News U Can Use
October 19, 2018
The Week that was…
15
th
October to 19
th
October
2
Indian Economy
• India’s Wholesale Price Index-based inflation (WPI) increased to 5.13% in Sep 2018 from
4.53% in Aug 2018 and 3.14% in Sep 2017. Inflation in potato increased 80.13% as
against an increase of 71.89% in Aug 2018. Inflation in wheat and cereals increased to
8.87% and 5.54% from 8.39% and 5.05%, respectively. The WPI Food Index came in at
0.14% in Sep from -2.25% in Aug 2018.
• India’s trade deficit in Sep 2018 fell to $13.98 billion as against $17.39 billion in Aug 2018.
Exports decreased 2.15% while imports increased 10.45%. For the six months ended Sep
2018, trade deficit stood at $94.32 billion, exports rose 12.54% and imports increased
16.16%.
• India has imposed anti-dumping duties of up to $185.51 per tonne for five years on
particular varieties of Chinese steel. The step has been taken to protect domestic players
from cheap imports from China. The revenue department put the duty after receiving
recommendations of the Directorate General of Trade Remedies (DGTR). Leading steel
companies had jointly filed an application before DGTR for investigations and levying of
anti-dumping duties. DGTR noted that imports of 'straight length bars and rods of alloy
steel' from China have gone up in absolute terms during 2016-17. It said goods have been
exported to India below normal value, which has hurt the domestic industry.
• According to a United Nations report, India attracted $22 billion foreign direct investment
(FDI) in the first half of 2018. Global FDI declined 41% in the same period because of tax
reforms carried out by the U.S. administration. The report said India just about managed to
find a place in the top 10 host economies receiving the most FDI during the period.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
19-Oct-18
1 Week Return
YTD Return
S&P BSE Sensex
34315.63 -1.20% 0.76%
Nifty 50
10303.55 -1.61% -2.16%
S&P BSE Mid
-Cap 14058.3 -1.60% -21.12%
S&P BSE Small
-Cap 14082.92 -0.54% -26.77%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
15-Oct-18 1251 582 2.15
16-Oct-18 1333 491 2.71
17-Oct-18 406 1425 0.28
19-Oct-18 513 1302 0.39
Source: NSE
• Indian equity markets resumed
weekly decline, after posting gains in
the last week. Weakness in non-
banking financial companies (NBFCs)
on concerns of overall credit growth
due to the liquidity crisis weighed on
the indices. Investors are worried that
the stress in the real estate sector
can deteriorate the asset quality of
these lenders.
• Surge in crude oil prices following
indication of increasing demand in
China, the world's second-biggest oil
consumer, added to the losses.
Reports that the Reserve Bank of
India has rejected the request of one
of the leading private sector banks for
extending the term of MD & CEO and
reaffirmed the deadline of Feb 2019
for finding his successor weighed on
the indices.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
22.03 24.83 29.89 -68.81
P/B
2.86 3.27 2.46 2.08
Dividend Yield
1.30 1.30 1.02 0.87
Source: BSE, NSE Value as on
Oct 19,
2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
19572.5
-4.15%
-16.90%
28042.3
-1.36%
-5.35%
18246.2
-2.60%
-9.79%
16644.8
-1.24%
-8.39%
11184.3 1.92% -5.97%
14549.6 0.66% -8.22%
14295.7
-0.02%
-8.59%
12816.4
-2.08%
-8.55%
13147.8
-0.97%
-11.32%
Source: Thomson Reuters Eikon
*Value as on Oct 19, 2018
• On the BSE sectoral front, indices closed
on a negative note. S&P BSE Auto was the
major loser that fell 4.15% followed by
S&P BSE Consumer Durables that fell
2.60%. Concerns over lower sales in this
festive season amid fears of rising
insurance costs and lower liquidity from
NBFCs kept the auto sector under
pressure.
• S&P BSE Realty and S&P BSE Metal
plunged 2.22% and 2.08%, respectively.
The realty sector was hit following reports
that long term fund-based facilities of a
leading real-estate developer was cut to D
from BB-.
Indian Derivatives Market Review
• Nifty Oct 2018 Futures settled at 10,303.20, a discount of 0.35 points, below the spot
closing of 10,303.55. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 44.07 lakh crore as against Rs. 53.31 lakh crore for the week to Oct 12.
• The Put-Call ratio stood at 0.83 compared with the previous week’s close of 0.80.
• The Nifty Put-Call ratio stood at 1.07 against the previous week’s close of 1.21.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
6.55 6.42 6.60 5.93
91 Day T
-Bill
6.95 6.89 7.07 6.12
7.80% 2021, (5
Yr GOI)
7.73 7.75 8.02 7.25
7.17% 2028, (10
Yr GOI)
7.92 7.98 8.07 7.63
Source: Thomson Reuters
Eikon
Value as on Oct 19, 2018
• Bond yields fell on easing consumer
inflation in Sep 2018, which is lower
than the central bank’s expectation of
4%. Yields further declined following
decline in crude oil prices and rise in
rupee. All these factors alleviated
inflationary concerns and worries
over hike in interest rates, thus lifting
the market sentiment.
• However, gains retreated to some
extent as market participants booked
profits following recent rise in bond
prices and fresh supply of
government securities through weekly
auction.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) fell 6 bps to
close at 7.92% from the last week’s
close at 7.98%, after trading in a
range of 7.86% to 7.98%.
7.70
7.85
8.00
15-Oct 16-Oct 17-Oct 19-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 7.63 8.94 132
3 Year 7.88 8.92 104
5 Year 8.06 8.84 78
10 Year 8.08 8.92 84
Source: Thomson Reuters Eikon
Value as on Oct 19, 2018
• Yields on gilt securities increased 1 bps
each on 2- and 6-year maturity. Yield fell
on remaining maturities in the range of 2
to 10 bps barring 15-year that was flat.
• Corporate bond yields fell across papers
in the range of 2 to 8 bps barring 4- and
5-year, which rose 1 bps each.
• Difference in spread between AAA
corporate bond and gilt witnessed a
mixed trend. It expanded the most by 7
bps on 4- and 5-year papers, contracted
the most by 4 bps on 2-year maturity and
closed steady on 3-year maturity.
-10
-5
0
5
10
6.50
7.00
7.50
8.00
8.50
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 19-Oct-18 12-Oct-18
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Reserve Bank of India (RBI) announced more steps to increase liquidity flows to non-
banking financial companies (NBFCs). RBI has permitted banks to use government
securities equal to their incremental outstanding credit to NBFCs, over and above their
outstanding credit to them as on Oct 19, 2018, to meet liquidity coverage ratio
requirements. NBFCs have come under pressure after a series of defaults by a leading
infrastructure and finance company.
• RBI released operational guidelines to facilitate payments among prepaid instruments (PPI)
such as mobile wallets. The move aims at promoting digital transactions. Besides
elaborating the needs to achieve the inter-operability for mobile wallets and cards, the
guidelines elaborates the norms for customer protection and grievance redressal. According
to the guidelines, inter-operability among mobile wallets, and between bank account and e-
wallet would be enabled through the Unified Payments Interface (UPI) system. Meanwhile,
if the PPIs are issued in the form of cards, the cards shall be affiliated to the authorised card
networks.
• The finance ministry announced that businesses that choose for composition scheme under
goods and services tax (GST) are not required to file details of purchases made from their
vendors while filing quarterly return GSTR-4. It stated that in the absence of auto-population
of the details of inward supplies received from registered suppliers, there have been doubts
regarding the manner of filing the quarterly return by composition dealers in Form GSTR-4.
Regulatory Updates in India (contd..)
• The Securities and Exchange Board of India (SEBI) issued a framework to bring uniformity
in the procedure for obtaining samples of agricultural commodities at the exchange
accredited warehouses. The decision comes as the market regulator noted that different
approaches were being followed by the exchanges. The exchanges and clearing
corporations have been asked by the regulator to make sure that enough samples are
collected from the goods deposited and are sealed in the presence of the depositor or
authorised representative.
• According to media reports, SEBI is planning to relax rules for listing of startups in India.
The rules would include giving promoters the flexibility to categorise themselves as ordinary
shareholders and exempting them from the obligatory three-year lock-in period. Also, they
would get freedom from the fiduciary responsibilities of a promoter.
• The government is planning to strip Employees’ Provident Fund Organisation (EPFO) and
Employees’ State Insurance Corporation (ESIC) of the power to manage social security
corpus of nearly 10 crore employees. The labour ministry is pushing for setting up social
security boards in states as single point contacts under the proposed labour code on social
security. According to the labour ministry, EPFO and ESIC will not be able to accommodate
the massively increased workload. Besides creating a single window system for social
security benefits at state level, the announcement comes as a part of a move to increase
the number of subscribers fivefold.
9
Global News/Economy
• According to minutes of U.S. Federal Reserve’s latest monetary policy meeting, the
members of central bank continued to favour a "gradual approach" in increasing interest
rates. The minutes also mentioned that the labour market had continued to strengthen and
economic activity had been rising at a strong rate.
• Survey data from the Centre for European Economic Research showed that Germany's
economic confidence weakened in Oct 2018. The economic sentiment index fell sharply by
14.1 points to -24.7 in Oct, worse than expected. The indicator for the current economic
situation dropped 5.9 points to 70.1 and this was well below the expected 74.4 level. The
economic confidence index for the euro zone dropped 12.2 points to -19.4 in Oct 2018.
• Consumer price inflation in the U.K. fell to 2.4% YoY in Sep 2018 from 2.7% in Aug 2018.
Core inflation that excludes energy, food, alcoholic beverages and tobacco, also fell to 1.9%
from 2.1% in Aug 2018.
• China's consumer price inflation rose to a 7-month high in Sep 2018. Consumer prices grew
2.5% on a yearly basis in Sep 2018 which was in line with expectations but faster than the
2.3% rise in Aug 2018. This was the highest increase since Feb 2017. On a monthly basis,
consumer price inflation held steady at 0.7% in Sep 2018.
• China's economy grew at the slowest pace since 2009, the time of the global financial crisis.
Data reflected softening activity across manufacturing and investment as trade tensions
escalate amid government's measures to control excessive lending. Gross domestic product
expanded 6.5% YoY in the third quarter, which is slower than 6.7% growth seen in the
second quarter and market expectations.
10
Global Equity Markets
11
Global Indices
Indices
19-Oct-18
1-Week
Return
YTD
Return
Dow Jones
25444.34 0.41% 2.93%
Nasdaq 100
7107.23 -0.70% 11.11%
FTSE 100
7049.8 0.77% -8.30%
DAX Index
11553.83 0.26% -10.56%
Nikkei Average
22532.08 -0.72% -1.02%
Straits Times
3062.51 -0.22% -10.00%
Source: Thomson Reuters
Eikon
Value as on Oct 19, 2018
U.S.
• U.S. markets edged higher supported
by upbeat earnings numbers from
several big companies for the third
quarter of 2018.
• However, lingering concerns over the
interest rate outlook restricted gains with
minutes of Fed’s latest meeting showing
that the policy makers are in favour of
gradual approach to raising interest
rates and believe the economy is
evolving as anticipated.
Europe
• European markets inched up on upbeat earnings reports from major companies for the
third quarter of 2018. Investor sentiment found additional support after European
Commissioner for Economic and Financial Affairs, Taxation and Customs said he wanted
to reduce ongoing tensions between Brussels and Rome over budget stand-off.
Asia
• Asian markets ended the week on a subdued note following concerns over foreign fund
outflow as minutes of the Fed's latest monetary policy meeting showed broad consensus
over further interest rate hikes on the back of robust economic growth and strong labour
market conditions. Sentiment dampened further after data released by China showed that
the country's GDP growth for the third quarter came in below market expectations.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
rose 6 bps to close at 3.20% from the
previous close of 3.14%.
• U.S. Treasury prices fell earlier during
the week following upbeat U.S.
consumer spending data for Sep 2018
which boosted the outlook of growth
prospects of the U.S. economy. Losses
were extended after minutes from the
U.S. Federal Reserve’s Sep meeting
increased the possibility of further rate
hikes by the U.S. central bank.
• U.S. Treasury prices fell further after
some U.S. companies came out with
strong corporate earnings for the
quarter ended Sep 2018. However,
concerns over geopolitical risks and
escalating trade tensions between U.S.
and China restricted further losses.
3.12
3.14
3.16
3.18
3.20
3.22
15-Oct 16-Oct 17-Oct 18-Oct 19-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)
81.17 81.05
Gold ($/Oz)
1225.86 1217.53
Gold (Rs/10 gm)
31706 31565
Silver ($/Oz)
14.59 14.55
Silver (Rs/Kg)
38248 38267
Source: Thomson Reuters
Eikon *Value as on Oct 19, 2018
Gold
• Gold prices traded higher as the safe-
haven appeal of the bullion rose amid
recent geopolitical events and
macroeconomic factors. U.S.-China
trade war concerns and tension over the
disappearance of a prominent Saudi
journalist helped to offset concerns
raised by the minutes of U.S. Fed’s
latest policy meeting.
Crude
• Brent crude traded higher following
indication of surging demand in China,
the world's second-biggest oil
consumer. Refinery throughput in China
surged to 12.49 million bpd in Sep 2018.
However, concerns that China's trade
war with the U.S. would limit oil demand
restricted the gains.
Baltic Dry Index
• The Baltic Dry Index fell 0.89% on the
back of lower capesize and panamax
activities.
9.80
10.00
10.20
10.40
10.60
10.80
11.00
19-Sep-18 29-Sep-18 9-Oct-18 19-Oct-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
0.15%
0.68%
0.29%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
73.44 73.80
Pound Sterling
95.65 97.65
EURO
84.17 85.55
100 JPY
65.27 65.67
Source: RBI Figures in INR , *
Value as on Oct 19, 2018
Rupee
• The Indian rupee rose against the
greenback after India’s trade deficit
narrowed to a five-month low in Sep
2018 and selling of the greenback by
exporters.
Euro
• The euro fell against the greenback after
minutes from the U.S. Federal Reserve’s
Sep meeting increased the possibility of
further rate hikes by the U.S. central
bank.
Pound
• The pound fell against the greenback
after inflation in Britain fell more than
expected in Sep 2018.
Yen
• The yen weakened against the
greenback after minutes from the U.S.
Federal Reserve’s Sep meeting
increased the possibility of further rate
hikes by the U.S. central bank.
9.80
9.90
10.00
10.10
10.20
10.30
19-Sep-18 29-Sep-18 9-Oct-18 19-Oct-18
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-0.49%
-2.05%
-1.61%
-0.61%
15
The Week that was…
15
th
Oct to 19
th
Oct
The Week that was (Oct 15 – Oct 19)
16
Date Events
Present Value
Previous Value
Monday,
October 15, 2018
•
India Wholesale Price Index (Sep) 5.13% 4.53%
•
India Trade Deficit (Sep) 13.98b 17.39b
•
U.S. Retail Sales Advance (MoM) (Sep) 0.10% 0.10%
Tuesday,
October 16, 2018
•
China Consumer Price Index (YoY) (Sep) 2.50% 2.30%
•
Germany ZEW Survey Expectations (Oct) -24.70 -10.60
•
U.S. Industrial Production (MoM) (Sep) 0.30% 0.40%
Wednesday,
October 17, 2018
•
U.K. Consumer Price Index (YoY) (Sep) 2.40% 2.70%
•
U.K. House Price Index (YoY) (Aug) 3.20% 3.40%
•
Eurozone Consumer Price Index (YoY) (Sep F) 2.10% 2.00%
•
U.S. Housing Starts (MoM) (Sep) -5.30% 7.10%
•
Japan Trade Balance (Sep) ¥139.6b -¥444.6b
Thursday,
October 18, 2018
•
Japan National Consumer Price Index (YoY) (Sep) 1.20% 1.30%
•
U.K. Retail Sales Ex Auto Fuel (YoY) (Sep) 3.20% 3.60%
•
U.S. Initial Jobless Claims (Oct 13) 210k 215k
•
U.S. Leading Index (Sep) 0.50% 0.40%
Friday,
October 19, 2018
•
China Gross Domestic Product (YoY) (3Q) 6.50% 6.70%
•
China Retail Sales (YoY) (Sep) 9.20% 9.00%
•
China Industrial Production (YoY) (Sep) 5.80% 6.10%
17
The Week Ahead
22
nd
Oct to 26
th
Oct
18
The Week Ahead
Day Event
Monday,
Oct 22, 2018
•
Japan All Industry Activity Index (MoM) (Aug)
Tuesday,
Oct 23, 2018
•
Eurozone Consumer Confidence (Oct A)
•
Japan Nikkei Manufacturing PMI (Oct P)
Wednesday,
Oct 24, 2018
•
Germany Markit/BME Composite PMI (Oct P)
•
Eurozone Markit Composite PMI (Oct P)
•
U.S. MBA Mortgage Applications (Oct 19)
•
U.S. House Price Index (MoM) (Aug)
•
U.S. Markit Composite PMI (Oct P)
•
U.S. New Home Sales (MoM) (Sep)
Thursday,
Oct 25, 2018
•
European Central Bank Rate Decision (Oct 25)
•
U.S. Advance Goods Trade Balance (Sep)
•
Germany GfK Consumer Confidence (NOV)
•
U.S. Wholesale Inventories (MoM) (Sep P)
•
U.S. Initial Jobless Claims (Oct 20)
•
U.S. Pending Home Sales (YoY) (Sep)
Friday,
Oct 26, 2018
•
U.S. Gross Domestic Product Annualized (QoQ) (3Q A)
•
U.S. University of Michigan Sentiment (Oct F)
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19
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