News U Can Use
October 12, 2018
The Week that was…
8
th
October to 12
th
October
2
Indian Economy
• Government data showed that India’s Consumer Price Index (CPI)-based inflation or retail
inflation stood at 3.77% in Sep 2018 compared to 3.69% in Aug 2018 and 3.28% in Sep
2017. The Consumer Food Price Index stood at 0.51% in Sep 2018 compared to 0.29% in
the previous month and 1.25% in the same month of the previous year. The increase was
because of surge in prices of food and beverages to 1.08% in Sep 2018 from 0.85% in
Aug 2018. Inflation in pan, tobacco and intoxicants surged to 5.57% in Sep 2018 as
against 5.34% in Aug 2018. Inflation in fuel and light remained steady at 8.47% in Sep
2018 as against Aug 2018.
• Government data showed that the growth of Index of Industrial Production (IIP) slowed to
4.3% in Aug 2018 from a revised 6.5% (6.6% originally reported) in the previous month,
marking a 3-month low. In the year-ago period, IIP had grown 4.8%. For the period Apr to
Aug 2018, IIP grew 5.2% as against 2.3% in the same period of the previous year. The
manufacturing sector grew 4.6% in Aug 2018 as against a growth of 3.8% in the same
month of the previous year.
• According to a data released by the Society of Indian Automobile Manufacturers (SIAM),
passenger vehicle (PV) sales fell 5.61% to 2,92,658 units in Sep 2018 from 3,10,041 units
in Sep 2017. Domestic car sales also fell 5.57% to 1,97,124 units as against 2,08,742
units in Sep 2017. Meanwhile, the domestic passenger vehicle sales grew 6.88% to
17,44,305 units in the first half of FY19 as against 16,32,006 units in the first half of FY18.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 12-Oct-18 1 Week Return YTD Return
S&P BSE Sensex 34,733.58 1.04% 1.99%
Nifty 50 10,472.50 1.51% -0.55%
S&P BSE Mid-Cap 14,286.22 2.02% -19.84%
S&P BSE Small-Cap 14,159.43 2.31% -26.37%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
08-Oct-18 501 1,371 0.37
09-Oct-18 679 1,166 0.58
10-Oct-18 1,538 316 4.87
11-Oct-18 523 1,301 0.40
12-Oct-18 1,538 313 4.91
Source: NSE
• Indian equity markets closed in the
green for the week ended Oct 12,
2018, after posting weekly losses for
five consecutive weeks. Gains in the
domestic markets reflect easing of
crude oil prices. Global crude oil
prices fell over the week on worries
that slowing global growth prospect
could dent overall oil demand.
• Further, investors welcomed Reserve
Bank of India’s (RBI) announcement
of injecting Rs. 12,000 crore into the
system through purchase of
government bonds. Investor
sentiment improved on hopes that
this step would help in easing the
tight liquidity condition that has been
bothering investors after the financial
sector was rocked by a series of debt
defaults by a leading infrastructure
and finance company.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
22.52 25.33 30.64 -68.64
P/B
2.91 3.33 2.53 2.11
Dividend Yield
1.28 1.28 0.99 0.86
Source: BSE, NSE Value as on Oct 12
, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
20,419.7 2.23% -14.79%
S&P BSE Bankex
28,429.0 4.42% -6.05%
S&P BSE CD
18,733.8 0.40% -7.61%
S&P BSE CG
16,853.4 1.31% -8.42%
S&P BSE FMCG
10,973.2 0.94% -8.54%
S&P BSE HC
14,454.7 0.38% -9.27%
S&P BSE IT
14,299.1 -6.57% -9.19%
S&P BSE Metal
13,088.5 -0.45% -5.01%
S&P BSE Oil & Gas
13,276.5 9.33% -8.87%
Source: Thomson Reuters Eikon
*Value as on Oct 12, 2018
• On the BSE sectoral front, indices closed
on a positive note. S&P BSE Oil & Gas
stood as the major gainer followed by S&P
BSE Bankex. Oil & Gas sector gained
followed by easing global crude oil prices.
Gains in banking sector was no more a
surprise as investor sentiment improved
on RBI’s announcement to inject fund into
the system.
• Gains in auto sector reflected surge in
passenger vehicle sales in the first half of
FY19. However, it was partially offset as
the same fell for the month of Sep 2018.
Indian Derivatives Market Review
• Nifty Oct 2018 Futures settled at 10,486.55, a premium of 14.05 points, above the spot
closing of 10,472.50. The turnover on NSE’s Futures and Options segment stood at Rs.
53.31 lakh crore as against Rs. 47.47 lakh crore on Oct 5.
• The Put-Call ratio stood at 0.80 compared with the previous week’s close of 0.68.
• The Nifty Put-Call ratio stood at 1.21 against the previous week’s close of 1.07.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
6.42 6.41 6.45 5.84
91 Day T-Bill
6.89 6.93 7.00 6.08
7.80% 2021, (5 Yr GOI)
7.75 7.84 8.11 7.11
7.17% 2028, (10 Yr GOI)
7.98 8.02 8.13 7.47
Source: Thomson Reuters
Eikon
Value as on Oct 12, 2018
• Bond yields fell following the central
bank’s bond purchase worth Rs.
12,000 crore under open market
operation on Oct 11. Fall in global
crude oil prices over the week also
boosted market sentiments which
helped ease concerns of increase in
domestic inflationary pressures to
some extent.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) fell 4 bps to
close at 7.98% from the last week’s
close at 8.02%.
• RBI on Oct 11 conducted OMO
purchase auction of 8.27% GS 2020,
8.15% GS 2022, 7.35 % GS 2024,
8.15 % GS 2026 and 7.61% GS 2030
for notified amount of Rs. 12,000
crore, of which the entire amount was
accepted.
7.95
8.00
8.05
8.10
8-Oct 9-Oct 10-Oct 11-Oct 12-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 7.75 8.96 121
3 Year 7.90 8.91 101
5 Year 8.14 8.84 70
10 Year 8.14 9.03 89
Source: Thomson Reuters Eikon
Value as on Oct 12, 2018
• Yields on gilt securities fell across the
maturities by up to 12 bps barring 2, 15 and
19-year maturities which increased 1 bps
each.
• Corporate bond yields fell across the
maturities in the range of 5 bps to 9 bps
barring 2 to 4-year maturities which
increased in the range of 3 bps to 9 bps.
• Spread between AAA corporate bond and
gilt expanded across 2 to 4 years’ maturities
and 6-year paper in the range of 3 bps to 19
bps and contracted across the remaining
maturities by up to 7 bps.
-15
-5
5
6.39
7.21
8.02
8.84
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 12-Oct-18 05-Oct-18
Yield in %
Change in
bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The government could soon make changes to the Companies Act through an ordinance.
This is being done to encourage ease of doing business and corporate compliance and
speed up insolvency proceedings. The government could ease various penal provisions in
the Act and introduce measures to unblock National Company Law Tribunal (NCLT) and
special courts. The main aim is to decentralise power to regional directors and build an in-
house e-adjudication mechanism, which will free up the overburdened NCLT and special
courts.
• The Competition Commission of India (CCI) has amended the combination regulations in
relation to withdrawal and refiling of notices seeking approvals. This is being done to
provide faster clearance of merger and acquisition cases. In Jul 2018, the regulator had
invited comments for the amendments in the Competition Commission of India (Procedure
in regard to the transaction of business relating to combinations) Regulations.
• As per media reports, the Parliamentary Standing Committee on Health has decided to
examine the implementation of the government’s flagship health scheme – Ayushman
Bharat. On the other hand, the panel will also investigate the functioning of AIIMS and other
such institutions, and affordability of cancer and duchenne muscular dystrophy (DMD)
treatment.
Regulatory Updates in India (contd..)
• The Insurance Regulatory and Development Authority of India (IRDAI) is planning to allow
100% foreign direct investment in insurance intermediaries along with insurance brokers,
according to media reports. The regulator thinks that if insurance brokers can be allowed
then the other insurance intermediaries like aggregator and third-party administrators (TPA)
should also be considered for the same facility.
• IRDAI has stated that HIV-positive people cannot be deprived from issuing insurance,
unless there are any data provided by actuarial studies in support of such exclusion. The
regulator had made this mandatory after the HIV and AIDS (Prevention and Control) Act,
2017 came into force effective Sep 10, 2017. The Act prevents insurance companies from
exclude HIV-positive individuals. Way back in 2013, IRDAI had directed insurers through a
draft regulation to provide cover to HIV-positive patients. However, insurers had a grievance
regarding the pricing of the product due to unavailability of data. According to National AIDS
Control Organization, almost 2.14 million people were detected with HIV in India at the end
of 2017.
• The Unique Identification Authority of India (UIDAI) stated that the restricted use of Aadhaar
by the Supreme Court will have no impact on enrolment and update services being carried
out at banks, post offices and government premises. The service providers can still continue
the use of offline verification tools that leverage the unique ID without authentication.
9
Global News/Economy
• The International Monetary Fund (IMF) downgraded the global growth forecast for this year
and the next and attributed it to persisting concerns of a global trade war. IMF projected the
growth for the world economy at 3.7% for both years, less than the 3.9% predicted in Apr
2018 and in a Jul 2018 update. The growth forecast of U.S. for this year was retained at
2.9% while the growth projection for next year was trimmed to 2.5% from 2.7%. The growth
projection for China was left unchanged at 6.6% for this year, but the forecast for next year
was brought down to 6.2% from 6.4%. The growth outlook for the euro zone for 2018 was
lowered to 2% from 2.2% projected in Jul 2018 while the growth projection for the next year
was retained at 1.9%, same as that projected in Jul 2018. Growth forecast for U.K. for this
year and next were kept unchanged at 1.4% and 1.5%, respectively same as that of its
previous projection in Jul 2018.
• A report from the Labor Department showed that U.S. consumer price index inched up 0.1%
in Sep 2018 as against an increase of 0.2% in Aug 2018. Prices for shelter edged up by
0.2%. Also, prices for apparel, motor vehicle insurance, recreation, and airline fares also
rose. Meanwhile, energy prices fell 0.5% in Sep 2018 as against an increase of 1.9% in Aug
2018. Core consumer prices (excluding food and energy prices) also inched up 0.1% in Sep
2018.
• According to a preliminary report from the University of Michigan, U.S consumer sentiment
index surprisingly fell to 99.0 in Oct 2018 as against 100.1 in Sep 2018.
10
Global Equity Markets
11
Global Indices
Indices
12-Oct-18
1-Week
Return
YTD
Return
Dow Jones
25,339.99 -4.19% 2.51%
Nasdaq 100
7,157.21 -3.27% 11.89%
FTSE 100
6,995.91 -4.41% -9.00%
DAX Index
11,523.81 -4.86% -10.79%
Nikkei Average
22,694.66 -4.58% -0.31%
Straits Times
3,069.17 -4.38% -9.81%
Source: Thomson Reuters Eikon
Value as on Oct 12, 2018
U.S.
• U.S. markets ended the week on a
subdued note amid lingering concerns
as to what stance the U.S. Federal
Reserve may adopt regarding its
monetary policy moving forward.
• Meanwhile, escalating trade war
between the U.S. and China continued
to play spoilsport. The downturn was
restricted by bargain hunting witnessed
towards week-end.
Europe
• European markets fell over the week on concerns over slowing global economic growth
after the International Monetary Fund downgraded the global growth forecast for 2018 and
2019 owing to persisting concerns of a global trade war. Uncertainty as to what stance the
U.S. Federal Reserve may adopt regarding its monetary policy moving forward also
weighed on the market sentiment.
Asia
• Asian markets too were hit by trade tension between U.S. and China and concerns over
slowdown in global economic growth outlook. Meanwhile, data showing an unexpected
acceleration in Chinese exports in Sep 2018 despite escalating trade tensions with the
U.S. soothed investor nerves to some extent.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
fell 9 bps to close at 3.14% from the
previous close of 3.23%.
• U.S. Treasury prices surged on weaker-
than-expected rise in U.S. inflation for
Sep 2018 as it partially tempered
expectations of more aggressive
interest rate hikes by the U.S. Federal
Reserve. Steep losses in the Wall Street
amid uncertainty as to what stance the
U.S. Federal Reserve may adopt
moving forward also boosted the safe
haven appeal of U.S. Treasuries.
• However, stronger than expected
increase in U.S. producer prices and
U.S. import prices in Sep 2018 capped
the gains.
3.10
3.15
3.20
3.25
9-Oct 10-Oct 11-Oct 12-Oct
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($/Barrel) 81.05 85.16
Gold ($/Oz) 1,217.53 1,202.45
Gold (Rs/10 gm) 31,565 31,216
Silver ($/Oz) 14.55 14.59
Silver (Rs/Kg) 38,267 38,480
Source: Thomson Reuters
Eikon *Value as on Oct 12, 2018
Gold
• Gold prices rose on massive sell-off in
the international equity market and
concerns over global economic growth.
Concerns of the intensifying U.S.-China
trade war also boosted the safe haven
appeal of the yellow metal.
Crude
• Brent crude prices moved down on
worries over global growth prospects.
The escalating trade tension between
U.S. and China poses a threat to global
economic activities, which could dent
overall oil demand. However, losses
were restricted due to production cut by
U.S. oil and gas producers in the Gulf of
Mexico due to Hurricane Michael.
Baltic Dry Index
• The Baltic Dry Index grew 2.80% on the
back of improved capesize and
panamax activities.
9.65
10.05
10.45
10.85
12-Sep-18 22-Sep-18 2-Oct-18 12-Oct-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
- 4.83%
1.25%
- 0.27%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
73.80 73.58
Pound Sterling
97.65 95.89
Euro
85.55 84.70
100 JPY
65.67 64.59
Source: RBI Figures in INR , *Value as on Oct 12, 2018
Rupee
• The Indian rupee weakened against the
greenback amid concerns over the fiscal
deficit of the country.
Euro
• The euro rose against the greenback
after consumer price inflation in U.S. for
Sep 2018 came weaker than expected.
Pound
• The pound increased against the
greenback on reports that Britain and
European Union were making progress
in Brexit talks and an agreement would
be reached soon.
Yen
• The yen surged against the greenback
as its safe haven appeal improved on
concerns over global growth and political
turmoil in Europe after the International
Monetary Fund downgraded its global
growth forecasts for 2018 and 2019.
9.75
10.00
10.25
10.50
12-Sep-18 22-Sep-18 2-Oct-18 12-Oct-18
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
0.29%
1.84%
1.01%
1.67%
The Week that was…
8
th
October to 12
th
October
15
The Week that was (Oct 8 – Oct 12)
16
Date Events Present Value Previous Value
Monday,
October 8, 2018
• China Caixin Composite PMI (Sep)
52.1 52
• Germany Industrial Production (YoY) (Aug)
-0.1% 1.1%
• Japan Trade Balance
- BOP Basis (Yen) (Aug) -¥219.3b -¥1.0b
Tuesday,
October 9, 2018
• Germany Trade Balance (Aug)
17.2b 16.5b
• Japan Machine Orders (YoY) (Aug)
12.6% 13.9%
Wednesday,
October 10, 2018
• U.K. Trade Balance (Aug)
-£1274 -£572
• U.K. Industrial Production (YoY) (Aug)
1.3% 1.0%
• U.K. Gross Domestic Product (MoM) (Aug)
0.0% 0.4%
Thursday,
October 11, 2018
• U.S. Consumer Price Index (YoY) (Sep)
2.4% 2.7%
• U.S. Initial Jobless Claims (Oct 6)
214k 207k
Friday,
October 12, 2018
• India Consumer Price Index (Sep)
3.8% 3.7%
• India Index of Industrial Production (Aug)
4.3% 6.5%
• U.S. University of Michigan Sentiment (Oct P)
99 100.4
• China Trade Balance USD (Sep)
$31.69B $27.89B
• Japan Tertiary Industry Index (MoM) (Aug)
0.5% -0.1%
• Germany Consumer Price Index (YoY) (Sep F)
2.3% 2.3%
• Eurozone Industrial Production (YoY) (Aug)
0.9% 0.3%
17
The Week Ahead
15
th
October to 19
th
October
18
The Week Ahead
Day Event
Monday,
October 15, 2018
• Japan Industrial Production (YoY) (Aug F)
• U.S. Retail Sales Advance (MoM) (Sep)
• U.S. Business Inventories (Aug)
Tuesday,
October 16, 2018
• China Producer Price Index (YoY) (Sep)
• China Consumer Price Index (YoY) (Sep)
• Eurozone ZEW Survey (Economic Sentiment) (Oct)
• U.K. ILO Unemployment Rate 3Mths (Aug)
• U.S. Industrial Production (MoM) (Sep)
Wednesday,
October 17, 2018
• U.K. Consumer Price Index (YoY) (Sep)
• Eurozone Consumer Price Index (YoY) (Sep F)
• U.S. Housing Starts (MoM) (Sep)
Thursday,
October 18, 2018
• Japan National Consumer Price Index (YoY) (Sep)
• U.S. Initial Jobless Claims (Oct 13)
Friday,
October 19, 2018
• China Gross Domestic Product (YoY) (3Q)
• China Retail Sales (YoY) (Sep)
• China Industrial Production (YoY) (Sep)
• U.K. Public Sector Net Borrowing (Sep)
• U.S. Existing Home Sales (MoM) (Sep)
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19
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