The Week that was…
2
nd
September to 6
th
September
2
Indian Economy
• Government data showed that the growth in the index of eight core industries grew 2.1% in
Jul 2019 against a revised growth of 0.7% in Jun 2019 (0.2% growth originally reported),
and 7.3% in the same period of the previous year. Crude oil growth fell the most by 4.4%,
followed by coal, refinery products and natural gas, down 1.4%, 0.9% and 0.5%,
respectively. The cement sector witnessed the maximum growth of 7.9% followed by steel
and electricity, which grew 6.6% and 4.2%, respectively.
• Nikkei India Manufacturing Purchasing Managers' Index (PMI) fell to 51.4 in Aug 2019 from
52.5 in Jul 2019 as sales expanded at the slowest rate in 15 months and output growth
and job creation were subdued. Also, factories decreased input buying for the first time
since May 2018. Manufactured goods inventories decreased further in Aug, which is the
25th month of continuous depletion.
• The seasonally adjusted Nikkei India Services Business Activity Index fell to 52.4 in Aug
2019 from 53.8 in Jul 2019. Job creation and output expansion was curtailed by weaker
sales gains and rates of inflation came in at historically weak levels. Business sentiment,
however, strengthened to one-year high because of supportive public policies and
estimates of better demand. The seasonally adjusted Nikkei India Composite PMI Output
Index that considers both the manufacturing sector and the services sector came in at 52.6
in Aug from 53.9 in Jul.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 06-Sep-19 1 Week Return YTD Return
S&P BSE Sensex 36,981.77 -0.94% 2.53%
Nifty 50 10,946.20 -0.70% 0.77%
S&P BSE Mid-Cap 13,364.63 -0.76% -13.43%
S&P BSE Small-Cap 12,594.59 0.48% -14.36%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline
Ratio
03-Sep-19 544 1,259 0.43
04-Sep-19 936 852 1.10
05-Sep-19 1,161 640 1.81
06-Sep-19 1,195 618 1.93
Source: NSE
• Indian equity markets fell in the holiday-
truncated week ended Sep 6, 2019,
mainly as dismal economic data soured
investor sentiment. India’s Jun 2019
quarter gross domestic product (GDP)
came in at more than six-year low. GDP
fell for the fifth consecutive quarter.
• On top of this, core sector data and
manufacturing PMI, released on Sep 2,
dropped as well. Manufacturing PMI
touched a 15-month low in Aug 2019.
Adding to the woes was continued
outflows by foreign portfolio investors.
• Further losses were restricted on upbeat
global cues and a strengthening rupee.
Investors welcomed positive political
developments in Italy, Britain and Hong
Kong. U.S.-China plans for more trade
talks and strong U.S. economic data also
added to the gains. Expectations of
further stimulus by the government also
contributed to the upside.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.07 26.91 34.92 33.85
P/B
2.80 3.32 2.29 1.80
Dividend Yield
1.25 1.40 1.11 1.11
Source: BSE, NSE Value as on Sep
06, 2019
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
15,958.7 1.21% 1.95%
S&P BSE Bankex
30,638.2 -1.01% -3.33%
S&P BSE CD
22,921.2 -2.13% 2.41%
S&P BSE CG
16,962.6 0.12% -2.19%
S&P BSE FMCG
10,893.6 -1.66% -0.45%
S&P BSE HC
12,952.6 0.60% 3.57%
S&P BSE IT
16,253.8 0.65% 4.14%
S&P BSE Metal
8,758.5 2.75% -3.92%
S&P BSE Oil & Gas
13,370.2 1.57% 4.39%
S&P BSE Power
1,924.2 1.92% 0.93%
S&P BSE Realty
1,949.2 -4.81% -3.74%
Source: Thomson Reuters Eikon
*
Value as on Sep 06, 2019
• S&P BSE Realty was the major loser, down
4.81%, followed by S&P BSE Consumer
Durables and S&P BSE FMCG that lost
2.13% and 1.66%, respectively. S&P BSE
Metal was the major gainer, up 2.75%,
followed by S&P BSE Power and S&P BSE
Oil & Gas, up 1.92% and 1.57%, respectively.
• The metal sector gained as trade relations
between U.S. and China seemed to improve.
The consumer sector was burdened by signs
of slowing demand in the economy.
Indian Derivatives Market Review
• Nifty Sep 2019 Futures stood at 10,973.65, a premium of 27.45 points above the spot
closing of 10,946.20. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 66.55 lakh crore as against Rs. 79.69 lakh crore for the week to Aug 30.
• The Put-Call ratio stood at 0.86 compared with the previous week’s close of 0.83 .
• The Nifty Put-Call ratio stood at 1.31 against the previous week’s close of 1.38.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.37 5.38 5.64 6.18
91 Day T-Bill
5.32 5.42 5.63 6.42
07.32% 2024, (5 Yr GOI)
6.23 6.25 6.22 7.05
07.26% 2029, (10 Yr GOI)
6.60 6.56 6.34 7.39
Source: Thomson Reuters Eikon
Value as on Sep 06, 2019
• Bond yields fell earlier during the
week on expectations that the
Monetary Policy Committee may
further ease its monetary policy after
the country’s economic growth rate
tumbled to more than a six-year low
in the quarter ended Jun 2019.
However, the trend reversed on
concerns that the government may
spend more to boost the growth
prospects of a slowing economy and
end up missing the fiscal deficit
target. Increase in global crude oil
prices also weighed on the market
sentiment.
• Yield on the 10-year benchmark
paper (7.26% GS 2029) rose 4 bps to
6.60% compared with the previous
close of 6.56%.
• India’s foreign exchange reserves fell
for the third consecutive week to
$428.60 billion as of the week ended
Aug 30 2019.
6.50
6.54
6.58
6.62
3-Sep 4-Sep 5-Sep 6-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 5.77 7.35 158
3 Year 6.11 7.28 117
5 Year 6.39 7.49 110
10 Year 6.71 8.11 140
Source: Thomson Reuters Eikon
Value as on Sep 06, 2019
• Yields on gilt securities fell across 1 to 7-year
maturities and 12 to 15-year paper by up to 8
bps and increased across the remaining
maturities in the range of 2 bps to 22 bps.
• Corporate bond yields increased across 6 to 9-
year paper in the range of 7 bps to 18 bps and
fell across the remaining maturities in the
range of 6 bps to 69 bps.
• Spread between AAA corporate bond and gilt
expanded on 1-year maturity and 5 to 7-year
paper by up to 19 bps and contracted across
the remaining maturities in the range of 11 bps
to 66 bps.
-12
0
12
24
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 06-Sep-19 30-Aug-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• A panel appointed by the Reserve Bank of India (RBI) has proposed that a self-regulatory
body make suitable benchmarks for trading corporate loans in the secondary market,
among others. The task force has suggested that a self-regulatory body (SRB) of market
participants be made to develop appropriate benchmark rates for secondary market
purchase and sale of corporate loans. The SRB is expected to also finalise detailed
modalities and formulate guidelines. This comes after corporate bonds were bought under
the secondary market.
• RBI has told banks to link interest rates on loans to retail and small business borrowers to
an external benchmark from Oct 1, 2019. This will help in effective downward transmission
of RBI’s policy rate cuts. Banks can link loans to other segments of borrowers as well, RBI
said. For borrowers, this will result in faster transmission during both rise and fall of interest
rates.
• The Prime Minister has launched 'Act Far East' policy and asserted that India will support
Russia in its development of the Far East. He announced $1 billion line of credit for the
development of the resource-rich region.
Regulatory Updates in India (contd..)
9
• The Cabinet Committee on Economic Affairs (CCEA) increased the price of sugarcane-
extracted ethanol. Ethanol is used for blending in petrol. This will encourage ethanol-
blended fuel and cut India’s heavy oil import bill. It will support the sugar industry and
farmers. Also, the government has allowed sugar and sugar syrup for ethanol production.
With this, all distilleries will be able to take benefit of the scheme and large number of them
are likely to supply ethanol for the Ethanol Blended Petrol (EBP) program. Improved price to
ethanol suppliers will help in reducing cane farmers’ arrears.
• The government is planning to invest Rs. 25,000 crore in the next five years to revamp the
fisheries infrastructure sector in India. It will expand the scope of inland fisheries and
increase productivity in aquaculture farms by monitoring disease and implementing
traceability in order to double seafood exports.
• As per media report, the nodal Department of Financial Services has allowed infusion of Rs.
12,000 crore capital in the three state-run general insurance companies – National
Insurance, Oriental Insurance and United India Insurance. Post the capital infusion, these
banks’ financial conditions will improve, which will help them to get prepared for merger. In
the Union Budget last year, plans were announced to merge these three entities into one
large entity, the process of which could not be completed because of various reasons,
including their poor financial health.
Global News/Economy
• Labor Department data showed employment in the U.S. increased by less than expected in
Aug 2019. The report said non-farm payroll employment rose by 130,000 jobs in Aug after
climbing by 159,000 jobs in Jul 2019.
• A report released by the Institute for Supply Management showed U.S. manufacturing
activity contracted for the first time in three years in Aug 2019. The ISM said its purchasing
managers index fell to 49.1 in Aug after dipping to 51.2 in Jul 2019. A reading below 50
indicates a contraction in manufacturing activity.
• Data from IHS Markit showed U.K. service sector growth weakened in Aug 2019. The IHS
Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index fell more
than expected to 50.6 in Aug from 51.4 in Jul 2019.
• Data from IHS Markit showed euro area private sector logged a moderate growth in Aug
2019 with the final composite output index rising to 51.9 from 51.5 in Jul 2019. The flash
score was 51.8. The pace of expansion improved slightly more than initially estimated.
• IHS Markit data showed China's private sector logged its fastest growth in four months in
Aug 2019 with the Caixin composite output index climbing to 51.6 from 50.9 in Jul 2019.
Both manufacturers and service providers saw improved rates of activity growth.
10
Global Equity Markets
11
Global Indices
Indices
06-Sep-19
1-Week
Return
YTD
Return
Russell 3000 1,312.34 1.41% 23.49%
Nasdaq 100 7,852.54 2.10% 24.05%
FTSE 100 7,282.34 1.04% 8.24%
DAX Index 12,191.73 2.11% 15.46%
Nikkei Average 21,199.57 2.39% 5.92%
Straits Times 3,144.48 1.22% 2.47%
Source: Thomson Reuters Eikon
Value as on Sep 06, 2019
U.S.
• U.S. markets traded positive following
news that both U.S. and China are
planning to hold high level trade talks in
early Oct. A report from payroll
processor ADP showing stronger than
expected private sector job growth in
U.S. in Aug also generated buying
interest. Lower than expected increase
in non-farm payroll employment during
the month hardly impacted market
sentiments.
Europe
• European markets too witnessed buying spree amid easing political tensions in Hong
Kong, Italy and the U.K. In Italy, the Prime Minister designate won support to form a new
government. Hopes of a possible breakthrough in the U.S.-China trade dispute buoyed
market sentiments.
Asia
• Asian markets reflected gains of the global peers amid positive vibes generated from news
that U.S.-China trade talks were back on the table. Hong Kong markets witnessed buying
interest amid easing political tension in Hong Kong. Furthermore, separate surveys
showing U.S. private payrolls and the services industry rebounding in Aug contributed to
the gains.
Global Debt (U.S.)
12
• Yields on the 10-year U.S. Treasury
bond rose 5 bps to 1.56% compared
with the previous week’s close of 1.51%.
• U.S treasury prices grew earlier during
the week under review after the U.S.
Federal Reserve's Beige Book report
led to concerns that the growth of the
U.S. economy may slow down in the
second quarter of 2019.
• However, the trend reversed as the
investor risk sentiment improved to
some extent on reports that the United
States and China had agreed to hold
trade talks in Oct 2019. Losses were
extended after U.S. private sector
employment grew at its fastest pace in
four months in Aug 2019.
• Further losses were restricted at the end
of the week after U.S. nonfarm payroll
employment slowed more than
expected in Aug 2019.
1.40
1.45
1.50
1.55
1.60
3-Sep 4-Sep 5-Sep 6-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) 61.57 61.13
Gold ($/Oz) 1,506.70 1,519.85
Gold (Rs/10 gm) 38,185 38,405
Silver ($/Oz) 18.16 18.35
Silver (Rs/Kg) 46,935 46,688
Source: Thomson Reuters Eikon *Value as on Sep 06, 2019
Gold
• Gold prices fell on upbeat remarks from
the Chairperson of U.S Fed that despite
trade uncertainties he did not expect a
U.S. recession. Easing tensions in Hong
Kong and hopes towards the end of the
week that U.S. and China are agreeing to
more trade talks in Oct also contributed
to the downside.
Brent Crude
• Brent crude prices grew following reports
from Energy Information Administration
(EIA) that oil inventories fell by 4.8 million
barrels in the week ended Aug 30, 2019.
Hopes towards the end of the week that
U.S. and China are agreeing to more
trade talks in Oct added to the gains.
Baltic Dry Index
• The Baltic Dry Index grew on the back of
improved capesize and panamax
activities.
9.20
9.90
10.60
11.30
12.00
6-Aug-19 16-Aug-19 26-Aug-19 5-Sep-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
0.72%
-0.87%
-1.04%
06-Sep-19
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
71.73 71.76
Pound Sterling
88.51 87.43
EURO
79.21 79.24
100 Yen
67.04 67.49
Source: RBI Figures in INR , *
Value as on Sep 06, 2019
Rupee
• The rupee strengthened as investor’s risk
appetite improved on reports that the U.S.
and China agreed to hold trade talks in Oct
2019.
Euro
• The euro gained against the greenback as
ease in geopolitical worries with positive
news of Hong Kong, Brexit and restart of
trade talks between U.S. and China made
investors to shift to riskier currencies.
Pound
• The pound gained against the greenback on
hopes that a no-deal Brexit would be
avoided.
Yen
• The yen fell against the U.S. dollar on reports
that U.S. and China are agreeing to hold
high-level talks in early Oct 2019 in
Washington which bolstered investor
confidence and reducing demand for safe-
haven currencies.
9.90
10.00
10.10
10.20
10.30
10.40
6-Aug-19 16-Aug-19 26-Aug-19 5-Sep-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
-0.04%
1.23%
-0.04%
-0.67%
06-Sep-19
15
The Week that was…
2
nd
September to 6
th
September
The Week that was (September 2 – September 6)
16
Date Events Present Value Previous Value
Monday,
September 02, 2019
• India Manufacturing PMI (Aug) 51.4 52.5
• China Caixin Manufacturing PMI (Aug) 50.4 49.9
• U.K. Markit Manufacturing PMI (Aug) 47.4 48.0
Tuesday,
September 03, 2019
• U.S. ISM Manufacturing (Aug) 49.1 51.2
• U.S. ISM Employment (Aug) 47.4 51.7
• U.K Markit/CIPS Construction PMI (Aug) 45.0 45.3
Wednesday,
September 04, 2019
• India Service PMI (Aug) 53.8 52.4
• China Caixin Services PMI (Aug) 52.1 51.6
• U.K. Markit/CIPS Services PMI (Aug) 50.6 51.4
• Eurozone Retail Sales (YoY) (Jul) 2.2% 2.8%
Thursday,
September 05, 2019
• U.S. ISM Non-Manufacturing/Services Composite (Aug) 56.4 53.7
• Germany Factory Orders (YoY) (Jul) -5.6% -3.5%
• Germany Markit Construction PMI (Aug) 46.3 49.5
• U.S. Initial Jobless Claims (Aug 31) 217k 216k
• U.S. ADP Employment Change (Aug) 195k 142k
• U.S. Factory Orders (Jul) 1.4% 0.6%
Friday,
September 06, 2019
• U.S Change in Non-farm Payrolls (Aug) 130k 159k
• U.S Unemployment Rate (Aug) 3.7% 3.7%
• Eurozone Gross Domestic Product (YoY) (2Q F) 1.2% 1.3%
17
The Week Ahead
9
th
September to 13
th
September
18
The Week Ahead
Day Event
Monday,
September 09, 2019
• China Trade Balance (Aug)
• Japan Trade Balance - BOP Basis (Yen) (Jul)
• Japan Gross Domestic Product Annualized s.a. (QoQ) (2Q F)
• U.K. Monthly GDP (3M/3M) (Jul)
Tuesday,
September 10, 2019
• China Consumer Price Index (YoY) (Aug)
• China Producer Price Index (YoY) (Aug)
• U.K. ILO Unemployment Rate 3Mths (Jul)
• U.K. Jobless Claims Change (Aug)
Wednesday,
September 11, 2019
• China Foreign Direct Investment (YoY) (Aug)
• U.S. DOE U.S. Crude Oil Inventories (Sep 6)
• Japan Machine Orders (YoY) (Jul)
Thursday,
September 12, 2019
• European Central Bank Rate Decision
• Eurozone Zone Industrial Production w.d.a. (YoY) (Jul)
• U.S. Consumer Price Index (YoY) (Aug)
• U.S. Initial Jobless Claims (Sep 7)
Friday,
September 13, 2019
• U.S. Retail Sales Advance (MoM) (Aug)
• U.S. University of Michigan Consumer Sentiment (Sep P)
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