News U Can Use
September 7, 2018
The Week that was…
31
st
August to 7
th
September
2
Indian Economy
• According to the preliminary numbers released by the Reserve Bank of India (RBI),
Current Account Deficit (CAD) stood at $15.8 billion or 2.4% of Gross Domestic Product
(GDP) in Q1 of 2018-19, compared to $15.0 billion or 2.5% of GDP in Q1 of 2017-18. The
widening of the CAD was driven by higher trade deficit that came in at $45.7 billion as
against $41.9 billion in the previous year period. Net services receipts grew 2.1% YoY
mainly due to rise in net earnings from software and financial services.
• India's manufacturing sector grew moderately in Aug 2018 because of softened domestic
demand, according to a private business survey. The manufacturing Purchasing Managers'
Index (PMI) came in at 51.7 in Aug 2018, compared to 52.3 in Jul 2018. A reading of over
50 indicates expansion and otherwise contraction.
• The Nikkei India Services PMI fell to 51.5 in Aug 2018 from 54.2 in Jul 2018. The downside
reflects weakest growth in new work in three months. Seasonally adjusted Nikkei India
Composite PMI Output Index fell to 51.9 in Aug 2018 as against 54.1 in Jul 2018 due to
weaker growth in both the manufacturing and service sectors.
• According to data from the Association of Mutual Fund in India (AMFI), the asset under
management (AUM) of the mutual fund industry surpassed the record Rs. 25 lakh crore-
mark. This is primarily attributable to the massive inflow of liquid funds and robust retail
investment. The net inflow during the month stood at Rs. 1.75 lakh crore, of which Rs. 1.71
lakh crore came from liquid / money market.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 07-Sep-18 1 Week Return YTD Return
S&P BSE Sensex 38,389.82 -0.66% 12.72%
Nifty 50 11,589.10 -0.78% 10.05%
S&P BSE Mid-Cap 16,504.86 -2.23% -7.39%
S&P BSE Small-Cap 16,896.95 -1.72% -12.14%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
03-Sep-18 885 966 0.92
04-Sep-18 412 1,424 0.29
05-Sep-18 601 1,228 0.49
06-Sep-18 1,088 710 1.53
07-Sep-18 1,060 743 1.43
Source: NSE
• Indian equity markets closed in the
red following rupee’s persistent
weakness wherein it plunged to a
record low against the greenback.
• Investor sentiment dented further as
final reading of a private survey
showed that the domestic service
sector expanded at a slower pace in
Aug as weaker demand and rising
input costs restricted hiring. Further,
India's manufacturing sector growth
eased in Aug 2018, thereby weighing
on market sentiment.
• Global cues too played spoilsport as
heightened worries over international
trade conflicts curbed investors'
appetite for riskier assets after U.S.-
Canada trade talks on the North
Atlantic Free Trade Agreement
(NAFTA) ended without a resolution.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
24.74 28.17 33.53 -132.1
P/B
3.18 3.73 2.8 2.53
Dividend Yield
1.15 1.15 0.93 0.75
Source: BSE, NSE Value as on Sep 7
, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
24,704.0 -0.05% 1.84%
S&P BSE Bankex
31,009.9 -2.31% -1.06%
S&P BSE CD
20,867.0 -3.82% -3.83%
S&P BSE CG
18,541.5 -2.40% 1.38%
S&P BSE FMCG
12,186.1 -4.59% 0.78%
S&P BSE HC
16,311.1 2.30% 12.10%
S&P BSE IT
15,780.7 1.49% 8.21%
S&P BSE Metal
14,045.5 1.62% 7.50%
S&P BSE Oil & Gas
14,971.2 -0.72% -0.58%
S&P BSE Auto
24,704.0 -0.05% 1.84%
Source: Thomson Reuters Eikon
*Value as on Sep 7, 2018
• On the BSE sectoral front, indices closed
on a weak note. S&P BSE FMCG stood as
the major loser that fell 4.59% followed by
S&P BSE Consumer Durables that fell
3.82%.
• S&P BSE Healthcare stood as the major
gainer that surged 2.30%, followed by S&P
BSE Metal and S&P BSE IT that grew
1.62% and 1.49%, respectively. The
information technology (IT) sector gained
as rupee hit a fresh low. A low rupee
benefits export-oriented businesses such
as IT.
Indian Derivatives Market Review
• Nifty Sep 2018 Futures settled at 11,573.10, a premium of 52.80 points, above the spot
closing of 11,520.30. The turnover on NSE’s Futures and Options segment stood at Rs.
58.47 lakh crore as against Rs. 53.44 lakh crore on Aug 31.
• The Put-Call ratio stood at 0.87 compared with the previous week’s close of 0.91.
• The Nifty Put-Call ratio stood at 1.45 against the previous week’s close of 1.55.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
6.34 6.41 6.33 5.89
91 Day T-Bill
6.85 6.81 6.78 6.29
7.80% 2021, (5 Yr GOI)
7.96 7.79 7.67 7.21
7.17% 2028, (10 Yr GOI)
8.03 7.95 7.79 7.68
Source: Thomson Reuters
Eikon
Value as on Sep 7, 2018
• Bond yields rose for the fourth
consecutive week as market
sentiment remained subdued with
rupee hitting a record against the
greenback.
• On the other hand, oil prices
continued to rise amid supply
concerns from Iran. Increase in global
crude oil prices have sparked worries
over rising inflation, widening trade
deficit and possibility of further
monetary tightening in the domestic
market. However, at the end losses
were restricted on value buying and
as global crude oil prices eased to
some extent.
• Yield on the 10-year benchmark
paper (7.17% GS 2028) rose 8 bps to
close at 8.03% from the previous
week’s close of 7.95% after trading in
a range of 7.92% to 8.11%.
7.97
8.01
8.05
8.09
3-Sep 4-Sep 5-Sep 6-Sep 7-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 7.96 8.66 70
3 Year 8.14 8.67 53
5 Year 8.28 8.81 53
10 Year 8.19 8.87 68
Source: Thomson Reuters Eikon
Value as on Sep 7, 2018
• Yields on gilt securities increased across
the maturities by up to 37 bps barring 11-
and 12-year papers that fell 4 bps and 1
bps, respectively.
• Corporate bond yields increased across
the maturities in the range of 3 bps to 11
bps barring 15-year paper that fell 6 bps.
• Spread between AAA corporate bond and
gilt contracted across the maturities in the
range of 2 bps to 26 bps. The maximum
contraction was witnessed on 1-year paper
and the minimum contraction was
witnessed on 7-year paper.
0
16
32
48
6.70
7.30
7.90
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 07-Sep-18 31-Aug-18
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• According to media reports, AMFI laid down a set of minimum standards, which needs
industry compliance. These standards have been formed to guard investors against cyber-
crime and identity theft. AMFI is said to have communicated this to all the Asset
Management Companies.
• The government has simplified the process of claiming GST refunds. The claimants will now
have to submit printout of ‘GSTR-2A’ form to tax authorities instead of giving invoices of all
purchases in a month. GSTR-2A form, the purchase return auto-generated by the system,
will serve as an evidence through which claimant can avail input tax credit.
• The Securities and Exchange Board of India (SEBI) will review the proposed new norms for
Foreign Portfolio Investors (FPIs) after issues being raised by foreign portfolio investor
groups. The regulator will look into the interests of all the stakeholders involved. SEBI has
already formed a working group under the former Reserve Bank of India (RBI) deputy
governor to take a look at issues raised by FPIs, including ‘know your client’ (KYC) needs
and disclosures on beneficial ownership.
• Electric vehicles and vehicles that run on alternative fuels such as compressed natural gas
(CNG) and ethanol will not require permits to ply on roads, as per the transport minister.
Also, the transport minister stated that vehicles that run on bio-CNG are being taken into
consideration for the relief. As per the minister, all states have given their support to
Centre’s move to end permits for such vehicles.
Regulatory Updates in India (contd..)
• A panel, led by the Insurance Regulatory and Development Authority (IRDAI), has
recommended that individuals will be allowable to change from being insurance agents to
insurance service providers (ISP), as this will help in streamlining distribution of insurance
products and providing efficient services to policyholders. Apart from this, the panel
recommended that the list of products to be sold through an insurance marketing firm
should include group insurance products and combi-products. Both the recommendations, if
accepted, will expand the scope of an insurance agent who can now sell products of more
than one insurer.
• IRDAI stated that no insurance coverage will be available for genetic disorders, for the time
being. The decision came after the Supreme Court stayed an order of the Delhi High Court
(issued in Feb 2018) asking insurers not to reject claims based on genetic disorder
exclusions. In a lawsuit involving United India Insurance, the Delhi High Court stated that
the exclusionary clause for ‘Genetic Disorders’ in the insurance policy is too extensive,
unclear and biased thereby violating the Article 14 of the Constitution of India that deals with
equality before the law.
• A new return form has been notified by the government for Goods and Services Tax (GST)
that will have to filed for the full year. GSTR-9 return is for the normal taxpayers and GSTR-
9A is for composition taxpayers. The tax payers must file the annual return form for 2017-18
by Dec 31, 2018.
9
Global News/Economy
• According to a report by the Labor Department, U.S. non-farm payroll employment rose
more than expected by 201,000 jobs in Aug 2018 after rising by a downwardly revised
147,000 jobs (157,000 jobs originally reported) in Jul 2018. However, the unemployment rate
stood steady at 3.9% defying expectations for a drop. Meanwhile, the annual rate of average
hourly employee earnings rose 2.9% in Aug 2018 from 2.7% in Jul 2018.
• A report from the Institute for Supply Management showed that U.S. manufacturing
Purchasing Managers’ Index (PMI) surprisingly grew to 61.3 in Aug 2018 from 58.1 in Jul
2018.
• According to data from the Eurostat, Gross Domestic Product (GDP) of the euro zone rose
0.4% (QoQ) in the second quarter of 2018, same as the first quarter and in line with market
expectations. On a yearly basis, GDP growth eased to 2.1% YoY as against 2.4% YoY in the
first quarter.
• Survey data from IHS Markit showed that the manufacturing activity in the euro zone
continued to strengthen in Aug 2018. The euro zone manufacturing PMI stood at 54.6 in Aug
2018 compared to 55.1 in Jul 2018. Germany’s IHS Markit/BME manufacturing PMI stood at
55.9 in Aug 2018 compared to 56.9 in Jul 2018. The French factory PMI stood at 53.5 in Aug
2018 compared to 53.3 in Jul 2018.
• A report from the Eurostat showed that euro zone retail sales fell 0.2% MoM in Jul 2018 as
against an increase of 0.3% in Jun 2018.
10
Global Equity Markets
11
Global Indices
Indices
7-Sep-18
1-Week
Return
YTD
Return
Dow Jones
25,916.54 -0.19% 4.84%
Nasdaq 100
7,430.26 -2.93% 16.16%
FTSE 100
7,277.70 -2.08% -5.33%
DAX Index
11,959.63 -3.27% -7.42%
Nikkei Average
22,307.06 -2.44% -2.01%
Straits Times
3,134.39 -2.46% -7.89%
Source: Thomson Reuters Eikon
Value as on Sep 7, 2018
U.S.
• U.S. markets witnessed selling pressure
amid persisting trade tensions between
U.S. and its key trade partners.
According to media reports the U.S.
President is considering imposing tariffs
on another $267 billion worth of Chinese
goods.
• This is in addition to the tariffs on $200
billion worth of Chinese goods, imposed
post the expiration of the public
comment period on Sep 6.
Europe
• European markets endured pullback due to persistent worries about global trade. Traders
are closely following the developments on the U.S.-China trade relations following the
expiration of the public comment period on new U.S. tariffs on $200 billion worth of
Chinese goods.
Asia
• Asian markets were no exception to the weakness seen in global peers. Worries over
potential new tariffs further weighed on the Asian bourses following the U.S. President’s
plan to impose tariffs on another $267 billion worth of Chinese goods and warning from
China's Commerce Ministry of rolling out necessary retaliatory measures in response.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury rose
9 bps to close at 2.94% from the
previous close of 2.85%.
• U.S. Treasury prices fell after data
showed that the official U.S.
manufacturing PMI accelerated to a
more than 14-year high in Aug 2018.
Moreover, heavy corporate debt supply
weighed on Treasury prices.
• However, prices recovered to some
extent following a sell off in global equity
market amid persistent concerns over
escalating trade tensions between U.S.
and China.
• Treasury prices fell further following
upbeat U.S. jobs data in Aug 2018. U.S.
nonfarm payroll employment
accelerated in Aug, while the annual
increase in wages was the largest since
Jun 2009.
2.86
2.89
2.92
2.95
4-Sep 5-Sep 6-Sep 7-Sep
Yield in %
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel) 75.62 77.01
Gold ($/Oz) 1,195.36 1,200.71
Gold (Rs/10 gm) 30,402 30,226
Silver ($/Oz) 14.10 14.50
Silver (Rs/Kg) 36,389 37,096
Source: Thomson Reuters
Eikon *Value as on Sep 7, 2018
Gold
• Gold prices moved down on
expectations of interest rate hike by the
U.S. Federal Reserve in its upcoming
policy review after the U.S. non-farm
payroll employment rose more than
expected in Aug 2018. However, the
downside was limited on persisting trade
tensions between U.S. and China.
Crude
• Brent crude prices moved down as
investors are now trying to gauge the
demand outlook for crude amid a
scenario of intensifying global trade
conflict and financial instability in
emerging markets.
Baltic Dry Index
• The Baltic Dry Index fell 5.64% on the
back of lower capesize and panamax
activities.
9.00
9.55
10.10
10.65
11.20
8-Aug-18 18-Aug-18 28-Aug-18 7-Sep-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-1.80%
-0.45%
-2.76%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
71.90 70.93
Pound Sterling
93.04 92.35
Euro
83.67 82.84
100 JPY
64.98 63.91
Source: RBI Figures in INR , *Value as on Sep 7, 2018
Rupee
• The rupee plunged to a record low
against the greenback as global crude oil
prices continued to remain at elevated
levels that sparked worries of rise in
domestic inflationary pressures.
Euro
• Euro weakened against the greenback
following upbeat U.S. non-farm payroll
employment data for Aug 2018.
Intensifying U.S. and China trade
tensions further improved the safe haven
appeal of the greenback.
Pound
• Pound fell against the greenback after
the U.K. manufacturing PMI fell to a two
year low in Aug 2018.
Yen
• Yen inched down against the greenback
following upbeat U.S. non-farm payroll
employment data for Aug 2018.
9.85
9.99
10.13
10.27
10.41
10.55
8-Aug-18 18-Aug-18 28-Aug-18 7-Sep-18
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
1.38%
0.74%
1.01%
1.67%
15
The Week that was…
31
st
August to 7
th
September
The Week that was (Sep 3 – Sep 7)
16
Date Events
Present
Value
Previous
Value
Monday,
September 03, 2018
• India Nikkei Manufacturing PMI (Aug) 51.7 52.3
• China Caixin Manufacturing PMI (Aug) 50.6 50.8
• U.K. Markit Manufacturing PMI (Aug) 52.8 53.8
Tuesday,
September 04, 2018
• U.S. ISM Manufacturing Index (Aug) 61.3 58.1
• U.S. ISM Employment Index (Aug) 58.5 56.5
• U.K. Markit/CIPS Construction PMI (Aug) 52.9 55.8
Wednesday,
September 05, 2018
• India Nikkei Service PMI (Aug) 51.5 54.2
• India Nikkei Composite PMI (Aug) 51.9 54.1
• China Caixin Composite PMI (Aug) 52 52.3
• Eurozone Retail Sales (YoY) (Jul) 1.10% 1.50%
• U.S. MBA Mortgage Applications (Aug 31) -0.10% 1.70%
Thursday,
September 06, 2018
• U.S. ISM Non-Manufacturing/Services Index (Aug) 58.5 55.7
• U.S. Factory Orders (Jul) -0.80% 0.60%
• Germany Factory Orders (YoY) (Jul) -0.90% -0.80%
Friday,
September 07, 2018
• U.S. Change in Non-Farm Payrolls (Aug) 201K 147K
• U.S. Unemplyment Rate (Aug) 3.90% 3.90%
• Germany Trade Balance (Jul) 16.5B 21.8B
• Eurozone Gross Domestic Product (YoY) (2QF) 2.10% 2.20%
• Germany Industrial Production (YoY) (Jul) 1.10% 2.70%
17
The Week Ahead
10
th
September to 14
th
September
18
The Week Ahead
Day Event
Monday,
September 10, 2018
• China Consumer Price Index (YoY) (Aug)
• U.K. Gross Domestic Product (MoM) (Jul)
• U.K. Trade Balance (Jul)
Tuesday,
September 11, 2018
• Eurozone Economic Sentiment (Sep)
• Germany Economic Sentiment (Sep)
• Japan Tertiary Industry Index (MoM) (Jul)
Wednesday,
September 12, 2018
• India Consumer Price Index (YoY) (Aug)
• India Index of Industrial Production (YoY) (Jul)
• Eurozone Employment (YoY) (Q2)
• Eurozone Industrial Production (YoY) (Jul)
Thursday,
September 13, 2018
• Bank of England Interest Rate Decision
• European Central Bank Rate Decision
• U.S. Consumer Price Index (YoY) (Aug)
Friday,
September 14, 2018
• India Wholesale Price Index (YoY) (Aug)
• U.S. Retail Sales Advance (MoM) (Aug)
• U.S. University of Michigan Sentiment (Sep P)
• China Industrial Production YTD (YoY) (Aug)
Disclaimer
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19
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