News U Can Use
September 28, 2018
The Week that was…
24
th
September to 28
th
September
2
Indian Economy
• Government data showed that India’s fiscal deficit for Apr-Aug 2018 came in at Rs. 5.91
lakh crore, or 94.7% of the budgeted target for FY19 against 96.1% in the year-ago period.
Net tax receipts were Rs. 3.66 lakh crore or 24.7% of the budget estimate for FY19
compared with 27.8% in the corresponding period of the previous year. The government’s
total expenditure for the period from Apr to Aug of 2018 stood at Rs. 10.70 lakh crore or
43.8% of the budget estimate for FY19 compared with 44.3% in the corresponding period
of the previous year.
• The government has announced a substantial cut of Rs. 70,000 crore in its planned
market borrowing programme for FY19. It stated that it would make efforts to meet its
requirements through small savings mopup. The secretary for Economic Affair stated that
government will bring in inflation index bonds from the second half of FY19. Also, the
secretary stated that the government will borrow Rs. 12,000 crore through gilts every week
from Nov 2018. The government borrowing in the second half of the financial year is
expected to be approximately Rs. 2.47 lakh crore as against Rs. 2.88 lakh crore during
Apr-Sep 2018 (first half of FY19).
• India has raised import duty on a range of including air-conditioners, refrigerators, washing
machines, footwear, jewellery, furniture fittings and tableware. Also, it has been raised on
aviation turbine fuel (ATF). The raise comes on the wake of government’s efforts to rein in
the current account deficit and strengthen up the rupee.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 28-Sep-18 1 Week Return YTD Return
S&P BSE Sensex 36,227.14 -1.67% 6.37%
Nifty 50 10,930.45 -1.91% 3.80%
S&P BSE Mid-Cap 14,763.20 -5.34% -17.16%
S&P BSE Small-Cap 14,430.68 -8.45% -24.96%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
24-Sep-18 285 1,619 0.18
25-Sep-18 664 1,186 0.56
26-Sep-18 890 943 0.94
27-Sep-18 471 1,374 0.34
28-Sep-18 268 1,621 0.17
Source: NSE
• Indian equity markets closed in the
red. Liquidity concerns kept market
participants wary.
• Surge in crude oil prices amid worries
regarding the shrinking supplies once
U.S.’ sanction on Iran kicks in Nov
2018 continued to weigh on the
market sentiment. Depreciating rupee
against the greenback added to the
woes.
• Additionally, decline in banking stocks
after stock price of one of the major
private sector bank witnessed fall
following reports that RBI has denied
an extension of the term of bank’s
current managing director and chief
executive officer also hit market
sentiment.
• Expiry of Sep derivative contracts
kept the investors on the sidelines.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
23.37 26.44 31.43 -69.16
P/B
3.02 3.47 2.59 2.14
Dividend Yield
1.23 1.23 0.97 0.85
Source: BSE, NSE Value as on Sep 28
, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
21,476.5 -7.73% -13.48%
S&P BSE Bankex
27,992.2 -2.47% -12.38%
S&P BSE CD
19,134.3 -4.75% -11.79%
S&P BSE CG
17,108.9 -5.26% -9.22%
S&P BSE FMCG
11,502.8 -2.57% -8.67%
S&P BSE HC
15,025.3 -3.61% -3.27%
S&P BSE IT
15,628.9 1.03% 1.81%
S&P BSE Metal
13,278.8 -4.85% -2.71%
S&P BSE Oil & Gas
14,855.4 -1.28% -1.57%
S&P BSE Power
1,929.43 -4.44% -8.10%
S&P BSE Realty
1,702.94 -12.23% -19.27%
Source: Thomson Reuters Eikon
*Value as on Sep 28, 2018
• On the BSE sectoral front, indices closed
on a weak note barring IT sector that grew
1.03%. S&P BSE Realty stood as the
major loser that fell 12.23% followed by
S&P BSE Auto that fell 7.73%. Decline in
auto stocks likely comes on the wake of
rising crude oil prices and escalating trade
tensions between the U.S. and China.
• S&P BSE Capital Goods and S&P BSE
Metal fell 5.26% and 4.85%, respectively.
S&P BSE Consumer Durables and S&P
BSE Power fell 4.75% and 4.44%,
respectively.
Indian Derivatives Market Review
• Nifty Oct 2018 Futures settled at 10,954.3, a premium of 23.85 points, above the spot
closing of 10,930.45. The turnover on NSE’s Futures and Options segment stood at Rs.
62.53 lakh crore as against Rs. 54.19 lakh crore on Sep 21.
• The Put-Call ratio stood at 0.78 compared with the previous week’s close of 0.87.
• The Nifty Put-Call ratio stood at 1.33 against the previous week’s close of 1.15.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
6.51 6.58 6.35 7.57
91 Day T-Bill
6.97 7.10 6.80 6.12
7.80% 2021, (5 Yr GOI)
7.96 8.00 7.75 7.09
7.17% 2028, (10 Yr GOI)
8.02 8.08 7.90 7.40
Source: Thomson Reuters
Eikon
Value as on Sep 28, 2018
• Bond yields fell following
announcement of Open market
operations (OMO) purchase of up to
Rs. 10,000 crore which took place
later during the week. Further, market
participants resorted to short covering
as they expected government
borrowing targets to come down in
the second half of FY19. However,
increase in crude oil prices and
weakening of rupee against the
greenback capped the gains.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) fell 6 bps to
close at 8.02% from the previous
week’s close of 8.08%.
• Data from RBI showed that India’s
foreign exchange reserves rose to
$401.79 billion as of Sep 21, 2018,
from $400.49 billion in the previous
week.
8.00
8.05
8.10
8.15
24-Sep 25-Sep 26-Sep 27-Sep 28-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 7.91 9.01 110
3 Year 8.14 8.97 83
5 Year 8.25 9.02 77
10 Year 8.19 9.03 84
Source: Thomson Reuters Eikon
Value as on Sep 28, 2018
• Yields on gilt securities fell across the
maturities by up to 12 bps barring 2-year
paper that increased 1 bps and 15-year
paper that closed steady.
• Corporate bond yields increased across the
maturities in the range of 5 bps to 21 bps.
The maximum increase was witnessed on 2-
year paper and the minimum increase on
15-year paper.
• Spread between AAA corporate bond and
gilt expanded across the maturities in the
range of 4 bps to 27 bps. The maximum
increase was witnessed on 2-year paper and
the minimum increase on 15-year paper.
-16
-3
10
6.70
7.55
8.40
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 28-Sep-18 21-Sep-18
Yield in %
Change in
bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Securities and Exchange Board of India (SEBI) has given the approval to the Bombay
Stock Exchange (BSE) for the launch of delivery based futures contract in gold (1 kg) and
silver (30 kg). Trading of these contracts will be launched on Oct 1, 2018. Contract start day
will be 6th day of contract launch month and last trading day will be 5th day of contract
expiry month.
• RBI has permitted the banks to dip further into statutory cash reserves in a bid to ease a
liquidity squeeze. RBI stated that the banks could carve out 15% of the holdings under the
statutory liquidity reserves to meet their liquidity coverage ratio (LCR) requirements as
against current rate of 13%. The announcement comes in order to ease the liquidity
squeeze that has been troubling the nation’s money markets.
• The Cabinet Committee on Economic Affairs (CCEA) has given approval for a package
worth Rs. 5,500 crore for the sugar industry. The package includes over two-fold increase in
production assistance to cane growers and transport subsidy to mills for export up to 5
million tonne in the marketing year 2018-19 that begins in Oct 2018. Besides offsetting the
cost of cane, the proposal comes in order to facilitate export of sugar from the country.
• The government would likely approach the RBI for relaxation in the prompt corrective action
(PCA) framework wherein the loss-making banks have been stopped from lending.
Regulatory Updates in India (contd..)
• The commerce ministry announced that India will impose duties on imports within the norms
of the World Trade Organisation (WTO). The announcement comes on the wake of
protecting domestic industry and boost the economy. The ministry stated that India is a
developing economy and has the right to use tariff within the bound rates under WTO.
• Ayushman Bharat–Pradhan Mantri Jan Aarogya Yojana (AB-PMJAY), the world's largest
government-funded healthcare scheme, was launched by the Prime Minister of India. The
government aims to provide healthcare facilities to more than 10 crore families that covers
urban and rural poor. The scheme that offers an insurance cover of Rs. 5 lakh and would
cover 10 crore poor families or almost 50 crore persons have become operational from Sep
25, 2018.
• The Union Cabinet has cleared a new telecom policy known as National Digital
Communications Policy (NDCP) 2018. The policy aims to get $100 billion investment in the
digital communications sector by 2022, provide broadband to all and create an additional
four million jobs.
9
Global News/Economy
• The U.S. Federal Reserve (Fed) in its monetary policy review increased interest rates by 25
bps as it decided to raise the target range for the federal funds rate to 2 to 2.25%. This was
the third-rate hike by Fed in 2018. Fed also projected one more rate hike in 2018, three rate
hikes in 2019 and one in 2020. Fed upwardly revised the outlook for GDP growth in 2018 to
3.1% from 2.8%.
• According to the Office for National Statistics, U.K.’s Gross Domestic Product (GDP) rose
0.4% in the second quarter of 2018, same as previous estimate. However, the growth rate
for the first quarter was revised down to 0.1% from 0.2%. On a yearly basis, the economy
expanded 1.2% that was revised down from 1.3%.
• European Central Bank’s President indicated rise in underlying inflation in coming months.
He also indicated euro zone’s continuous growth at robust pace amid high level of capacity
utilization. Also, specified that labour markets are tightening with signs of labour shortages in
some countries and sectors.
• According to the Ministry of Internal Affairs and Communications, industrial production in
Japan rose 0.7% MoM in Aug 2018 following 0.1% fall in Jul 2018. On a yearly basis,
industrial production rose 0.6% from 2.2% in the previous month.
10
Global Equity Markets
11
Global Indices
Indices
28-Sep-18
1-Week
Return
YTD
Return
Dow Jones
26,458.31 -1.07% 7.04%
Nasdaq 100
7,627.65 1.28% 19.25%
FTSE 100
7,510.20 0.27% -2.31%
DAX Index
12,246.73 -1.48% -5.19%
Nikkei Average
24,120.04 1.05% 5.95%
Straits Times
3,257.05 1.22% -4.29%
Source: Thomson Reuters Eikon
Value as on Sep 28, 2018
U.S.
• U.S. markets closed on a mixed note
during the week. Market participants
remained cautious over trade deal
between U.S. and Canada and after
China rejected a trade meeting with
U.S.
• However, market sentiment received
some support following higher than
expected rise in durable goods orders in
Aug 2018.
Europe
• European markets closed on a mixed note during the week. Market sentiments remained
subdued following trade war concerns between U.S. and China and on political uncertainty
in Italy after the nation announced a high deficit budget. Respite was seen following a slew
of upbeat economic data from the euro zone.
Asia
• Asian markets got support amid expectations that Chinese government would take some
stimulus measures to support the growth trajectory of the country. However, trade
concerns over U.S. and China limited the upside after media reported that China has
cancelled its meeting with U.S. and fresh set of tariffs are expected to be imposed by both
the nations.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
fell 3 bps to close at 3.04% from the
previous close of 3.07%.
• U.S. Treasury prices fell initially on
growing possibility of a rate hike by the
U.S. Federal Reserve in its monetary
policy review which was due on Sep 26,
2018.
• However, the trend reversed and U.S.
Treasury prices rose after the U.S.
Federal Reserve in its monetary policy
review projected inflation to come down
and signalled a gradual rate hike path
moving forward in response to solid
economic growth even though it
increased interest rates as expected.
3.05
3.07
3.09
3.11
24-Sep 25-Sep 26-Sep 27-Sep 28-Sep
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) 83.21 79.34
Gold ($/Oz) 1,191.69 1,199.09
Gold (Rs/10 gm) 30,296 30,697
Silver ($/Oz) 14.60 14.25
Silver (Rs/Kg) 37,006 36,882
Eikon *Value as on Sep 28, 2018
Gold
• Gold prices came under pressure after
the U.S. Federal Reserve increased
interest rates by 25 bps and gave clues
of another rate-hike in Dec 2018. It
further added that the central bank is
expected to increase interest rates
thrice in 2019 and once in 2020.
Crude
• Brent crude prices surpassed the $80
per barrel level during the week, on
worries regarding shrinking supplies
once U.S.’ sanction on Iran starts in Nov
2018. Nonetheless, gains were
restricted by U.S.’ assurance that it
would ensure proper oil supply before
the Iran sanction begins.
Baltic Dry Index
• The Baltic Dry Index grew 8.99% on the
back of improved capesize and
panamax activities.
9.50
10.00
10.50
11.00
29-Aug-18 8-Sep-18 18-Sep-18 28-Sep-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
4.88%
-0.62%
2.46%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
72.55 71.85
Pound Sterling
94.91 95.15
Euro
84.44 84.68
100 JPY
63.90 63.67
Source: RBI Figures in INR , *Value as on Sep 28, 2018
Rupee
• The rupee weakened against the
greenback as increase in global crude oil
prices weighed on market sentiment.
Euro
• The euro plunged against the greenback
after the U.S. Fed indicated another rate
hike in Dec 2018. Concerns about the
Italian budget also weighed on the
common bloc currency.
Pound
• The pound weakened against the
greenback after the U.S. Fed increased
interest rates by 25 bps and indicated
multiple rate hikes moving forward.
Yen
• The yen weakened against the
greenback after the U.S. Fed in its
monetary policy review increased
interest rates by 25 bps and indicated
multiple rate hikes until 2020.
9.80
10.00
10.20
10.40
10.60
29-Aug-18 8-Sep-18 18-Sep-18 28-Sep-18
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
0.97%
- 0.25%
- 0.28%
0.36%
15
The Week that was…
24
th
September to 28
th
September
The Week that was (Sep 24 – Sep 28)
16
Date Events Present Value Previous Value
Monday,
September 24, 2018
• Germany IFO Business Climate (Sep) 103.7 103.8
Tuesday,
September 25, 2018
• India Fiscal Deficit (Apr-Aug 2018) (Rs. in lakh crore) 5.91 5.4
• U.S. Consumer Confidence Index (Sep) 138.4 134.7
• U.S. House Price Index (MoM) (Jul) 0.20% 0.30%
Wednesday,
September 26, 2018
• U.S. FOMC Rate Decision (Upper Bound) 2.25% 2.00%
• U.S. FOMC Rate Decision (Lower Bound) 2.00% 1.75%
• U.S. New Home Sales (MoM) (Aug) 3.50% -1.60%
Thursday,
September 27, 2018
• U.S. Durable Goods Orders (Aug P) 4.50% -1.20%
• U.S. Gross Domestic Product Annualized (QoQ) (2Q) 4.20% 4.20%
• U.S. Advance Goods Trade Balance (Aug) -$75.8B -$72.0B
• Germany Consumer Price Index (YoY) (Sep P) 2.30% 2.00%
• Germany GfK Consumer Confidence (Oct) 10.6 10.5
Friday,
September 28, 2018
• U.S. Personal Consumption Expenditure Core (YoY) (Aug) 2.00% 2.00%
• Eurozone Consumer Price Index Estimate (YoY) (Sep) 2.10% 2.00%
• Germany Unemployment Claims Rate (Sep) 5.10% 5.20%
• Germany Unemployment Change (000's) (Sep) 23K -8K
• Japan Housing Starts (YoY) (Aug) 1.60% -0.70%
• Japan Construction Orders (YoY) (Aug) 0.50% -9.30%
17
The Week Ahead
1
st
October to 5
th
October
18
The Week Ahead
Day Event
Monday,
October 1, 2018
• India Nikkei Manufacturing PMI (Sep)
• India Index of Eight Core Industries (Aug)
• U.S. ISM Manufacturing PMI (Sep)
• U.K. Mortgage Approvals (Aug)
• Japan Monetary Base (YoY) (Sep)
Tuesday,
October 2, 2018
• Japan Consumer Confidence Index (Sep)
• U.K. Nationwide House Price (YoY) (Sep)
Wednesday,
October 3, 2018
• U.S. ISM Non-Manufacturing/Services Composite (Sep)
• Japan Nikkei Composite PMI (Sep)
• U.K. Markit Composite PMI (Sep)
• Eurozone Retail Sales (YoY) (Aug)
Thursday,
October 4, 2018
• India Nikkei Service PMI (Sep)
• U.S. Factory Orders (Aug)
Friday,
October 5, 2018
• India Fourth Bi-monthly Monetary Policy Meeting for FY19
• U.S. Change in Non-farm Payrolls (Sep)
• U.S. Unemployment Rate (Sep)
• U.K. Unit Labor Costs (YoY) (2Q)
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19
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