. market were
also closed on Nov 22, 2018, for
Thanksgiving.
• Escalating trade tensions, global
growth fears, concerns about
earnings outlook and further
development in Brexit weighed on
sentiment.
• Cautious stance was seen due to the
upcoming state elections in some
major Indian states and Monetary
Policy Committee’s policy review
meeting scheduled in early Dec
2018.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
22.85 25.43 32.39 -88.22
P/B
2.91 3.33 2.52 2.12
Dividend Yield
1.24 1.26 0.97 0.87
Source: BSE, NSE Value as on
Nov 22, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
20400.13 -0.57% 4.99%
S&P BSE Bankex
29192.05 -1.11% 4.63%
S&P BSE CD
20025.20 -0.50% 11.29%
S&P BSE CG
18431.21 0.10% 12.24%
S&P BSE FMCG
11337.23 -0.02% 2.59%
S&P BSE HC
14302.95 -0.32% 0.89%
S&P BSE IT
13443.54 -4.11% -2.55%
S&P BSE Metal
12031.52 -4.26% -4.77%
S&P BSE Oil & Gas
13421.42 -1.52% 4.99%
Source: Thomson Reuters Eikon
*Value as on Nov 22, 2018
• On the BSE sectoral front, major indices
closed in the red barring S&P BSE Realty
(1.64%) and S&P BSE CG (0.10%). S&P
BSE Metal (-4.26%) stood as the major
loser followed by S&P BSE IT (-4.11%)
and S&P BSE Teck (-3.60%). Technology
and internet behemoths saw their stocks
decline on the Wall Street, which led to
tech companies in Asia fall.
• Strong rupee further dented IT stocks.
Banking stocks remained under pressure
despite the crucial meeting between RBI
and the government succeeding in the two
coming to an agreement on a wide range
of issues.
Indian Derivatives Market Review
• Nifty Nov 2018 Futures settled at 10,524.7, a discount of 2.05 points, below the spot
closing of 10,526.75. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 37.39 lakh crore as against Rs. 44.51 lakh crore for the week to Nov 16.
• The Put-Call ratio stood at 0.86 compared with the previous week’s close of 1.05.
• The Nifty Put-Call ratio stood at 1.46 against the previous week’s close of 1.64.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
6.48 6.36 6.53 5.97
91 Day T-Bill
6.78 6.82 6.96 6.32
7.80% 2021, (5 Yr GOI)
7.15 7.40 7.70 7.68
7.17% 2028, (10 Yr GOI)
7.71 7.82 7.89 7.85
Source: Thomson Reuters
Eikon
Value as on Nov 22, 2018
• Bond yields fell initially during the
week under review after the much-
anticipated meeting between the
government and the Reserve Bank of
India concluded on a positive note.
• Bond yields fell further as global
crude oil prices plunged to a near 1-
year low and the rupee appreciated
against the greenback. This eased
concerns over the possibility of
increase in domestic inflationary
pressures and widening of current
account deficit of the country to some
extent.
• However, further gains were capped
as investors preferred to book profits
from the recent bond rally.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) fell 11 bps to
close at 7.71% from the last week’s
close at 7.82%.
7.61
7.70
7.80
7.89
19-Nov 20-Nov 22-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 7.35 8.53 119
3 Year 7.64 8.63 99
5 Year 7.71 8.56 85
10 Year 7.86 8.53 67
Source: Thomson Reuters Eikon
Value as on Nov 22, 2018
• Yields on gilt securities fell across the
maturities in the range of 4 bps to 16 bps
barring 2-year paper that increased 1
bps. The maximum fall was witnessed on
15-year paper and the minimum on 30-
year paper.
• Corporate bond yields fell across the
maturities by up to 13 bps.
• Difference in spread between AAA
corporate bond and gilt expanded across
the maturities by up to 7 bps barring 1-
and 6-year papers that closed steady.
-15
-10
-5
0
6.28
7.04
7.79
8.55
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 22-Nov-18 16-Nov-18
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The crucial meeting between the Reserve Bank of India (RBI) and the government came to
an end and according to media reports both RBI and the government succeeded in coming
to an agreement on a wide range of issues. The central bank has decided to form
committees who will specifically look into critical issues at multiple levels. According to
reports, RBI will allow loan restructuring for small and medium enterprises. The central bank
has also agreed to review the corrective plan for state-run banks.
• Reserve Bank of India’s board advised the bank to support small businesses and give
banks more time to fulfil capital regulations. The board had a nine-hour meeting on Nov 19,
2018, wherein it also decided to form an expert committee to advice on whether RBI
reserves are adequate since there have been requests from the government for access to
surplus reserves.
• The Securities and Exchange Board of India (SEBI) allowed promoters to make counter
offer to shareholders of companies that are planning to delist from stock exchanges. This is
aimed at bettering the current method. SEBI’s system for price discovery is as per the
reverse book building (RRB) method, along with considering counter offer of promoter. At
present, if the price discovered through reverse book building is not liked by the promoter,
he may singly reject the price and the whole exercise goes to waste.
Regulatory Updates in India (contd..)
• The Income Tax department has said that hotels and restaurants that have collected service
charge but not passed on to staff and workers will be liable to income tax in the hands of
such entities. The Central Board of Direct Taxes (CBDT) has asked field offices to examine
the books of hotels and restaurants and see if there is any 'under reporting' or 'non-
reporting' of service charge. The Ministry of Consumer Affairs had flagged that some hotels
and restaurants are collecting service charge from customers compulsorily, violating the
guidelines issued by the ministry.
• The Government of India asked the World Trade Organisation (WTO) to set up a panel
against the U.S. for imposing high import duties on certain steel and aluminium products,
according to media reports. This happened after both the countries failed to resolve the
issue in a bilateral consultation process under the dispute settlement mechanism of WTO.
Imposition of high import duties on these items by the U.S. has hurt exports by Indian
businesses. The U.S. move also does not comply with global trade rules. Other than India,
Russia, Norway, Canada, Mexico, Switzerland, and European Union have taken the U.S. in
the WTO for imposing 25% and 10% import duties on certain steel and aluminium products,
respectively, which has led to global trade tensions.
• The revenue department is mulling to join together e-way bill with National Highways
Authority of India’s FASTag mechanism and Delhi-Mumbai Industrial Corridor's Logistics
Data Bank (LDB) services, to ensure faster movement of goods and check goods and
services tax evasion. The proposal will help improve operational efficiencies across India's
logistic landscape as it would plug the loopholes in the supply chain.
9
Global News/Economy
• Data from the U.S. Commerce Department showed that durable goods orders in the U.S. fell
4.4% in Oct 2018 following a revised 0.1% (0.7% increase originally reported for the
previous month) fall in Sep 2018.
• According to a Commerce Department report, U.S. housing starts rebounded in Oct 2018,
although building permits decreased a bit. Housing starts increased 1.5% to an annual rate
of 1.228 million in Oct 2018 after plunging 5.5% to a revised rate of 1.210 million in Sep
2018.
• Preliminary survey data from IHS Markit showed that eurozone's private sector growth
slowed in Nov 2018. The composite PMI dropped to 52.4 in Nov 2018 from 53.1 in Oct 2018.
The manufacturing PMI fell to 51.5 in Nov 2018 from 52.0 in Oct 2018. The services PMI fell
to 53.1 in Nov 2018 from 53.7 in Oct 2018.
• Minutes of the European Central Bank’s (ECB) monetary policy meeting held on Oct 24 and
Oct 25 showed that policymakers had agreed to affirm the central bank's plan to gradually
taper its massive asset purchase programme, despite the recent weak economic data. The
next ECB policy session is on Dec 13, 2018.
• Bank of England governor welcomed the draft Brexit deal and the transition arrangement
that the British Prime Minister made with the European Union recently. The governor,
however, warned that the risks of a "no-deal, no-transition" scenario are very high.
• Data from the Ministry of Internal Affairs and Communications of Japan showed that
consumer price inflation in Japan grew 1.4% on a yearly basis in Oct 2018 from 1.2% in Sep
2018. On a monthly basis, both overall and core inflation grew 0.2%.
10
Global Equity Markets
11
Global Indices
Indices
23-Nov-18
1-Week
Return
YTD
Return
Dow Jones
24285.95 -4.44% -1.75%
Nasdaq 100
6527.347 -4.95% 2.05%
FTSE 100
6952.86 -0.87% -9.56%
DAX Index
11192.69 -1.31% -13.35%
Nikkei Average
21646.55 -0.16% -4.91%
Straits Times
3052.49 -1.01% -10.30%
Source: Thomson Reuters Eikon
Value as on Nov 23, 2018
U.S.
• U.S. markets extended the previous
week’s loss amid lingering concerns
about the outlook for the global
economy. Hopes over a potential trade
deal between the U.S. and China
dampened after the U.S. Vice President
(VP), in the recently held Asia Pacific
Economic Cooperation summit, said
that the U.S. would not back down until
China changes its ways.
Europe
• European markets too witnessed selling pressure owing to worries over the outlook of the
global economic health. A series of weak economic data too restrained market participants
from taking bets on riskier assets. The downturn was restricted by approval of U.K. and
European Union on the draft agreement regarding future relationship between the nations
ahead of the EU summit.
Asia
• Uncertainty over the fate of the U.S. – China trade relation kept Asian markets under
pressure. While the U.S. President is hopeful of making a deal with China at the upcoming
G20 summit in Argentina, U.S. VP warned that the U.S. would not back down until China
changes its ways. Tech stocks were hit following reports that the U.S. has been pressuring
foreign allies to avoid doing business with a major Chinese technology company.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
fell 2 bps to close at 3.05% from the
previous close of 3.07%.
• U.S. Treasury prices rose after U.S.
Federal Reserve officials acknowledged
slowdown of the global economy and
indicated that the central bank may be
nearing the end of its tightening cycle.
• U.S. Treasury prices rose further as the
safe haven appeal of U.S. Treasuries
improved due to a plunge in global
crude oil prices which fueled concerns
of slowing global growth and rising
global oil supply.
• Gains were extended after U.S. durable
goods orders fell more than expected in
Oct 2018 that led to a perception that
the sharp increase in interest rates by
the U.S. Federal Reserve earlier in the
year might be restraining the economic
growth of the U.S. economy.
3.00
3.04
3.07
3.11
19-Nov 20-Nov 21-Nov 22-Nov 23-Nov
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel)
56.83 64.13
Gold ($/Oz)
1222.44 1221.39
Gold (Rs/10 gm)
#
30834 30912
Silver ($/Oz)
14.24 14.41
Silver (Rs/Kg)
#
36798 36747
Source: Thomson Reuters
Eikon
#
Value as on Nov 22, 2018; *Value as on Nov 23, 2018
Gold
• Gold prices closed almost flat as the
safe haven appeal of the bullion on the
back of uncertainty over the U.S.-China
trade talks ahead of the upcoming G20
summit was neutralised by reports that
Italy may accommodate with the
European Union and modify certain
aspects of its budget. Weak global trend
and softening demand from jewellers in
Asian economies kept the bullion’s
gains under leash.
Crude
• Brent crude prices plunged as concerns
over supply glut and weak global cues
continued to weigh on the commodity.
The rising U.S. crude stockpiles have
added to worries of oil oversupply amid
soft demand outlook.
Baltic Dry Index
• The Baltic Dry Index rose 6.01% WoW
on the back of improved capesize and
panamax activities.
7.00
7.50
8.00
8.50
9.00
9.50
10.00
10.50
24-Oct-18 3-Nov-18 13-Nov-18 23-Nov-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-11.38%
0.09%
-1.18%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
71.18 71.80
Pound Sterling
91.04 91.92
EURO
81.19 81.46
100 JPY
62.97 63.37
Source: RBI Figures in INR , *Value as on Nov 22, 2018
Rupee
• The Indian rupee posted its biggest
weekly rise in nearly three years against
the greenback as global crude oil prices
plummeted to a near 1-year low.
Euro
• The euro fell against the greenback as
persisting worries about the U.S.-China
trade conflict and continuing
confrontation between the European
Union and Italy over the latter’s budget
plans kept market participants jittery.
Pound
• The pound fell against the greenback
after Spain raised objections regarding
the same and asked for changes to the
withdrawal contract.
Yen
• The yen fell as the safe haven appeal of
the dollar improved on persisting worries
about the U.S.-China trade conflict,
Italy’s budget negotiations and plunge in
global crude oil prices.
9.50
9.60
9.70
9.80
9.90
10.00
10.10
23-Oct-18 2-Nov-18 12-Nov-18 22-Nov-18
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
-0.87%
-0.96%
-0.34%
-0.63%
15
The Week that was…
19
th
Nov to 23
rd
Nov
The Week that was (Nov 19 – Nov 23)
16
Date Events Present Value Previous Value
Monday,
November 19, 2018
• U.K. Rightmove House Prices (YoY) (Nov) -0.2% 0.9%
• U.S. NAHB Housing Market Index (Nov) 60 68
Tuesday,
November 20, 2018
• U.S. Housing Starts (MoM) (Oct) 1.5% -5.5%
• U.S. Building Permits (MoM) (Oct) -0.6% 1.7%
Wednesday,
November 21, 2018
• U.S. Durable Goods Orders (Oct P) -4.4% -0.1%
• Japan National Consumer Price Index (YoY) (Oct) 1.4% 1.2%
• Japan All Industry Activity Index (MoM) (Sep) -0.9% 0.4%
• U.K. Public Finances (PSNCR) (Pounds) (Oct) -3.3b 18.3b
• U.S. Initial Jobless Claims (Nov 17) 224k 221k
• U.S. Existing Home Sales (MoM) (Oct) 1.4% -3.4%
• U.S. University of Michigan Sentiment (Nov F) 97.5 98.3
Thursday,
November 22, 2018
• Japan Machine Tool Orders (YoY) (Oct F) -0.7% -1.1%
• Eurozone Consumer Confidence (Nov A) -3.9 -2.7
Friday,
November 23, 2018
• Germany Gross Domestic Product (YoY) (3Q F) 1.1% 1.1%
• Germany Markit/BME Composite PMI (Nov P) 52.2 53.4
• Eurozone Markit Composite PMI (Nov P) 52.4 53.1
• U.S. Markit Composite PMI (Nov P) 54.4 54.9
17
The Week Ahead
26
th
Nov to 30
th
Nov
18
The Week Ahead
Day Event
Monday,
Nov 26, 2018
• Japan Leading Index CI (Sep F)
• Eurozone German IFO Current Assessment (Nov)
Tuesday,
Nov 27, 2018
• Eurozone German Retail Sales (YoY) (Oct)
• U.S. House Price Index (MoM) (Sep)
• U.S. Consumer Confidence Index (Nov)
Wednesday,
Nov 28, 2018
• U.S. Advance Goods Trade Balance (Oct)
• U.S. Gross Domestic Product Annualized (QoQ) (3Q S)
• U.S. New Home Sales (MoM) (Oct)
Thursday,
Nov 29, 2018
• Eurozone German Unemployment Change (000's) (Nov)
• U.K. Mortgage Approvals (Oct)
• Eurozone German Consumer Price Index (YoY) (Nov P)
• U.S. PCE Core (YoY) (Oct)
Friday,
Nov 30, 2018
• India Index of Eight Core Industries (Oct)
• China Manufacturing PMI (Nov)
• Eurozone Unemployment Rate (Oct)
• Eurozone Consumer Price Index Estimate (YoY) (Nov)
• Japan Housing Starts (YoY) (Oct)
• Japan Consumer Confidence Index (Nov)
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19
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