2
The Week that was…
09
th
September to 13
th
September
Indian Economy
• Government data released showed Index of Industrial production (IIP) grew 4.3% YoY in
Jul 2019, slower than 6.5% in Jul 2018. Manufacturing grew 4.2% in Jul 2019, much
slower than 7.0%, a year ago. From Apr to Jul 2019, IIP grew eased to 3.3% YoY from
5.4% recorded in the corresponding period last year. USE-based classification showed,
consumer durables output dropped 2.7% YoY in Jul 2019 compared to 14.1% rise, a year
ago while primary goods output almost halved to 3.5% from 6.8% in the similar period.
• Consumer price index-based inflation rate touched 10-month high to 3.21% YoY in Aug
2019 from 3.15% in Jul 2019. However, inflation eased from 3.69% YoY, recorded a year
ago. Sequential rise in inflation was due to acceleration in consumer food inflation price
index that rose to 2.99% YoY from 2.36% in the similar period.
• According to media reports, sales of cars and SUVs in India declined for the 10th straight
month in Aug 2019. Deliveries fell 41% from a year earlier to 115,957 units, data released
by the Society of Indian Automobile Manufacturers (SIAM) showed, said the reports. Truck
and bus sales dropped 39%. Domestic passenger vehicle sales fell for the 10th straight
month in Aug by 31.57% to 1,96,524 units from 2,87,198 units in the year-ago period.
• The oil minister said the country’s energy demand is projected to grow 4.2% through 2035,
which is an expansion faster than all major economies of the world. He said the share of
world’s third-largest energy consumer in total global primary energy demand is set to
double to 11% by 2040.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
13
-Sep-
19
1 Week Return
YTD Return
S&P BSE Sensex
37,384.99 1.09% 3.65%
Nifty 50
11,075.90 1.18% 1.96%
S&P BSE Mid
-Cap 13,665.59 2.25% -11.48%
S&P BSE Small
-
Cap
13,013.05 3.32% -11.52%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline
Ratio
09-Sep-19 1,187 639 1.86
11-Sep-19 1,378 484 2.85
12-Sep-19 990 871 1.14
13-Sep-19 1,157 678 1.71
Source: NSE
• Indian equity markets closed on positive
note in the week ended Sep 13, 2019.
Finance minister reassuring that the
government will take additional measures
to revive economic growth boosted
market sentiment. Gains were extended
on hopes of another rate cut by the
Reserve Bank of India (RBI) in the next
month's monetary policy meeting amid
retail inflation data for Aug that came in
below the central bank’s 4% medium-
term target.
• On the global front, investor sentiment
got a major boost as signs of progress in
U.S. and China trade talks and
aggressive stimulus from the European
Central Bank (ECB) helped to calm
worries of a global economic slowdown.
• Back home, surge in crude oil prices
restricted the gains.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.42 27.23 35.78 35.22
P/B
2.84 3.36 2.34 1.87
Dividend Yield
1.23 1.39 1.03 1.06
Source: BSE, NSE Value as on Sep 13, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
16,541.7 3.65% 7.15%
S&P BSE
Bankex
31,681.2 3.40% 1.09%
S&P BSE CD
23,587.3 2.91% 4.59%
S&P BSE CG
17,422.5 2.71% 4.03%
S&P BSE FMCG
10,884.0
-0.09%
0.12%
S&P BSE HC
13,022.7 0.54% 3.54%
S&P BSE IT
15,968.6
-1.75%
3.01%
S&P BSE Metal
9,093.6 3.83% 3.97%
S&P BSE Oil & Gas
13,639.3 2.01% 4.86%
S&P BSE Realty
2,059.1 5.64% 1.55%
Source: Thomson Reuters Eikon
*Value as on Sep 13, 2019
• S&P BSE Realty was the major gainer that
grew 5.64% followed by S&P BSE Metal that
grew 3.83%. A government official has
reportedly stated that the finance minister
may make some announcement for the real
estate sector soon to help it come out of its
present tight liquidity situation.
• S&P BSE Auto and S&P BSE Bankex grew
3.65% and 3.40%, respectively. S&P BSE
Consumer Durables and S&P BSE Capital
Goods grew 2.91% and 2.71%, respectively.
However, S&P BSE IT was the major loser
and fell 1.75% followed by S&P BSE FMCG
that fell 0.09%.
Indian Derivatives Market Review
• Nifty Sep 2019 Futures stood at 11,105.55, a premium of 29.65 points above the spot
closing of 11,075.90. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 54.40 lakh crore as against Rs. 66.55 lakh crore for the week to Sep 6.
• The Put-Call ratio stood at 0.94 compared with the previous week’s close of 0.86 .
• The Nifty Put-Call ratio stood at 1.34 against the previous week’s close of 1.31.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
5.29 5.37 5.31 6.17
91 Day T
-Bill
5.33 5.32 5.43 6.41
07.32% 2024, (5 Yr GOI)
6.28 6.23 6.29 7.05
07.26% 2029, (10 Yr GOI)
6.64 6.60 6.53 7.38
Source: Thomson Reuters Eikon
Value as on Sep 13, 2019
• Bond yields rose after a steep rise in
the U.S. Treasury yields and surge in
crude oil prices. Besides, concerns
over widening fiscal deficit in the
domestic market continued to weigh
over market sentiments.
• However, majority of the losses
retreated on rising expectations of
policy rate cuts by the Monetary
Policy Committee, particularly after
the release of Aug inflation data.
Market participants also resorted to
buying notes to capitalize on the fall
in prices.
• Yield on the 10-year benchmark
paper (7.26% GS 2029) rose 4 bps to
6.64% compared with the previous
close of 6.60% after trading in a
range of 6.56% to 6.71%.
6.00
6.40
6.80
9-Sep 11-Sep 12-Sep 13-Sep
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 5.79 7.37 158
3 Year 6.13 7.46 133
5 Year 6.46 7.52 107
10 Year 6.74 8.14 140
Source: Thomson Reuters Eikon
Value as on Sep 13, 2019
• Yields on gilt securities increased across the
maturities in the range of 2 bps to 8 bps
barring 2-year paper which fell 1 bps.
• Corporate bond yields increased across the
maturities in the range of 2 bps to 41 bps
barring 1-year paper and 6 to 8-year
maturities which fell in the range of 5 bps to 8
bps.
• Difference in spread between AAA corporate
bond and gilt contracted on 1-year paper and
5 to 7-year maturities in the range of 4 bps to
15 bps while it expanded across the
remaining maturities in the range of 6 bps to
38 bps.
-5
1
7
5.00
6.30
7.60
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 13-Sep-19 06-Sep-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Employees Provident Fund Organization (EPFO) has floated a proposal that says it
should be granted priority over other creditors’ dues to assets of a bankrupt company. The
pension fund is struggling to recover almost Rs. 1,800 crore of its subscribers’ money from
two troubled companies. The proposal has been circulated among stakeholders for
consultation.
• The commerce and industry ministry, in its effort to remove the licence raj and enhance
ease of doing business, said no compulsory licence would be required for manufacturers of
goods, barring four segments of tobacco items, defence equipment, hazardous chemicals
and industrial explosives. The ministry said that no industrial/arms licence is needed for the
manufacturer of any parts or accessories in the defence sector, unless specifically listed for
procuring licences.
• A Central Board of Direct Taxation (CBDT) circular has said instances of wilful attempt to
evade tax, failure to furnish return of income and not remitting tax deducted from source
(TDS) in the government exchequer up to the limit of Rs. 25 lakh will not be generally filed
for criminal prosecution before a court by the tax authorities. This will help cut down tax
litigation and save a number of assessees from legal proceedings, media reports said. Also,
CBDT launched a one-time facility to apply for compounding of income tax offences that
taxpayers can use by Dec 31, 2019. CBDT said this "one-time measure" will help mitigate
unintended hardship to taxpayers in deserving cases and reduce the pendency of existing
prosecution cases before the courts.
Regulatory Updates in India (contd..)
9
• The finance minister said the government has set up a task force to boost investments in
infrastructure projects. She said they are in the process of identifying the sectors which
needed funding.
• Finance minister said the government will respond to demands of the automobile sector.
The sector is facing its worst sales performance in more than two decades. She said the
finance ministry has already considered some suggestions of automakers.
• Commerce and Industry Minister said India will protect the interest of industry and ensure
huge opportunities for exporters getting into the Regional Comprehensive Economic
Partnership (RCEP). RCEP is a proposed mega free trade agreement between 16 countries
including the 10-nation grouping ASEAN and India, China, Japan, South Korea, Australia
and New Zealand. The minister said India has invited representations from all 15 countries
of RCEP bloc on Sep 14 and 15 in India to discuss ideas related to the pact.
• Finance minister said the government has appointed a task force that will speedily identify
infrastructure projects through frontloading to increasing spending, which will in a way give
boost to the economy. She also pledged additional measures aimed at reviving growth in
the coming quarters.
Global News/Economy
• According to report from the Labor Department, U.S. consumer price index came in line
with market expectations and edged up 0.1% in Aug 2019 as against an increase of 0.3% in
Jul 2019. Core consumer prices grew 0.3% in Aug, thereby matching the increase
witnessed in Jul. Annual rate of consumer price growth slowed to 1.7% in Aug as against
growth of 1.8% in Jul. Meanwhile, annual rate of core price growth surged to 2.4% from
2.2% in Jul.
• The European Central Bank (ECB) has cut the deposit rate by 10 basis points to -0.50%,
while it left the main refinancing rate and the marginal lending rate unchanged at 0.00% and
0.25%, respectively. ECB announced the restart of its asset purchase programme that had
ended in Dec 2018 and stated that it will make monthly asset purchases of EUR 20 billion
from Nov 1, 2019. ECB now expects interest rates to remain at their present or lower levels
until the inflation outlook reaches close to its target range of 2%.
• Figures from the National Bureau of Statistics showed China's consumer prices climbed at
a steady pace in Aug 2019, while producer prices declined further on weak demand
signaling deflationary pressures. Consumer prices rose 2.8% YoY in Aug, the same pace of
growth as seen in Jul 2019.
10
Global Equity Markets
11
Global Indices
Indices
13-Sep-19
1-Week
Return
YTD
Return
Russell 3000
1,309.07
-0.25% 23.18%
Nasdaq 100
7,892.96
0.51% 24.69%
FTSE 100
7,367.46
1.17% 9.50%
DAX Index
12,467.24
2.26% 18.07%
Nikkei Average
21,988.29
3.72% 9.86%
Straits Times
3,211.49 2.13% 4.65%
Source: Thomson Reuters Eikon
Value as on
Sep 13, 2019
U.S.
• U.S. markets traded higher with
investor sentiments buoyed by media
reports stating that the U.S.
government had temporarily delayed
raising tariffs on $250 billion worth of
Chinese imports as a goodwill gesture.
However, much of the gains were
erased later after a senior White House
official reported that the U.S. is not
considering any interim trade deal with
China.
Europe
• European markets rose as investors welcomed ECB’s policy decision, which came in line
with market expectations. The ECB slashed interest rates for the first time since 2016 and
unveiled a series of stimulus package to boost growth of the euro zone economy. Worries
over the U.S.- China trade war took a backseat following U.S. government decision to
delay its planned tariff hike on Chinese goods.
Asia
• Asian markets were no exception to the gains seen in its global peers. Market participants
rejoiced media reports stating that the U.S. President announced a short delay on its
scheduled tariff hikes on Chinese goods in response to China's decision to exempt some
U.S. anti-cancer drugs and other goods from its tariffs.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond surged 35 bps to 1.90% compared
with the previous week’s close of 1.55%.
• U.S Treasury prices fell initially as the
haven appeal of U.S. Treasuries came
down on hopes that central banks
across the globe will launch stimulus
measures to support their slumping
economies.
• U.S. Treasury prices fell further as trade
tensions between U.S. and China eased
to some extent after U.S. President
postponed an increase in tariffs on $250
billion of Chinese shipments by two
weeks.
• U.S Treasury prices continued with its
downward trend towards the end of the
week after U.S. retail sales data for Aug
2019 came better than market
expectations which reduced the safe
haven appeal of U.S Treasuries.
1.55
1.75
1.95
9-Sep 11-Sep 13-Sep
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
62.14 61.57
Gold ($/Oz)
1,488.45 1,506.70
Gold (Rs/10 gm)
37,592 38,185
Silver ($/Oz)
17.43 18.16
Silver (Rs/Kg)
46,250 46,935
Source: Thomson Reuters Eikon *
Value as on Sep 13, 2019
Gold
• Gold prices fell amid reports that U.S.
President may consider an interim trade
deal with China. Additionally, interest
rate cut by ECB improved the risk
appetite of the investors.
Brent Crude
• Brent crude prices were up as Saudi
Arabia’s new energy minister opined
that a global deal to cut oil production by
1.2 million barrels per day would be
maintained. However, gains were
restricted as oil cut decision remains
pending until Organization of the
Petroleum Exporting Countries’ meet in
Dec 2019.
Baltic Dry Index
• The Baltic Dry Index fell due to lower
capesize and panamax activities.
9.20
10.50
11.80
13-Aug-19 29-Aug-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
0.93%
-1.21%
-4.05%
13-Sep-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
70.94 71.73
Pound Sterling
87.65 88.51
EURO
78.56 79.21
100 Yen
65.64 67.04
Source: RBI Figures in INR , *
Value as on Sep 13, 2019
Rupee
• The rupee rose against the greenback
following gains in domestic equity market.
Ease in trade tensions between U.S. and
China and announcement of bond purchase
program by ECB contributed to the upside.
Euro
• The euro rose against the greenback after the
ECB monetary policy review failed to live up to
market expectations where central bank cut its
deposit rate to record low and launched an
indefinite asset purchase program.
Pound
• The pound rose against the greenback on
hopes that Britain would come to an
agreement with the European Union before its
exit from the euro zone.
Yen
• The yen weakened against the greenback as
the safe haven appeal of the former came
down on hopes that the ongoing trade tensions
between U.S. and China would come to an
end.
9.65
10.05
10.45
13-Aug-19 29-Aug-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of
INR)
Rebased to 10
Currency Movement
-1.11%
-0.96%
-0.81%
-2.09%
13-Sep-19
15
The Week that was…
09
th
September to 13
th
September
The Week that was (September 09 – September 13)
16
Date Events
Present
Value
Previous
Value
Monday,
September 09, 2019
•
U.K. Monthly GDP (MoM) (Jul) 0.30% 0.00%
•
U.K. Industrial Production (YoY) (Jul) -0.90% -0.60%
Tuesday,
September 10, 2019
•
China Consumer Price Index (YoY) (Aug) 2.80% 2.80%
•
Japan Machine Tool Orders (YoY) (Aug P) -37.10% -33.00%
Wednesday,
September 11, 2019
•
China New Yuan Loans CNY (Aug) 1210.0b 1060.0b
•
U.S. MBA Mortgage Applications (Sep 6) 2.00% -3.10%
•
Japan Machine Orders (YoY) (Jul) 0.30% 12.50%
Thursday,
September 12, 2019
•
India Consumer Price Index (Aug) 3.21% 3.15%
•
India Index of Industrial Production (Jul) 4.30% 1.20%
•
European Central Bank Rate Decision (Sep 12) 0.00% 0.00%
•
U.S. Consumer Price Index (YoY) (Aug) 1.70% 1.80%
•
Japan Tertiary Industry Index (MoM) (Jul) 0.10% -0.10%
•
U.S. Initial Jobless Claims (Sep 7) 204k 219k
Friday,
September 13, 2019
•
U.S. Retail Sales Advance (MoM) (Aug) 0.40% 0.80%
•
U.S. University of Michigan Sentiment (Sep P) 92.00 89.80
•
Japan Industrial Production (YoY) (Jul F) 0.70% 0.70%
•
U.S. Retail Sales Ex Auto and Gas (Aug) 0.10% 0.90%
•
U.S. Business Inventories (Jul) 0.40% 0.00%
17
The Week Ahead
16
th
September to 20
th
September
18
The Week Ahead
Day Event
Monday,
September 16, 2019
•
India Wholesale Price Index (Aug)
•
China Retail Sales (YoY) (Aug)
•
China Industrial Production (YoY) (Aug)
Tuesday,
September 17, 2019
•
Germany ZEW Survey Expectations (Sep)
•
Eurozone ZEW Survey (Economic Sentiment) (Sep)
•
U.S. Industrial Production (MoM) (Aug)
•
Japan Trade Balance (Aug)
Wednesday,
September 18, 2019
•
U.S. FOMC Rate Decision (Sep 18)
•
U.K. Consumer Price Index (YoY) (Aug)
•
Eurozone Consumer Price Index (YoY) (Aug F)
•
U.S. Housing Starts (MoM) (Aug)
Thursday,
September 19, 2019
•
Bank of Japan Rate Decision (Sep 19)
•
Bank of England Bank Rate (Sep 19)
•
Japan National Consumer Price Index (YoY) (Aug)
•
Japan All Industry Activity Index (MoM) (Jul)
•
U.S. Initial Jobless Claims (Sep 14)
Friday,
September 20, 2019
•
Eurozone Consumer Confidence (Sep A)
Disclaimer
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