The Week that was…
30
th
Sep to 04
th
Oct
2
Indian Economy
• The Monetary Policy Committee (MPC) lowered key policy repo rate by 25 bps from 5.40%
to 5.15% in its fourth bi-monthly monetary policy review. The key policy repo rate thus
stands at its lowest level in nine years. This is the fifth consecutive rate cut by the MPC in
this calendar year. MPC has thus lowered key policy repo rate by 135 bps in 2019. The
MPC retained its accommodative stance on the monetary policy and will continue to do as
long as it is necessary to revive growth with retail inflation remaining within its medium -
term target.
• Data from the Reserve Bank of India showed that India’s current account deficit (CAD)
widened to $14.3 billion (2.0% of GDP) in Q1FY20 from $ 4.6 billion (0.7% of GDP) in the
preceding quarter but narrowed from $15.8 billion (2.3% of GDP) in the same period of the
previous year. CAD contracted on a yearly basis primarily on account of higher invisible
receipts which stood at $31.9 billion in QYFY20 as compared with $ 29.9 billion in the
same period of the previous year.
• Government data showed that the growth of India’s eight infrastructure sectors contracted
0.5% in Aug 2019 compared to a growth of 2.7% in the previous month and 4.7% in the
same month of the previous year. The coal sector witnessed the maximum contraction of
8.6% followed by crude oil and cement sector which contracted 5.4% and 4.9%
respectively. Meanwhile, steel sector witnessed the maximum growth of 5.0% followed by
fertilizers and refinery products which grew 2.9% and 2.6% respectively.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 04-Oct-19 1 Week Return YTD Return
S&P BSE Sensex 37673.31 -2.96% 4.45%
Nifty 50 11174.75 -2.93% 2.87%
S&P BSE Mid-Cap 13713.79 -3.87% -11.17%
S&P BSE Small-Cap 12808.66 -3.92% -12.91%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
30-Sep-19 518 1369 0.38
01-Oct-19 389 1472 0.26
03-Oct-19 702 1133 0.62
04-Oct-19 671 1178 0.57
Source: NSE
• Indian equity markets closed on weak
note in the week ended Oct 04, 2019.
Indian equity markets fell as weak
macroeconomic data kept investors
under pressure. The country’s core
sectors contracted in Aug 2019 and
current account deficit widened in the
first quarter.
• Meanwhile, investors remained
cautious ahead of the Reserve Bank of
India's (RBI) monetary policy review
that was scheduled on Oct 4, 2019.
Though RBI cut its key policy rate by 25
basis points, investors got worried over
the economy as it slashed its growth
forecast for 2019-20 to 6.1% from
6.9%. The central bank stated that
domestic demand conditions remained
weak amid subdued prospects for
exports.
• Also, weak global cues kept the
domestic markets under pressure.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.43 25.75 25.85 40.14
P/B
2.83 3.44 2.30 1.72
Dividend Yield
1.23 1.34 1.18 1.13
Source: BSE, NSE Value as on
Oct 04, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
16571.7 -1.94% 8.74%
S&P BSE Bankex
31303.4 -7.34% 2.58%
S&P BSE CD
25450 -2.64% 13.26%
S&P BSE CG
18042.1 -3.53% 8.16%
S&P BSE FMCG
11501.3 -1.98% 5.63%
S&P BSE HC
12274.3 -3.30% -3.91%
S&P BSE IT
15482.2 1.11% -4.50%
S&P BSE Metal
8545.84 -6.44% 1.84%
S&P BSE Oil & Gas
14818.2 1.76% 14.37%
Source: Thomson Reuters Eikon
*
Value as on Oct 04, 2019
• S&P BSE Bankex was the major loser that
fell 7.34% followed by S&P BSE Metal that
fell 6.44%. RBI has initiated prompt
corrective action against a private bank due
to high level of bad loans, among other
things.
• S&P BSE Realty and S&P BSE Capital
Goods fell 5.37% and 3.53%, respectively.
However, S&P BSE Oil & Gas was the major
gainer and grew 1.76% followed by S&P BSE
IT that grew fell 1.11% amid weakness in
rupee that helped the export-oriented sector
to gain.
Indian Derivatives Market Review
• Nifty Oct 2019 Futures stood at 11,215.15, a premium of 40.40 points above the spot
closing of 11,174.75. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 56.40 lakh crore as against Rs. 83.70 lakh crore for the week to Sep 27.
• The Put-Call ratio stood at 0.88 compared with the previous week’s close of 0.91 .
• The Nifty Put-Call ratio stood at 0.97 against the previous week’s close of 1.19.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.19 5.24 5.35 6.13
91 Day T-Bill
5.24 5.41 5.41 6.22
07.32% 2024, (5 Yr GOI)
6.27 6.42 6.19 6.99
07.26% 2029, (10 Yr GOI)
6.69 6.74 6.55 7.35
Source: Thomson Reuters Eikon
Value as on Oct 04, 2019
• Bond yields lowered following the
announcement of 10-year note
auction, which lifted investor
sentiments. Fall in crude oil prices
also aided market sentiments. The
debt market also turned optimistic
after the country’s borrowing plan for
the Oct-Mar period came in line with
expectations.
• Yields fell further after the Monetary
Policy Committee announced 25
basis points rate cut in the meeting.
However, the gains were capped as
investors booked profits after the
policy announcement.
• Yield on the 10-year benchmark
paper (7.26% GS 2029) fell 5 bps to
6.69% compared with the previous
close of 6.74% after trading in a
range of 6.58% to 6.71%.
6.58
6.65
6.72
30-Sep 1-Oct 3-Oct 4-Oct
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 5.70 6.83 114
3 Year 6.11 7.31 120
5 Year 6.42 7.45 103
10 Year 6.79 8.02 123
Source: Thomson Reuters Eikon
Value as on Oct 04, 2019
• Yields on gilt securities fell across the
maturities in the range of 5 to 21 bps,
barring 2- & 11-year papers that increased 1
& 8 bps, respectively.
• Corporate bond yields plunged across the
curve in the range of 11 to 18 bps. Yield fell
the most on 1-year paper.
• Difference between the spread of AAA
corporate bond and gilt expanded on 1, 4-,
5- & 15-year papers by up to 8 bps while
remaining papers contracted by up to 11
bps. Spread fell the most on 10-year paper.
-24
-12
0
5.00
6.20
7.40
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 04-Oct-19 27-Sep-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Reserve bank of (RBI) relaxed lending-related restrictions for non-banking financial
service-micro finance institutions (NBFC-MFIs). The move comes after RBI took note of the
important role played by NBFC-MFIs in delivering credit to those who are at the bottom of
the economic pyramid. RBI increased the household income limit for NBFC-MFI borrowers
from the existing Rs. 1.00 lakh to Rs 1.25 lakh and from Rs 1.60 lakh to Rs. 2.00 lakhs for
rural areas and for urban/semi urban areas, respectively. The lending limit has also been
increased from Rs. 1.00 lakh to Rs. 1.25 lakh per eligible borrower.
• RBI has given approval to domestic banks to freely offer foreign exchange prices to non-
residents, out of their Indian books. This can be dome either by a domestic sales team or
through their overseas branches. In addition, RBI allowed rupee derivatives (with settlement
in foreign currency) to be traded in International Financial Services Centres (IFSCs). The
objective of the move is to incentivize the non-residents by giving them access to the
onshore foreign exchange market.
• RBI expanded the scope of non-interest-bearing Special Non-resident Rupee (SNRR)
Account by permitting persons resident outside India to open such accounts. The objective
of the move is to give a boost to the cross-border transactions in Indian rupee in respect of
external commercial borrowing trade credit, exports and imports. In addition, the move will
also help lower the exchange risk for those persons who are Indian residents. RBI also
removed the restriction on the tenure of SNRR account, which is currently 7 years for the
above-mentioned purposes.
Regulatory Updates in India (contd..)
9
• RBI announced the extension of the collateralized liquidity support on the National
Electronic Funds Transfer (NEFT) payment system to round the clock. Presently this facility
is available till 7.45 pm on working days. The objective of the move is to bring about smooth
settlement of the transactions in the accounts of the banks maintained with RBI.
• RBI has decided to set up an internal ombudsman scheme at the large non-bank pre-paid
payment instruments (PPIs) issuers. Large PPI issuers are those who have more than 10
million pre-paid payment instruments outstanding. The objective of the move is to
strengthen and improve the grievance redressal mechanism at the entity level itself.
• The Securities & Exchange Board of India (SEBI) has eased rules for buyback of shares by
listed companies, especially those with subsidiaries in the housing finance and non-banking
financial company segments. The repurchase of shares by listed companies is governed by
the Buyback Regulations of SEBI and the Companies Act.
• According to media report, the Insurance Regulatory and Development Authority of India
(IRDAI) is eyeing to develop a standard structure for title insurance, which is mandatory for
Real Estate (Regulation and Development) Act, 2016 (RERA)-registered projects. Title
insurance provides protection to developers and succeeding buyers of the property against
losses due to flaws in the title arising out of third-party challenges.
Global News/Economy
• Payroll processor ADP report showed private sector employment rose by slightly less than
expected in Sep 2019. ADP said private sector employment climbed by 135,000 jobs in Sep.
The report also showed a significant downward revision to the increase in private sector jobs
in Aug 2019 to 157,000 jobs from the originally reported 195,000 jobs.
• A Labor Department report showed U.S. employment increased by less than expected in
Sep 2019. The report also showed the unemployment rate unexpectedly dropped to a nearly
50-year low. Non-farm payroll employment rose by 136,000 jobs in Sep.
• Survey data from IHS Markit showed China's manufacturing sector expanded at the fastest
pace since early 2018 in Sep 2019 despite ongoing trade disputes with the U.S. The Caixin
factory Purchasing Managers' Index rose to 51.4 in Sep from 50.4 in Aug 2019.
• Survey data from IHS Markit showed seasonally adjusted CIPS UK Services Purchasing
Managers' Index, or PMI, fell to 49.5 in Sep 2019, from 50.6 in Aug 2019. British services
activity decreased in Sep for only the fifth time in over a decade and the overall private
sector shrunk for a second consecutive month, signaling that the economy may slip into
recession soon.
• Data from Eurostat showed euro zone retail sales recovered in Aug 2019 largely driven by
non-food product sales. Retail sales grew 0.3% MoM in Aug, reversing a 0.5% drop in Jul
2019. The rate of growth matched expectations.
10
Global Equity Markets
11
Global Indices
Indices
04-Oct-19
1-Week
Return
YTD
Return
Russell 3000
1289.27 0.50% 21.32%
Nasdaq 100
7754.10 0.94% 22.50%
FTSE 100
7155.38 -3.65% 6.35%
DAX Index
12012.81 -2.97% 13.77%
Nikkei Average
21410.20 -2.14% 6.97%
Straits Times
3078.36 -1.51% 0.31%
Source: Thomson Reuters Eikon
Value as on Oct 04, 2019
U.S.
• U.S. markets were mixed in the week
on the back of a mixed bunch of
economic data and rate cut
expectations from the U.S. Federal
Reserve. The country’s corporate sector
started the fourth quarter earnings
season tepidly, adding to growth
slowdown concerns. Upbeat Chinese
economic data supported sentiment.
Europe
• European markets lost in the period on weak economic data and U.S. imposing tariffs on
European Union imports. U.S. manufacturing data slipped to its worse in more than 10
years and German economic research institutes cut GDP growth forecasts for Europe’s
largest economy.
Asia
• Asian markets fell as weak manufacturing data from the U.S. and the eurozone led to
global growth concerns. Sentiment was hit on news that North Korea has fired a
submarine-launched ballistic missile. Losses were deepened after the U.S. announced
imposition of tariffs on $7.5 billion of goods from the European Union from Oct 18, 2019.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond fell 16 bps to 1.51% compared
with the previous week’s close of 1.67%.
• U.S. Treasury prices grew amid a slew
of key weak economic data. Signs of a
slowdown in U.S. manufacturing and
services resulted in recession fears.
U.S. manufacturing activity index fell to
its lowest level in a decade in Sep 2019
to 47.8 as trade tensions between U.S.
and China had been impacting business
conditions.
• Gains were extended as investor
confidence got weakened following
private sector jobs report wherein hiring
by U.S. private employers slowed in
Sep. This thereby boosted expectations
that the U.S. Federal Reserve will cut
interest rates in Oct 2019.
1.50
1.60
1.70
30-Sep 1-Oct 2-Oct 3-Oct 4-Oct
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel) 60.02 63.37
Gold ($/Oz) 1504.35 1496.56
Gold (Rs/10 gm) 38151 37481
Silver ($/Oz) 17.55 17.54
Silver (Rs/Kg) 45086 44604
Source: Thomson Reuters Eikon *Value as on Oct 04, 2019
Gold
• Gold prices rose after weaker-than-
expected hiring by U.S. private employers
in Sep 2019 stoked concerns of an
economic slowdown in the U.S. economy.
However, fears of an escalation in the
U.S.-China trade eased to some extent
initially during the week, thereby
restricting the gains.
Brent Crude
• Brent crude prices fell amid concerns of a
slowdown in global growth after China’s
official Purchasing Managers’ Index (PMI)
continued to remain below 50 in Sep 2019
which signified contraction. Losses were
extended on reports that Saudi Arabia has
restored capacity to 11.3 million barrels
per day (bpd).
Baltic Dry Index
• The Baltic Dry Index fell on the back of
declining capesize and panamax
activities.
8.50
10.00
11.50
4-Sep-19 19-Sep-19 4-Oct-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-5.29%
0.52%
0.03%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
70.87 70.84
Pound Sterling
87.52 87.33
EURO
77.78 77.32
100 Yen
66.36 65.71
Source: RBI Figures in INR , *
Value as on Oct 04, 2019
Rupee
• The rupee fell marginally against the
greenback following losses in the
domestic equity market. Dollar
purchases by a large corporate and
state-run bank added to the losses.
Euro
• The euro rose against the greenback
after U.S. private sector employment,
manufacturing and services activity
declined in Sep 2019.
Pound
• The pound rose against the greenback
on hopes that government’s latest Brexit
proposals could be a tolerable deal.
However, most gains erased after few
senior officials comment diminished the
possibility of last-minute deal.
Yen
• The yen rose against the greenback as
the latter weakened on concerns of an
economic slowdown in the U.S.
economy.
9.60
9.70
9.80
9.90
10.00
10.10
10.20
10.30
4-Sep-19 14-Sep-19 24-Sep-19 4-Oct-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
0.23%
0.05%
0.60%
0.99%
15
The Week that was…
30
th
Sep to 04
th
Oct
The Week that was (Sep 30 – Oct 04)
16
Date Events Present Value Previous Value
Monday,
September 30, 2019
• India Eight Core Industries (Aug) -0.5% 2.7%
• China Caixin Manufacturing PMI (Sep) 51.4 50.4
• U.K. Gross Domestic Product (QoQ) (Q2) -0.2% -0.2%
• Germany Harmonized Index of Consumer Prices (YoY) (Sep) P 1.2% 1.4%
• Japan Unemployment Rate (Aug) 2.2% 2.2%
Tuesday,
October 01, 2019
• U.K. Markit Manufacturing PMI (Sep) 48.3 47.4
• Eurozone Consumer Price Index (YoY) (Sep) P 0.9% 1.0%
• U.S. ISM Manufacturing PMI (Sep) 47.8 49.1
Wednesday,
October 02, 2019
• U.S. ADP Employment Change (Sep) 135K 157K
• U.K. Markit Construction PMI (Sep) 43.3 45.0
Thursday,
October 03, 2019
• Eurozone Markit PMI Composite (Sep) 50.1 50.4
• Germany Markit PMI Composite (Sep) 48.5 49.1
• U.K. Markit Services PMI (Sep) 49.5 50.6
• Eurozone Retail Sales (YoY) (Aug) 2.1% 2.2%
• U.S. ISM Non-Manufacturing PMI (Sep) 52.6 56.4
• U.S. Markit Services PMI (Sep) 50.9 50.9
Friday,
October 04, 2019
• U.S. Nonfarm Payrolls (Sep) 136K 168K
• U.S. Average Hourly Earnings (YoY) (Sep) 2.9% 3.2%
• U.S. Unemployment Rate (Sep) 3.5% 3.7%
• U.S Trade Balance (Aug) $-54.9B $-54.0B
17
The Week Ahead
07
th
Oct to 11
th
Oct
18
The Week Ahead
Day Event
Monday,
Oct 07, 2019
• Japan Leading Economic Index (Aug) P
• Germany Factory Orders s.a. (MoM) (Aug)
• Japan Overall Household Spending (YoY) (Aug)
Tuesday,
Oct 08, 2019
• China Caixin Services PMI (Sep)
• Germany Industrial Production s.a. (MoM) (Aug)
Wednesday,
Oct 09, 2019
• U.S. MBA Mortgage Applications (Oct 4)
• Japan Foreign Bond Investment (Oct 4)
Thursday,
Oct 10, 2019
• Germany Trade Balance s.a. (Aug)
• China FDI - Foreign Direct Investment (YTD) (YoY) (Sep)
• U.K. Manufacturing Production (YoY) (Aug)
• U.S. Consumer Price Index (YoY) (Sep)
Friday,
Oct 11, 2019
• Germany Harmonized Index of Consumer Prices (YoY) (Sep)
• U.S. Michigan Consumer Sentiment Index (Oct) P
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19
