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NEWS U CAN USE
Oct 18, 2019
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The Week that was…
14
th
Oct to 18
th
Oct
2
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Indian Economy
• Consumer price index-based inflation rate increased to 3.99% in Sep 2019 from an
upwardly revised 3.28% in Aug 2019 (3.21% originally reported) and 3.70% in Sep 2018.
Consumer Food Price Index increased to 5.11% in Sep from 2.99% in Aug and 0.51% in the
same period of the previous year.
• Government data showed that wholesale price index-based inflation (WPI) eased to 0.33%
in Sep 2019 compared with 1.08% in Aug 2019 and 5.22% in the same month of the
previous year. The rate of inflation for primary articles eased from 6.43% in Aug to 5.54%
in Sep. The rate of inflation for non-food articles eased from 4.76% in Aug to 2.18% in Sep.
• Government data showed that India’s trade deficit narrowed to $10.86 billion in Sep 2019
from $14.95 billion in the same period of the previous year. India’s trade deficit narrowed
as imports fell 13.85% to $36.89 billion in Sep 2019 while exports came down at a
comparatively slower rate of 6.57% to $26.03 billion in Sep 2019. Oil imports fell 18.33%
to $8.98 billion in Sep from $10.99 billion in the year-ago period.
• The International Monetary Fund (IMF) said India should go for further monetary policy
easing and broad-based structural reforms to reverse a cyclical demand slowdown. IMF cut
its growth projection for the country to 6.1% in FY20 from its Jul 2019 forecast of 7%. For
FY21, IMF downgraded the growth of the Indian economy to 7.0% from its Jul 2019
forecast of 7.2%.
3
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4
Domestic Equity Market Indices
Indices 18-Oct-19 1 Week Return YTD Return
S&P BSE Sensex
39,298.38 3.07% 8.96%
Nifty 50
11,661.85 3.16% 7.36%
S&P BSE Mid-Cap
14,420.25 4.64% -6.60%
S&P BSE Small-Cap
13,126.83 2.78% -10.74%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date
Advances
Declines
Advance/Decline Ratio
14-Oct-19 919 914 1.01
15-Oct-19 855 955 0.90
16-Oct-19 833 996 0.84
17-Oct-19 1,125 707 1.59
18-Oct-19 1,304 517 2.52
Source: NSE
• Indian equity markets closed on strong
note in the week ended Oct 18, 2019.
Finance minister hinting that more
stimulus measures could be on their
way to propel the economy, supported
sentiment. Further, investors’
expectation that the Reserve Bank of
India (RBI) might further cut rates
contributed to the upside.
• On the global front, strong global cues
after the U.K. and European Union
reached a new Brexit deal acted as a
positive catalyst. This to some extent
eased concerns over global economic
growth as uncertainty over Brexit deal
had been for a long time upsetting the
fabric of markets.
• However, back home, weak Index of
Industrial Production data for Aug 2019
capped the gains.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
27.51 26.94 26.97 41.43
P/B
2.94 3.60 2.39 1.77
Dividend Yield
1.17 1.28 1.13 1.11
Source: BSE, NSE Value as on Oct
18, 2019
Indian Equity Market
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5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
17,882.4 7.88% 13.41%
S&P BSE Bankex
32,900.6 3.68% 7.28%
S&P BSE CD
26,570.4 3.35% 10.63%
S&P BSE CG
18,583.4 3.02% 9.58%
S&P BSE FMCG
11,929.2 3.55% 8.89%
S&P BSE HC
12,635.1 3.97% -1.92%
S&P BSE IT
15,453.6 -0.08% -3.16%
S&P BSE Metal
9,147.0 5.09% 2.23%
S&P BSE Oil & Gas
15,314.1 4.75% 14.49%
Source: Thomson Reuters Eikon
*Value as on Oct 18, 2019
• S&P BSE Auto was the major gainer that
surged 7.88%. Brexit deal bores well for the
Britain-based luxury car subsidiary of an Indian
auto major. S&P BSE Metal and S&P BSE Oil &
Gas grew 5.09% and 4.75%, respectively.
• According to media reports, a Saudi energy
behemoth could evince interest in an Indian oil
major’s strategic sale which boosted the oil
sector. S&P BSE Healthcare and S&P BSE
Bankex grew 3.97% and 3.68%, respectively.
However, S&P BSE IT was the major loser that
fell 0.08%.
Indian Derivatives Market Review
• Nifty Oct 2019 Futures stood at 11,670.00, a premium of 8.15 points above the spot closing
of 11,661.85. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 63.87 lakh crore as against Rs. 18.16 lakh crore for the week to Oct 11.
• The Put-Call ratio stood at 0.81 compared with the previous week’s close of 0.90.
• The Nifty Put-Call ratio stood at 1.44 against the previous week’s close of 1.14.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.10 5.04 5.36 6.08
91 Day T-Bill
5.08 5.20 5.31 6.34
07.32% 2024, (5 Yr GOI)
6.29 6.32 6.29 7.25
07.26% 2029, (10 Yr GOI)
6.70 6.73 6.62 7.42
Source: Thomson Reuters Eikon Value as on Oct 18, 2019
• Bond yields fell as market participants
resorted to value buying. Besides,
hopes of further policy rate cuts also
supported the sentiments.
• However, the gains were restricted
following the release of the country’s
retail inflation data of 3.99% for Sep,
which is the highest since last year Jul.
Market participants also remained
wary on how the government will
manage covering the revenue shortfall
in a scenario where tax is consistently
declining. This led to selloff in the
bond market, dampening sentiments.
• Yield on the 10-year benchmark paper
(7.26% GS 2029) fell 3 bps to 6.70%
compared with the previous close of
6.73% after trading in a range of
6.64% to 6.74%.
Domestic Debt Market
6.55
6.65
6.75
14-Oct 15-Oct 16-Oct 17-Oct 18-Oct
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year
5.63 6.80 117
3 Year
6.02 7.25 123
5 Year
6.46 7.55 109
10 Year
6.80 8.15 135
Source: Thomson Reuters Eikon
Value as on Oct 18, 2019
• Yields on gilt securities fell across the
maturities by up to 10 bps barring 6 and
12-year paper which closed steady.
• Corporate bond yields fell across 2 to 7-
year maturities by up to 7 bps and
increased across the remaining maturities
in the range of 2 bps to 15 bps.
• Difference in spread between AAA
corporate bond and gilt contracted across
3 to 6-year maturities by 2 bps or 3 bps
and expanded across the remaining
maturities in the range of 2 bps to 23 bps.
Domestic Debt Market (Spread Analysis)
-15
-10
-5
0
4.80
6.30
7.80
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 18-Oct-19 11-Oct-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
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8
• As per media reports, Securities and Exchange Board of India (SEBI) approved the proposal
on graded exit load for liquid funds. The regulator communicated the same to the
Association of Mutual Funds in India (AMFI) in a letter. As per the revised structure, one-day
holding in liquid fund would attract an exit load of 0.007%, two-day would draw 0.0065% in
exit load, followed by 0.006%, 0.005% and so on till the seventh day.
• The Reserve Bank of India (RBI) has issued guidelines on 'on tap' authorisation of payment
systems, including minimum networth criteria for different players. This has been done to
encourage innovation and competition. In a circular, RBI said it has been decided to offer on-
tap authorisation for Bharat Bill Payment Operating Unit (BBPOU), Trade Receivables
Discounting System (TReDS) and White Label ATMs (WLAs). The payment system operators
should ensure interoperability among different retail payment systems. The authorisation
would be given based on merits of the proposal, and RBI's assessment of potential for
additional entities in that segment.
• SEBI has announced stricter disclosure standards for auditors in case of resignations. SEBI
said in a circular that if an auditor resigns within 45 days before the end of a quarter, they
would still need to issue a limited review or audit report for the said quarter. If the
resignation happens after 45 days before the end of the quarter, the auditor would need to
issue limited review for the said quarter as well as the next one. This comes in the wake of
listed companies witnessing a slew of auditor resignations in the past two years, sometimes
just few weeks ahead of the announcement of financial results.
Regulatory Updates in India
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9
• Media reports showed the government is looking into to raise threshold of Rs. 1 lakh
default to invoke the Insolvency and Bankruptcy Code (IBC) to reduce number of cases in
the NCLT. The banks should be looking at other choices for recovering loans before
invoking the IBC, especially in those cases where amount of bad loans is not that big, the
reports said.
• The government has started redrafting the proposed national industrial policy, which will
offer benefits in addition to what states provide. The government has constituted a
working group to prepare the new industrial policy to make India a manufacturing hub.
The working group will consult stakeholders, identify problems of industry and develop
solutions for short and medium term.
• The Prime Minister has made increasing livestock production into 'mission mode' in
achieving target of making India a $5 trillion economy by 2024. The Prime Minister held
meetings with livestock experts, top veterinary scientists and key officials of the Animal
Husbandry and Dairying Ministry, and launched three schemes, which can turn around the
growth story of millions of livestock farmers in India. The government has estimated that
in the next five years, livestock farmers will save losses worth Rs 2.50 lakh crore, and
increase their income four times, contributing a big share in India's GDP.
Regulatory Updates in India (contd..)
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• The International Monetary Fund said the global economy is set to expand at the slowest
pace in a decade in 2019 amid weak manufacturing momentum, and rising trade and
geopolitical tensions. The global lender cut the growth forecast for this year to 3% from
3.3% projected in Apr 2019 in its latest World Economic Outlook. The pace of growth this
year will be the lowest since 2008-09 global financial crisis, the report said. The projection
for 2020 was lowered to 3.4% from 3.6% forecast in Apr.
• A Labor Department report showed initial jobless claims in U.S. edged up to 214,000 in the
week ended Oct 12, 2019, an increase of 4,000 from the previous week's 210,000.
• A Federal Reserve report showed a bigger than expected drop in industrial production in
U.S. in Sep 2019. Industrial production fell 0.4% in Sep after climbing 0.8% in Aug 2019.
• Data from the U.S. Commerce Department showed the retail sales in the U.S. unexpectedly
decreased in Sep 2019. Retail sales fell 0.3% in Sep after climbing by an upwardly revised
0.6% in Aug 2019.
• Data from the General Administration of Customs showed China's exports declined more
than expected in Sep 2019, reflecting weak global growth and trade disputes with the U.S.
In dollar terms, exports fell 3.2% YoY in Sep 2019. This was bigger than the prior month's
1% fall.
10
Global News/Economy
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11
Global Indices
Indices
18-Oct-19
1-Week
Return
YTD
Return
Russell 3000 1,303.77 0.34% 22.68%
Nasdaq 100 7,868.49 0.31% 24.31%
FTSE 100 7,150.57 -1.33% 6.28%
DAX Index 12,633.60 0.97% 19.65%
Nikkei Average 22,492.68 3.18% 12.38%
Straits Times 3,114.16 0.01% 1.48%
Source: Thomson Reuters Eikon Value as on Oct 18, 2019
U.S.
• U.S. markets rose as the corporate
earnings season started strongly. A
multinational investment bank and
financial services behemoth’s third
quarter earnings for 2019 beat
expectations. Also, news emerged that
the European Union and the U.K. have
struck a deal on Brexit. However, Ù.S.
retail sales fell unexpectedly in Sep
2019 which added to recession fears
and capped the gains.
Europe
• European markets closed on a mixed note on the back of Brexit and U.S.-China trade
developments. A partial deal reached between U.S. and China could not earn investor
confidence. The initial optimism over the U.K. and European Union cracking a Brexit deal
was also neutralized to some extent when doubts appeared on the chances of the deal
clearing in the U.K. parliament.
Asia
• Asian markets rose following a good start to the U.S. earnings season and expectations
that U.K. and the European Union could strike a deal.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury bond
closed steady at 1.75% compared with
the previous week’s close.
• U.S. Treasury prices fell initially during
the week on reports that British and
European Union (EU) negotiators were
close to a deal for Britain to exit the
European Union.
• Most of the initial losses got neutralized
on worries whether U.S. and China will
reach a deal to end their prolonged
trade war which kept the investors
cautious, thereby boosting the safe
haven appeal of U.S. Treasuries.
• Further, weak U.S. retail sales data
wherein it fell for the first time in seven
months in Sep 2019 and China's weak
economic growth data for third quarter
2019 also helped in neutralizing the
losses.
Global Debt (U.S.)
1.74
1.76
1.78
15-Oct 16-Oct 17-Oct 18-Oct
Yields in %
US 10-Year Treasury Yield
Movement
Source: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel) 60.50 61.48
Gold ($/Oz) 1489.70 1489.45
Gold (Rs/10 gm) 38,241 38,154
Silver ($/Oz) 17.54 17.54
Silver (Rs/Kg) 45,203 45,257
Source: Thomson Reuters Eikon *Value as on Oct 18, 2019
Gold
• Gold prices were flat to marginally
higher following China’s GDP growth
data, which was the lowest in three
years in the quarter ended Sep 2019.
Hopes of rate cut by U.S. Federal
Reserve also boosted the prices of the
yellow metal.
Brent Crude
• Brent crude prices were down amid
uncertainty over a trade deal between
U.S. and China after officials on both
sides said much more work was needed.
However, the downside was limited as
both OPEC and the allied producers are
expected to curb supplies through Dec.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
Commodities Market
9.00
9.50
10.00
10.50
18-Sep-19 28-Sep-19 8-Oct-19 18-Oct-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
0.01%
-1.59%
-0.02%%
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
71.20 71.03
Pound Sterling
91.52 88.43
EURO
79.19 78.24
100 Yen
65.58 65.78
Source: RBI Figures in INR , *Value as on Oct 18, 2019
Rupee
• The Indian rupee fell for the third
consecutive week against the U.S. dollar
on fading optimism about the U.S.-China
trade deal which led to fears of a global
economic slowdown.
Euro
• Euro rose against the U.S dollar amid
reports that European Union and Britain
have struck a long-awaited Brexit deal.
Pound
• Pound rose against the U.S dollar amid
reports that European Union and Britain
have reached a long-awaited Brexit deal.
Yen
• The yen inched down against the
greenback amid reports that European
Union and Britain have struck a long-
awaited Brexit deal.
Currencies Markets
9.70
10.00
10.30
18-Sep-19 28-Sep-19 8-Oct-19 18-Oct-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of
INR)
Rebased to 10
Currency Movement
3.49%
0.24%
- 0.30%
1.21%
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15
The Week that was…
14
th
Oct to 18
th
Oct
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16
The Week that was (Oct 14 –Oct 18)
Date Events Present Value Previous Value
Monday,
October 14, 2019
• China Exports (YoY) (Sep)
-3.20% -1.00%
• China Imports (YoY) (Sep)
-8.50% -5.60%
• Euro Zone Industrial Production w.d.a. (YoY) (Aug)
-2.80% -2.10%
• Germany Wholesale Price Index (YoY) (Sep)
-1.90% -1.10%
Tuesday,
October 15, 2019
• China Consumer Price Index (YoY) (Sep)
3.00% 2.80%
• U.K. ILO Unemployment Rate (3M) (Aug)
3.90% 3.80%
• Germany ZEW Survey
- Economic Sentiment (Oct) -22.80 -22.50
Wednesday,
October 16, 2019
• U.K. Consumer Price Index (YoY) (Sep)
1.70% 1.70%
• U.S. Retail Sales (MoM) (Sep)
-0.30% 0.60%
Thursday,
October 17, 2019
• U.S. Housing Starts Change (MoM) (Sep)
-9.40% 15.10%
• U.S. Building Permits Change (MoM) (Sep)
-2.70% 8.20%
• U.S. Initial Jobless Claims (Oct 11)
214K 210K
• U.S. Industrial Production (MoM) (Sep)
-0.40% 0.80%
• U.K. Retail Sales (MoM) (Sep)
0.00% -0.30%
• Japan National Consumer Price Index (YoY) (Sep)
0.20% 0.30%
Friday,
October 18, 2019
• China Gross Domestic Product (YoY) (Q3)
6.00% 6.20%
• China Gross Domestic Product (QoQ) (Q3)
1.50% 1.60%
• China Retail Sales (YoY)
7.80% 7.50%
• China Industrial Production (YoY)
5.80% 4.40%
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17
The Week Ahead
21
st
Oct to 25
th
Oct
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18
Day Event
Monday,
Oct 21, 2019
• China PBoC Interest Rate Decision
• China House Price Index (Sep)
• Germany Producer Price Index (MoM) (Sep)
Tuesday,
Oct 22, 2019
• U.S. Existing Home Sales Change (MoM) (Sep)
• U.S. API Weekly Crude Oil Stock (Oct 18)
• U.K. Public Sector Net Borrowing (Sep)
Wednesday,
Oct 23, 2019
• U.S. Housing Price Index (MoM) (Aug)
• Euro Zone Consumer Confidence (Oct) Preliminary
• EIA Crude Oil Stocks Change (Oct 18)
Thursday,
Oct 24, 2019
• ECB Monetary Policy Review
• U.S. New Home Sales Change (MoM) (Sep)
• U.S. Durable Goods Orders (Sep)
• U.S. Initial Jobless Claims (Oct 18)
Friday,
Oct 25, 2019
• Germany Gfk Consumer Confidence Survey (Nov)
• U.S. Michigan Consumer Sentiment Index (Oct)
• U.S. Baker Hughes US Oil Rig Count
The Week Ahead
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