News U Can Use
September 14, 2018
The Week that was…
10
th
September to 14
th
September
2
Indian Economy
• Government data showed that the growth of Index of Industrial Production (IIP) slowed to
6.6% in Jul 2018 from a revised 6.9% (7% originally reported) in the previous month. In the
year-ago period, IIP had grown 1%. For the period Apr to Jul 2018, IIP grew 5.4% as
against 1.7% in the same period of the previous year. The manufacturing sector grew 7%
in Jul 2018 as against a degrowth of 0.1% in the same month of the previous year.
• Government data showed that growth of India’s Consumer Price Index (CPI)-based
inflation or retail inflation eased to 3.69% in Aug 2018 from 4.17% in Jul 2018, thereby
marking a 10-month low. However, it increased as against 3.28% in Aug 2017. The growth
in Consumer Food Price Index eased to 0.29% in Aug 2018 from 1.30% in Jul 2018 and
1.52% in the same month of the previous year. Among the key components, fuel and light
grew 8.47% in Aug 2018 as against a growth of 7.96% in Jul 2018.
• Government data showed that India’s Wholesale Price Index (WPI)-based inflation eased
to 4.53% in Aug 2018 from 5.09% in Jul 2018 as prices of food articles, mainly vegetables,
came down. This marked a four-month low. Wholesale price inflation was at 3.24% in Aug
2017. Inflation in vegetables declined 20.18% as against a decline of 14.07% in Jul 2018.
Inflation in fruits fell 16.40% in Aug 2018 as against a decline of 8.81% in Jul 2018.
Meanwhile, inflation for onion fell 26.80% in Aug 2018 as against an increase of 38.82% in
Jul 2018. ‘Fuel and power' inflation went up 17.73% in Aug 2018 as against an increase of
18.10% in Jul 2018. The WPI Food Index came in at -2.25% in Aug 2018 as against -
0.86% in Jul 2018.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices
14-Sep-18
1 Week Return
YTD Return
S&P BSE Sensex
38,090.6 -0.78% 11.84%
Nifty 50
11,515.2 -0.64% 9.35%
S&P BSE Mid
-Cap 16,350.0 -0.94% -8.26%
S&P BSE Small
-Cap 16,670.9 -1.34% -13.31%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
10-Sep-18 600 1230 0.49
11-Sep-18 459 1382 0.33
12-Sep-18 722 1083 0.67
14-Sep-18 1276 540 2.36
Source: NSE
• The domestic market posted loss
during the truncated trading week as
recent weakness in rupee stoked
foreign fund outflow fears.
• Rise in global crude oil prices and
global trade war tensions further
weighed on sentiment after the U.S.
President iterated his plan to impose
tariffs an additional $267 billion
Chinese imports. Extra tariffs on
$200 billion Chinese imports are
already being discussed.
• Later, some respite was seen
following encouraging macro-
economic numbers. Government
data showed CPI and WPI inflation
eased in Aug 2018, which raised
optimism that the Monetary Policy
Committee (MPC) might not raise
interest rates in the near future.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
24.64 28.00 32.93 -133.70
P/B
3.17 3.71 2.79 2.50
Dividend Yield
1.16 1.16 0.93 0.76
Source: BSE, NSE Value as on Sep 14, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
24,246.9
0.19%
S&P BSE Bankex
30,621.6
-3.31%
S&P BSE CD
20,735.9
-6.03%
S&P BSE CG
18,553.9 0.07% 3.44%
S&P BSE FMCG
12,068.1
-1.70%
S&P BSE HC
16,236.5
10.55%
S&P BSE IT
15,746.7
5.48%
S&P BSE Metal
14,090.5 0.32% 8.84%
S&P BSE Oil & Gas
14,873.6
0.09%
Source: Thomson Reuters Eikon
*Value as on Sep 14, 2018
• On the BSE sectoral front, all the indices
closed in the red barring S&P BSE Power
(0.47%), S&P BSE Metal (0.32%) and S&P
BSE Capital Goods (0.07%). Rate
sensitive auto and banking sectors
witnessed maximum fall of 1.85% and
1.25%, respectively.
• Meanwhile, according to the Society of
Indian Automobile Manufacturers data,
passenger car sales in Aug 2018 dipped
1% to 196,847 units compared with Aug
2017.
Indian Derivatives Market Review
• Nifty Sep 2018 Futures settled at 11,547.30, a premium of 32.10 points, above the spot
closing of 11,515.20. The turnover on NSE’s Futures and Options segment stood at Rs.
49.39 lakh crore as against Rs. 58.47 lakh crore on Sep 7.
• The Put-Call ratio stood at 0.82 compared with the previous week’s close of 0.87.
• The Nifty Put-Call ratio stood at 1.38 against the previous week’s close of 1.45.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
6.43 6.34 6.37 5.83
91 Day T
-Bill
7.07 6.85 6.75 6.25
7.80% 2021, (5
Yr GOI)
8.11 7.96 7.67 7.21
7.17% 2028, (10
Yr GOI)
8.13 8.03 7.82 7.68
Source: Thomson Reuters
Eikon
Value as on Sep 14, 2018
• Bond yields surged initially as rupee
plunged to a record low against the
greenback, surpassing the 72-mark.
The increase in crude oil prices and
rise in U.S. Treasury yield also kept
bond yields at elevated level. Worries
over possible monetary tightening
action to curb high inflation inflation
and the relentless surge in crude oil
prices also weighed on the market
sentiment.
• However, losses were limited later as
the rupee rebounded against the
greenback to some extent. Market
sentiment received further support
after consumer price inflation fell to a
10-month low in Aug 2018.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) rose 10 bps
to close at 8.13% from the previous
week’s close of 8.03%.
8.10
8.15
8.20
10-Sep 11-Sep 12-Sep 14-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 8.02 8.81 79
3 Year 8.27 8.84 56
5 Year 8.36 8.92 56
10 Year 8.29 8.98 69
Source: Thomson Reuters Eikon
Value as on Sep 14, 2018
• Yields on gilt securities jumped across all
maturities by up to 18 bps. Yield on 15-year
paper was steady. Highest rise was seen
on 1-year paper while lowest increase was
on 2-year paper.
• Corporate bond surged across maturities in
the range of 6 bps to 20 bps. Highest rise
was witnessed on 1-year paper and lowest
increase was on 15-year paper.
• Spread between AAA corporate bond and
gilt rose across the maturities in the range
of 2 to 6 bps, barring 10-year paper that fell
by 2 bps.
0
12
24
6.50
7.50
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 14-Sep-18 07-Sep-18
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The National Anti Profiteering Authority (NAA) ruled that suppliers will be penalised if they
do not pass the benefits of Goods and Services Tax (GST) rate cut to consumers. NAA said
this in a ruling of a case filed by a department store. The case was examined by the
standing committee on anti-profiteering and was referred to the Directorate General of Anti
Profiteering (DGAP) for a detailed look.
• To ensure social security for contract workers, the coal ministry together with a major coal
mining company and Singareni Collieries decided to put 70,000 coal contract workers under
the Coal Mines Provident Fund Organisation (CMPFO). The move will not only help workers
get higher returns but will also assist the body which is facing an asset-liability mismatch.
CMPFO is meant for coal workers and is similar to the Employees Provident Fund
Organisation. Members of the fund put in a monthly contribution that is matched by the
employer.
• The date, Oct 1, 2018, has been notified by the government for implementing the tax
deducted at source (TDS) and tax collected at source provisions under the GST law.
According to the Central GST (CGST) Act, notified entities need to collect TDS at 1% on
payments to goods or services suppliers in excess of Rs 2.5 lakh. States will levy 1% TDS
under state laws. E-commerce companies will have to collect up to 1% TCS when they
make payment to suppliers.
Regulatory Updates in India (contd..)
• According to media reports, the government could auction power supply contracts with
attached coal supplies. It could also relax rules to allow coal usage for short-term power
contracts and start a payment mechanism to enable power projects recover dues from state
electricity distribution companies. This may ease sectoral stress to a large extent, the report
said. A high-level empowered committee headed by the cabinet secretary is looking into the
proposals and will meet on Sep 21, 2018.
• In order to decrease dependence on cooking oil imports, the government may come out
with a scheme under which farmers will be compensated for rates below the minimum
support price or MSP. The size of the scheme is being put by media reports as more than
Rs. 10,000 crore. The agriculture ministry, under a cabinet note, has proposed a new
system – Price Deficiency Payment – to safeguard oilseeds farmers, say reports. Under the
proposed mechanism, the government will give farmers the difference between monthly
average price of oilseeds quoted in wholesale markets and MSP. India’s edible oil imports
stand at about 14-15 million tonne or 70% of domestic demand.
9
Global News/Economy
• As per a Labour Department report, U.S. consumer prices increased modestly in Aug 2018.
The consumer price index increased 0.2% in Aug 2018, the same pace as Jul 2018.
Expectations were for prices to climb 0.3%. The modest rise was partly because of increase
in energy prices by 1.9% in Aug 2018 against a fall of 0.5% in Jul 2018.
• According to a report from the University of Michigan, U.S. consumer sentiment index came
in higher than market expectations and grew to 100.8 in Sep 2018 as against 96.2 in Aug
2018. The increase came in as the current economic conditions index surged to 116.1 in Sep
2018 from 110.3 in Aug 2018. The index of consumer expectations also grew to 91.1 in Sep
2018 from 87.1 in Aug 2018.
• According to a report from the Commerce Department, U.S. retail sales missed market
expectations and edged up 0.1% in Aug 2018 as against an upwardly revised gain of 0.7%
(0.5% gain originally reported) in Jul 2018. The downside reflects decline in auto sales that
fell 0.8% in Aug 2018 as against a decline of 0.1% in Jul 2018.
• The Bank of England maintained status quo in its monetary policy. Policymakers
unanimously settled for not making any change in interest rates after hiking rates a quarter-
point in Aug 2018. The Monetary Policy Committee, led by the central bank governor, kept
key rates unchanged at 0.75% and maintained the quantitative easing via asset purchases
at GBP 435 billion.
10
Global Equity Markets
11
Global Indices
Indices
14-Sep-18
1-Week
Return
YTD
Return
Dow Jones
26,154.67 0.92% 5.81%
Nasdaq 100
7,545.50 1.55% 17.96%
FTSE 100
7,304.04 0.36% -4.99%
DAX Index
12,124.33 1.38% -6.14%
Nikkei Average
23,094.67 3.53% 1.45%
Straits Times
3,161.42 0.86% -7.10%
Source: Thomson Reuters Eikon
Value as on Sep 14, 2018
U.S.
• U.S. markets rose as the lingering U.S. -
China trade tensions eased following
reports that the U.S. is planning a new
round of trade talks with China soon.
• In the latest development, the U.S.
Treasury Secretary has sent an
invitation for talks to senior Chinese
officials, proposing a meeting in the next
few weeks.
Europe
• European markets too were positively impacted by media reports suggesting probability of
fresh round of trade talks between the United States and China. The resultant optimism
eased worries over the escalating tariff war threating to derail global economic growth.
Concerns over emerging markets also eased to some extent after Turkey's central bank
raised its key interest rate sharply in a bid to prevent a currency crisis.
Asia
• Asian markets followed their global peers and ended higher with Chinese officials
welcoming the invitation from U.S. Treasury Secretary for fresh round of trade talks.
Nonetheless, underlying sentiment remained weak to some extent as the U.S. President is
considering imposing tariffs on $200 billion worth of Chinese goods, which may escalate
the conflict between the world's two largest economies.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
rose 5 bps to close at 2.99% from the
previous close of 2.94%.
• U.S. Treasury prices fell earlier during
the week under review after a report
from the U.S. Labour Department
showed a record number of job
openings in Jul 2018 which indicated a
sustained labour market strength and
made market participants optimistic of a
faster wage growth within the economy.
• U.S. Treasury prices fell further
following upbeat U.S. economic data
which increased the possibility of
continued rate hikes by the U.S. Federal
Reserve in 2018.
• However, further losses were capped
due to strong demand at an auction for
$23 billion of U.S. 10-year notes.
2.90
2.96
3.02
10-Sep 11-Sep 12-Sep 13-Sep 14-Sep
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
77.81 75.62
Gold ($/Oz)
1,193.31 1,195.36
Gold (Rs/10 gm)
30,558 30,402
Silver ($/Oz)
14.04 14.10
Silver (Rs/Kg)
36,565 36,389
Source: Thomson Reuters
Eikon *Value as on Sep 14, 2018
Gold
• Gold prices fell amid expectations of
interest rate hike by the Federal
Reserve, particularly after a strong U.S.
job report for Aug 2018. U.S. non-farm
payroll employment rose more than
expected by 201,000 jobs in Aug 2018.
Crude
• Brent crude prices grew as market
participants stayed worried ahead of the
U.S. sanction on Iran oil supplies, which
comes into effect from Nov 2018. Iran’s
oil supplies have already started falling
at a faster than expected pace.
Baltic Dry Index
• The Baltic Dry Index fell 7.25% on the
back of lower capesize and panamax
activities.
9.20
10.30
11.40
14-Aug-18 24-Aug-18 3-Sep-18 13-Sep-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
2.90%
-0.17%
-0.43%
14-Sep-18
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
71.81 71.90
Pound Sterling
94.16 93.04
Euro
83.98 83.67
100 JPY
64.19 64.98
Source: RBI Figures in INR , *
Value as on Sep 14, 2018
Rupee
• The rupee managed to recover against
U.S. dollar on hopes that the government
would take steps to provide support to
the rupee.
Euro
• The euro rose against the greenback on
hopes that trade talks would resume
between U.S. and China.
Pound
• Pound surged against the greenback on
hopes that Britain would reach an
agreement with the European Union
(EU) before its exit from the euro zone.
Yen
• Yen weakened against the greenback
amid optimism that Britain would reach
an agreement with the EU before its exit
from the euro zone which lowered the
safe haven appeal of yen.
9.90
10.30
10.70
14-Aug-18 24-Aug-18 3-Sep-18 13-Sep-18
USD GBP Euro JPY
Source: RBI
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-0.12%
1.20%
0.36%
-1.22%
14-Sep-18
15
The Week that was…
10
th
September to 14
th
September
The Week that was (Sep 10 – Sep 14)
16
Date Events
Present
Value
Previous
Value
Monday,
September 10, 2018
• China Consumer Price Index (YoY) (AUG)
2.30% 2.10%
Tuesday,
September 11, 2018
• Eurozone ZEW Survey (Economic Sentiment) (SEP)
-7.20% -11.10%
• U.K. ILO Unemployment Rate 3Mths (JUL)
4.00% 4.00%
• Japan Tertiary Industry Index (MoM) (JUL)
0.10% -0.50%
Wednesday,
September 12, 2018
• India's Consumer Price Inflation Index (AUG 18)
3.69% 4.17%
• India's Index of Industrial Production (JUL 18)
6.60% 6.90%
• China New Yuan Loans CNY (AUG)
1280.0b 1450.0b
• Japan Machine Orders (YoY) (JUL)
13.90% 0.30%
Thursday,
September 13, 2018
• U.K. Bank of England Bank Rate (SEP 13)
0.75% 0.75%
• European Central Bank Rate Decision (SEP 13)
0.00% 0.00%
• U.S. Consumer Price Index (YoY) (AUG)
2.70% 2.90%
• Germany Consumer Price Index (YoY) (AUG F)
2.00% 2.00%
• U.S. Initial Jobless Claims (SEP 8)
204k 205k
Friday,
September 14, 2018
• India's Wholesale Price Index (AUG 18)
4.53% 5.09%
• U.S. Retail Sales Advance (MoM) (AUG)
0.10% 0.70%
• Japan Industrial Production (YoY) (JUL F)
2.20% 2.30%
• China Retail Sales YTD (YoY) (AUG)
9.30% 9.30%
• U.S. University of Michigan Sentiment (SEP P)
100.8 96.20
17
The Week Ahead
17
th
September to 21
st
September
18
The Week Ahead
Day Event
Monday,
September 17, 2018
•
Eurozone Consumer Price Index (YoY) (AUG F)
Tuesday,
September 18, 2018
•
Japan Nationwide Dept Sales (YoY) (AUG)
•
U.S. NAHB Housing Market Index (SEP)
•
Japan Trade Balance (AUG)
Wednesday,
September 19, 2018
•
Bank of Japan Rate Decision (SEP 19)
•
U.K. Consumer Price Index (YoY) (AUG)
•
U.K. House Price Index (YoY) (JUL)
•
U.S. Housing Starts (MoM) (AUG)
Thursday,
September 20, 2018
•
Japan National Consumer Price Index (YoY) (AUG)
•
U.S. Initial Jobless Claims (SEP 15)
•
U.S. Leading Index (AUG)
•
U.S. Existing Home Sales (MoM) (AUG)
Friday,
September 21, 2018
•
Japan Nikkei Manufacturing PMI (SEP P)
•
Japan All Industry Activity Index (MoM) (JUL)
•
Germany Markit/BME Composite PMI (SEP P)
•
Eurozone Markit Composite PMI (SEP P)
•
U.K. Public Sector Net Borrowing (AUG)
Disclaimer
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19
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