2
The Week that was…
16
th
September to 20
th
September
Indian Economy
• Government data showed that wholesale price index based inflation (WPI) remained
unchanged on a month-on-month basis at 1.08% in Aug 2019 compared with 4.62% in the
same month of the previous year. The build up inflation rate in FY20 till date stood at
1.25%, much lower than 3.27% in the corresponding period of the previous year. WPI
inflation for manufactured products fell to 0.00% which indicated lack of pricing power for
producers. Fuel and power inflation also remained in the negative territory for the third
consecutive month even though they are concerns that such a trend might be short lived
due to disruption in crude oil supply from Saudi Arabia. However, WPI for food articles
increased to 7.67% in Aug 2019 from 6.15% in Jul 2019.
• The finance minister reduced the basic corporate tax rate to 22% from 30% for domestic
companies that do not avail exemption/incentive. The effective tax rate for such companies
would be 25.17% inclusive of surcharge and cess. In order to provide boost to the
manufacturing sector and its ‘Make-in-India’ initiative, the government lowered the
corporate tax rate to 15% from 25% for those domestic companies that came into
existence on or after Oct 2019. The effective tax rate for such companies would be 17.01%
inclusive of surcharge and cess. Such companies shall not be required to pay Minimum
Alternate Tax. Also, to provide relief to companies that continue to avail
exemptions/incentives, the government lowered the Minimum Alternate Tax or MAT to
15%, from 18.5%.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 20-Sep-19 1 Week Return YTD Return
S&P BSE Sensex 38,014.62 1.68% 5.40%
Nifty 50 11,274.20 1.79% 3.79%
S&P BSE Mid-Cap 14,120.07 3.33% -8.54%
S&P BSE Small-Cap 13,204.25 1.47% -10.22%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline
Ratio
16-Sep-19 985 860 1.15
17-Sep-19 516 1,328 0.39
18-Sep-19 921 889 1.04
19-Sep-19 408 1,405 0.29
20-Sep-19 1,389 488 2.85
Source: NSE
• Indian equity markets were mostly
volatile in the week ended Sep 20, 2019,
but at the end managed to gain
handsomely. The finance minister on the
last day of the week unveiled a Rs. 1.25
lakh crore stimulus package to boost the
economy.
• The downslide continued as investors
remained anxious over the impact of rise
in crude oil prices on the domestic
economy. Also, global growth slowdown
worries kept investors on tenterhooks as
the U.S. Federal Reserve remained non-
committal on any further rate cuts in the
year, while cutting rates in its latest policy
meet, and Bank of Japan maintained
status quo.
• All the losses were made good on the
last day of the week as the government
came all out to support the economy and
instill confidence among investors.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.78 27.72 36.68 35.85
P/B
2.88 3.42 2.40 1.89
Dividend Yield
1.21 1.36 1.00 1.05
Source: BSE, NSE Value as on Sep 20
, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
17080.5 3.26% 7.83%
S&P BSE Bankex
32625.3 2.98% 3.07%
S&P BSE CD
25594 8.51% 11.13%
S&P BSE CG
18070.6 3.72% 6.17%
S&P BSE FMCG
11290.3 3.73% 3.76%
S&P BSE HC
13016.6 -0.05% 3.89%
S&P BSE IT
15579.3 -2.44% -1.07%
S&P BSE Metal
9317.52 2.46% 6.47%
S&P BSE Oil & Gas
13892.8 1.86% 7.00%
S&P BSE Realty
2040.74 -0.89% 0.57%
Source: Thomson Reuters Eikon
*Value as on Sep 20, 2019
• S&P BSE Consumer Durables was the major
gainer that grew 8.51% followed by S&P BSE
FMCG and S&P Capital Goods, which grew
3.73% and 3.72%, respectively. The
consumer durables and FMCG sectors stand
to gain the most from the government’s
stimulus as companies will not have to take
any drastic measures to deal with the general
slowdown in the economy.
• S&P BSE Auto and S&P BSE Bankex grew
3.26% and 2.98%, respectively. S&P BSE IT
was the major loser and fell 2.44% followed
by S&P BSE Teck that fell 2.07%. The tech
sector lost because of the strength in rupee.
Indian Derivatives Market Review
• Nifty Sep 2019 Futures stood at 11,295.50, a premium of 21.30 points above the spot
closing of 11,274.20. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 83.90 lakh crore as against Rs. 54.40 lakh crore for the week to Sep 13.
• The Put-Call ratio stood at 0.81 compared with the previous week’s close of 0.94.
• The Nifty Put-Call ratio stood at 1.39 against the previous week’s close of 1.34.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.37 5.29 5.28 6.20
91 Day T-Bill
5.32 5.33 5.45 6.31
07.32% 2024, (5 Yr GOI)
6.46 6.28 6.30 7.00
07.26% 2029, (10 Yr GOI)
6.79 6.64 6.59 7.36
Source: Thomson Reuters Eikon
Value as on Sep 20, 2019
• Bond yields surged tracking sharp
rise in crude oil prices amid
heightened geopolitical worries
following multiple drone attacks on
Saudi Arabian crude oil facilities. This
is expected to have a bearing on
domestic inflation, which further
weighed on sentiment.
• Yield on the 10-year benchmark
paper (7.26% GS 2029) rose 15 bps
to 6.79% compared with the previous
close of 6.64% after trading in a
range of 6.55% to 6.87%.
• RBI conducted auction of state
development loans of eight state
governments for notified amount of
Rs. 7,500 crore. The entire amount
was accepted. The cut-off yield lied in
the range of 6.82% to 7.30%, while
the tenure was in between 5 years to
18 years.
6.00
6.40
6.80
16-Sep 17-Sep 18-Sep 19-Sep 20-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 5.87 6.96 109
3 Year 6.22 7.45 124
5 Year 6.60 7.64 104
10 Year 6.90 8.21 131
Source: Thomson Reuters Eikon Value as on Sep 20, 2019
• Yields on gilt securities increased across the
maturities in the range of 2 bps to 21 bps
barring 2 and 19-year paper which fell 5 and
9 bps, respectively.
• Corporate bond yields increased across the
maturities in the range of 6 bps to 27 bps
barring 1 to 3-year and 15-year maturities
which fell in the range of 6 bps to 39 bps.
• Difference in spread between AAA corporate
bond and gilt contracted on 1 to 4-year and
10 and 15-year maturities in the range of 4
bps to 47 bps while it expanded across the
remaining maturities in the range of 2 bps to
22 bps.
-11
-2
7
16
5.00
5.80
6.60
7.40
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 20-Sep-19 13-Sep-19
Yield in
%
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The government in order to provide a boost to the hospitality and tourism sector, proposed
reduced Goods and Services Tax (GST) rates on hotel tariffs. Rooms with tariff exceeding
Rs. 7,500 will now be taxed at 18% much lower than the earlier rate of 28%. GST on rooms
with tariff between Rs 1001 and Rs 7,500 will be taxed at 12%. No GST would be levied on
tariffs of up to Rs 1,000.
• The GST Council provided a major boost to the gems and jewellery sector as it
recommended to lower GST on cut and polished semi-precious items to 0.25% from the
present 3%. Tax rates on job work in diamond industry has been lowered to 1.5% from 5%.
The GST Council proposed to lower the tax rate on supply of machine job work such as in
engineering industry to 12% from 18%. Tax rates for outdoor catering was reduced to 5%
from 18%.
• The government gave exemption from GST/IGST on import of specified defence goods not
being manufactured indigenously till 2024. The same is applicable for supply of goods and
services & other specified persons for U17 Women's World Cup in India.
• The government hiked GST rates on caffeinated beverages to 28% (and an additional cess
of 12%) as against the current rate of 18%. GST rate on railway wagon, coaches has been
increased from 5% to 12%.
Regulatory Updates in India (contd..)
9
• The government expanded the scope of corporate spend under the norms of Corporate
Social Responsibility (CSR). Presently companies could provide CSR funds to technology
incubators located within Centre-approved academic institutions. Now the scope has been
widened and the companies can now spend their CSR fund across various fields such as
science, technology, medicine or on incubators that are funded by either central government
or state government or any public sector entity. Such a move is expected to attract funds
towards research and development within the country.
• The Union Cabinet approved the ban on manufacture and sale of e-cigarettes in India. The
move comes amid concerns of an alarming rise in smoking among young population. On a
separate note, the Union Cabinet approved 78 days' of wages as bonus for Railway
employees. The bonus is given as an acknowledgement of employees’ contribution in
improving the efficiency of railway operations.
• According to media reports, the government has done away with the 3-year lock-in period
on investments made by non-residents in infrastructure debt funds. The objective of the
move is to promote funding in the infrastructure sector. Infrastructure debt funds are
investment vehicles which are used to accelerate the flow of long-term debt into the
infrastructure sector.
Global News/Economy
• The U.S. Federal Reserve cut rates by another 25 basis points, lowering the target range
for the federal funds rate to 1-3/4 to 2%. This is the second reduction in 2019. The cut was
once again attributed to the implications of global developments for the economic outlook as
well as muted inflation pressures. The accompanying statement was mostly unchanged
from Jul 2019. The Fed reiterating that the labor market remains strong and that economic
activity has been rising at a moderate rate.
• The Bank of England left its monetary policy unchanged amid the heightened Brexit
uncertainty. It warned that the global slowdown and a no-deal Brexit would hurt the
economy severely. The Monetary Policy Committee unanimously decided to hold the bank
rate at 0.75%, the stock of corporate bond purchases at GBP 10 billion and government
bond purchases at GBP 435 billion.
• The Bank of Japan (BoJ) maintained status quo in policy, as was widely expected, after the
U.S. Federal Reserve resorted to further easing. The Policy Board of the BoJ voted 7-2 to
maintain interest rate at -0.1% on current accounts that financial institutions maintain at the
bank. The bank said it will purchase government bonds so that the yield of 10-year JGBs
will remain at around zero percent.
10
Global Equity Markets
11
Global Indices
Indices
20-Sep-19
1-Week
Return
YTD
Return
Russell 3000 1,304.92 -0.32% 22.79%
Nasdaq 100 7,823.55 -0.88% 23.60%
FTSE 100 7,344.92 -0.31% 9.17%
DAX Index 12,468.01 0.00% 18.08%
Nikkei Average 22,079.09 0.41% 10.31%
Straits Times 3,159.68 -1.61% 2.96%
Source: Thomson Reuters Eikon
Value as on Sep 20, 2019
U.S.
• U.S. markets witnessed initial jitters
following spike in global crude oil prices
in the aftermath of the drone attack on
the oil processing facility in Saudi
Arabia. Meanwhile, markets recouped
much of its losses amid latest batch of
largely upbeat U.S. economic data,
including a report from the National
Association of Realtors showing an
unexpected rise in existing home sales
in Aug 2019.
Europe
• The geopolitical tension in the Middle East took a toll on European stocks as well.
However, markets made up much of its losses, led by the policy decision of major global
banks. While, U.S. Fed slashed interest rates for the second time this year, the Bank of
Japan reiterated its willingness to pursue additional easing measures to support the
economy.
Asia
• Asian markets largely remained weak with exception of the Nikkei. Mixed reactions were
generated post U.S. Fed’s policy decision. Investors remained concerned regarding
uncertainty over the outlook for interest rates, although the central bank cut its key rates
by 25 bps.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond fell 15 bps to 1.75% compared
with the previous week’s close of 1.90%.
• U.S Treasury prices grew following
attacks on crude facilities in Saudi
Arabia that reportedly led to shutting
down of approximately 5% of the world's
oil supply, resulting in surge in oil prices.
Gains were extended on China’s weak
industrial production data in Aug 2019.
• Though the U.S. Fed cut interest rates
for the second time in 2019, however,
uncertainty as to what stance the central
bank will adopt in the next monetary
policy meet, boosted the safe haven
appeal of U.S. Treasuries.
• Additionally, concerns about rising
tensions between the U.S. and Iran also
boosted U.S Treasury prices.
1.70
1.80
1.90
16-Sep 18-Sep 20-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($/Barrel) 66.12 62.14
Gold ($/Oz) 1,516.75 1,488.45
Gold (Rs/10 gm) 37,390 37,592
Silver ($/Oz) 17.98 17.43
Silver (Rs/Kg) 45,686 46,250
Source: Thomson Reuters Eikon *Value as on Sep 20, 2019
Gold
• Gold prices surged as its safe haven
appeal improved after an attack on oil
facilities in Saudi Arabia raised concerns
over global energy supply.
Brent Crude
• Brent crude prices surged following
attacks on Saudi Arabian refining
facilities which knocked out more than
5% of global oil output. Gains were
extended on reports that the U.S. is
seeking to build a coalition of European
and Arab partners to deter Iran after an
attack on Saudi Arabia. However, further
gains were capped after the U.S.
President authorized the release of oil
from the U.S. Strategic Petroleum
Reserve to keep the markets “well-
supplied”.
Baltic Dry Index
• The Baltic Dry Index fell due to lower
capesize and panamax activities.
9.00
10.00
11.00
12.00
20-Aug-19 31-Aug-19 11-Sep-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
6.40%
1.90%
3.19%
20-Sep-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
70.94 70.94
Pound Sterling
89.21 87.65
EURO
78.44 78.56
100 Yen
65.76 65.64
Source: RBI Figures in INR , *Value as on Sep 20, 2019
Rupee
• The rupee weakened against the greenback
following increase in global crude oil prices
due to an attack on a major oil facility in Saudi
Arabia.
Euro
• The euro fell against the greenback as to what
stance the U.S. Federal Reserve might adopt
in its upcoming monetary policy reviews even
though it lowered key policy repo rate by 25
bps as expected.
Pound
• The pound rose against the greenback after
the European Commission President
expressed hopes of a Brexit deal. However,
further gains were capped after U.K. inflation in
Aug 2019 dropped to its weakest level since
Dec 2016.
Yen
• The yen rose against the greenback after BoJ
issued a stronger warning over the risks
threatening the Japanese economy after it kept
interest rates on hold in its monetary policy
review.
13-Sep-19
9.70
9.80
9.90
10.00
10.10
10.20
10.30
20-Aug-19 31-Aug-19 11-Sep-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of
INR)
Rebased to 10
Currency Movement
-0.002%
1.78%
-0.16%
0.18%
15
The Week that was…
16
th
September to 20
th
September
The Week that was (September 16 – September 20)
16
Date Events
Present
Value
Previous
Value
Monday,
September 16, 2019
• India Wholesale Price Index (Aug) 1.08% 1.08%
• China Retail Sales (YoY) (Aug) 7.5% 7.6%
• China Industrial Production (YoY) (Aug) 4.4% 4.8%
Tuesday,
September 17, 2019
• Germany ZEW Survey Expectations (Economic Sentiment)
(Sep)
-22.5 -44.1
• Eurozone ZEW Survey (Economic Sentiment) (Sep) -22.4 -43.6
• U.S. Industrial Production (MoM) (Aug) 0.6% -0.1%
• Japan Trade Balance (Aug) ¥-130.800B ¥-126.751B
Wednesday,
September 18, 2019
• U.S. FOMC Rate Decision (Sep 18) 2.0% 2.3%
• U.K. Consumer Price Index (YoY) (Aug) 1.7% 2.1%
• Eurozone Consumer Price Index (YoY) (Aug F) 1.0% 1.0%
• U.S. Housing Starts (MoM) (Aug) 1.364M 1.215M
Thursday,
September 19, 2019
• Bank of Japan Rate Decision -0.1% -0.1%
• Bank of England Bank Rate 0.8% 0.8%
• Japan National Consumer Price Index (YoY) (Aug) 0.3% 0.5%
• Japan All Industry Activity Index (MoM) (Jul) 0.2% -0.7%
• U.S. Initial Jobless Claims (Sep 14) 208K 206K
Friday,
September 20, 2019
• Eurozone Consumer Confidence (Sep A) -6.5 -7.1
17
The Week Ahead
23
rd
September to 27
th
September
18
The Week Ahead
Day Event
Monday,
September 23, 2019
• Eurozone Markit PMI Composite (Sep) (P)
• U.S. Markit PMI Composite (Sep) (P)
• Germany Markit PMI Composite (Sep) (P)
Tuesday,
September 24, 2019
• Japan Leading Economic Index (Jul)
• Eurozone IFO - Current Assessment (Sep)
• U.K. Public Sector Net Borrowing (Aug)
• U.S. S&P/Case-Shiller Home Price Indices (YoY) (Jul)
Wednesday,
September 25, 2019
• U.S. MBA Mortgage Applications (Sep 20)
• U.S. New Home Sales (MoM) (Aug)
Thursday,
September 26, 2019
• U.S. Gross Domestic Product Annualized (Q2)
• Japan Foreign Bond Investment (Sep 20)
Friday,
September 27, 2019
• Eurozone Business Climate (Sep)
• U.S. Personal Income (MoM) (Aug)
• U.S. Personal Spending (Aug)
• U.S. Durable Goods Orders (Aug)
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