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NEWS U CAN USE
Dec 06, 2019
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The Week that was…
2
nd
Dec to 06
th
Dec
2
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Indian Economy
• The Monetary Policy Committee (MPC) kept key policy repo rate unchanged in its fifth bi-
monthly monetary policy review. The policy repo rate thus presently stands at 5.15%. The
reverse repo rate remains unchanged at 4.90% while the marginal standing facility rate
and the bank rate remains at 5.40%. However, the MPC decided to continue with its
accommodative stance on the monetary policy as long as it is necessary to revive growth,
while ensuring that inflation remains within its medium-term target. All members of the
MPC voted in favour of the decision.
• MPC raised its retail inflation projection to a range of 4.7% to 5.1% for H2FY20 from its
earlier projection of 3.5% to 3.7%. It downgraded the real GDP growth projections of the
Indian economy to 5.0% for FY20 from its earlier projection of 6.1%.
• Nikkei India Manufacturing Purchasing Managers' Index (PMI) rose to 51.2 in Nov 2019
from 50.6 in Oct 2019. Growth was supported by new products launch and better demand.
Though new orders and output rose at a modest pace, companies cut jobs for the first
time in 20 months and reduced input buying. It remained above the 50-mark threshold
that separates contraction from expansion.
• The IHS Markit Services Purchasing Managers' (PMI) rose to 52.7 in Nov 2019 against from
49.2 in Oct 2019. The Composite PMI Output Index rose to 52.7 from 49.6 in Oct 2019. The
services PMI increased on the back of renewed rise in new business intakes, faster job
creation and strengthening business confidence.
3
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4
Domestic Equity Market Indices
Indices 06-Dec-19 1 Week Return YTD Return
S&P BSE Sensex
40,445.15 -0.85% 12.13%
Nifty 50
11,921.50 -1.12% 9.75%
S&P BSE Mid-Cap
14,667.37 -2.77% -4.99%
S&P BSE Small-Cap
13,339.35 -1.63% -9.30%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines Advance/Decline Ratio
02-Dec-19 711 1134 0.63
03-Dec-19 573 1264 0.45
04-Dec-19 992 839 1.18
05-Dec-19 791 1033 0.77
06-Dec-19 527 1316 0.40
Source: NSE
• Indian equity markets closed on a weak
note in the week ended Dec 06, 2019.
Market fell on concerns over
weakening domestic growth and rising
inflationary risks. On Dec 5, 2019, the
Reserve Bank of India (RBI) kept
interest rates unchanged, defying
expectations of 25 bps cut. Surge in
crude oil prices added to the woes.
• Weak global cues added to the losses.
The U.S. President imposing tariffs on
foreign steel and threatening tariffs on
allies like the European Union spooked
markets across the globe. However, the
losses got restricted after media
reports showed that U.S. and China
could agree on the amount of tariffs to
be rolled back in a phase-one trade
deal. The deal could come through
despite tensions over Hong Kong, the
report said.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
28.39 27.78 28.32 42.32
P/B
2.93 3.68 2.33 1.88
Dividend Yield
1.14 1.25 1.11 1.13
Source: BSE, NSE Value as on Dec 06, 2019
Indian Equity Market
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5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
17,493.08 -3.35% -5.49%
S&P BSE Bankex
35,751.43 -1.21% 3.47%
S&P BSE CD
24,976.02 0.42% 0.95%
S&P BSE CG
16,893.12 -2.83% -9.07%
S&P BSE FMCG
11,565.59 -1.35% -5.74%
S&P BSE HC
13,348.71 -1.87% 0.89%
S&P BSE IT
15,175.64 2.02% -1.52%
S&P BSE Metal
9,435.68 -3.51% -3.98%
S&P BSE Oil & Gas
14,650.59 -3.33% -5.67%
Source: Thomson Reuters Eikon *Value as on Dec 06, 2019
• S&P BSE Metal was the major loser that fell
3.51% followed by S&P BSE Auto and S&P BSE
Oil & Gas that fell 3.35% and 3.33%,
respectively. Weak auto sales numbers for Nov
2019 weighed on the auto sector.
• S&P BSE Power and S&P BSE Capital Goods fell
3.11% and 2.83%, respectively. S&P BSE
Healthcare and S&P BSE FMCG fell 1.87% and
1.35%, respectively. The country’s economic
growth concerns with GDP at more than six-
year low and rising inflation is keeping sectors
under pressure.
Indian Derivatives Market Review
• Nifty Dec 2019 Futures stood at 11,955.70, a premium of 34.20 points above the spot
closing of 11,921.50. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 77.06 lakh crore as against Rs. 69.36 lakh crore for the week to Nov 29.
• The Put-Call ratio stood at 1.00 against the previous week’s close of 0.99.
• The Nifty Put-Call ratio stood at 1.25 against the previous week’s close of 1.54.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.05 5.06 5.07 5.85
91 Day T-Bill
5.02 4.91 5.04 5.88
07.32% 2024, (5 Yr GOI)
6.45 6.19 6.22 6.76
06.45% 2029, (10 Yr GOI)
6.67 6.47 6.49 --
Source: Thomson Reuters Eikon Value as on Dec 06, 2019
• Bond yields surged following the
Monetary Policy Committee’s decision
of no change in the key policy rate
amid higher inflation. This weighed on
the market sentiment as investors
were expecting a rate cut of 25 bps
and raised ambiguity over future rate
cuts.
• Yields also rose as market participants
resorted to profit booking following
lower than expected economic growth
numbers. The country’s GDP came in
at 4.5% for the Jul-Sep quarter against
median forecast of 4.7%, thus
dampening market sentiments.
• Yield on the new 10-year benchmark
paper (6.45% GS 2029) rose 20 bps to
close at 6.67% compared with the
previous week’s close of 6.47% after
trading in a range of 6.45% to 6.67%.
Domestic Debt Market
6.45
6.54
6.63
6.72
2-Dec 3-Dec 4-Dec 5-Dec 6-Dec
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year
5.65 6.80 115
3 Year
6.35 7.35 100
5 Year
6.47 7.62 115
10 Year
6.77 8.09 132
Source: Thomson Reuters Eikon
ValueasonDec06,2019
• Yields on gilt securities increased across
the maturities in the range of 2 to 27 bps.
Maximum rise was witnessed on 4-year
paper and minimum rise on 30-year paper.
• Corporate bond yields rose across curve in
the range of 15 to 24 bps. Maximum rise
was seen on 2-year paper and the
minimum rise was seen on 5 and 6- year.
• Spread between AAA corporate bond and
gilt contracted across maturities in the
range of 3 to 9 bps barring 2, 5 and 15-
year paper which expanded 3 bps each.
Domestic Debt Market (Spread Analysis)
-4
6
16
26
4.70
5.60
6.50
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-Dec-19 29-Nov-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
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8
• The Reserve Bank of India (RBI) tightened exposure norms for urban cooperative banks
(UCBs). The objective of the move is to protect the interest of the depositors. Detail
guidelines will be issued by the central bank shortly. RBI also mandated that urban
cooperative banks with a loan book of more than Rs. 500 crore will report the details of their
large exposures to the Central Repository for Information on Large Credit (CRILC). In
addition, RBI also came out with a comprehensive cybersecurity framework for UCBs. The
move is expected to improve the cybersecurity preparedness, enable UCBs to provide a
wide variety of payment services and bring in higher penetration of information technology.
Detail guidelines will be issued by Dec 31, 2019.
• RBI has decided to set up a self-regulatory body (SRB) for the development of secondary
market for corporate loans. The SRB’s responsibility would include standardizing documents
and mandating the practices and covenants related to transactions in the secondary market
for corporate loans.
• The Insurance Regulatory and Development Authority of India (IRDAI) introduced significant
changes to both ULIPs and non-linked life insurance products. Insurance companies have
been asked to withdraw all such offerings which do not comply with the revised product
policies. The deadline to withdraw products has been extended to Jan 31, 2019 following
requests from life insurers. The changes in policies have been made in favour of customers.
Regulatory Updates in India
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9
• RBI has proposed to introduce a new type of Pre-Paid Payment Instruments (PPI) which
can be used only for purchase of goods and services up to a limit of Rs. 10,000 crore. Such
PPIs can be used for making only digital payments such as bill payments, merchant
payments, etc. The move comes after RBI took note of the important role played by PPIs in
promoting digital payments. Detail guidelines regarding the same will be issued by Dec 31,
2019.
• RBI has increased the limits imposed on peer-to-peer lenders to Rs. 50 lakh from the
earlier limit of Rs. 10 lakh. The move is expected to bring relief to the fledgling non-
banking financial segment. RBI also proposed to do away with the current requirement of
escrow accounts to be operated by bank promoted trustee for transfer of funds. The
move is expected to bring in more flexibility in their operations. Detail guidelines
regarding the same will be provided shortly.
• RBI issued final guidelines for ‘on-tap’ licensing of small finance banks (SFBs) where it
doubled the minimum capital requirement to Rs. 200 crore from Rs. 100 crore set earlier.
The central bank also took note of the inherent risk of small finance banks and mandated
that such banks need to maintain a minimum capital adequacy ratio of 15% of its risk
weighted assets on a continuous basis. RBI also made it mandatory for SFBs to get listed
within three years after it reaches a networth of Rs. 500 crore. In addition, RBI has allowed
payment banks to get themselves converted into SFBs after five years of operation
provided they meet the eligibility criteria.
Regulatory Updates in India (contd..)
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• A Labor Department report showed non-farm payroll employment surged up by 266,000
jobs in Nov 2019 after climbing 156,000 jobs in Oct 2019.
• An Institute for Supply Management report showed U.S. manufacturing activity contracted
for the fourth straight month in Nov 2019 with the purchasing managers index edging
down to 48.1 from 48.3 in Oct 2019.
• A report released by the Institute for Supply Management showed the pace of growth in
U.S. service sector activity slowed by more than anticipated in Nov 2019. The non-
manufacturing index dipped to 53.9 in Nov after climbing to 54.7 in Oct 2019.
• Revised data from Eurostat showed euro zone economy grew as initially estimated in the
third quarter. Gross domestic product grew 0.2% from the second quarter, when the
economy expanded at the same rate. On a yearly basis, GDP growth came in at 1.2%, in line
with the previous estimate and the second quarter growth.
• Provisional data from the Federal Statistical Office showed Germany's manufacturing new
orders declined unexpectedly in Oct 2019 on weak domestic demand. Factory orders fell a
seasonally and calendar adjusted 0.4% MoM following a 1.5% increase in Sep 2019.
• Survey results from IHS Markit showed China's private sector expanded at the steepest
pace in 21 months in Nov 2019. The Caixin composite output index rose to 53.2 in Nov
from 52.0 in Oct 2019. The services Purchasing Managers' Index advanced to a seven-
month high of 53.5 from 51.1 in Oct.
10
Global News/Economy
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11
Global Indices
Indices
06-Dec-19
1-Week
Return
YTD
Return
Russell 3000 1,384.10 -0.14% 30.24%
Nasdaq 100 8,397.37 -0.08% 32.66%
FTSE 100 7,239.66 -1.45% 7.60%
DAX Index 13,166.58 -0.53% 24.70%
Nikkei Average 23,354.40 0.26% 16.69%
Straits Times 3,194.71 0.02% 4.10%
Source: Thomson Reuters Eikon Value as on Dec 06, 2019
U.S.
• U.S. equity markets were mostly down
in the week ended Dec 6, 2019. Weak
economic data and trade uncertainties
kept markets under pressure. Investors
took stock of disappointing
manufacturing data and the latest trade
developments. The U.S. President
hinted that a deal with China may be
delayed till after the Presidential
elections in 2020.
Europe
• European equity markets declined on trade tensions. The U.S. President said that he
would reinstate duties on steel and aluminum from Brazil and Argentina. Also, the U.S.
President said that it might be better to wait until after the 2020 election to sign a trade
deal with China.
Asia
• Asian equity markets were mixed in the period. Expectations of an economic recovery in
Japan and China helped overshadow concerns that U.S. support for Hong Kong may derail
the U.S.-China trade talks.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury bond
grew 6 bps to close at 1.84% compared
to the previous week’s close of 1.78%.
• U.S. Treasury prices surged to its highest
level since May 2018 after the U.S.
President said there is no deadline to
reach a trade agreement with China and
it may come after the 2020 U.S.
election. However, gains reversed, after
the U.S. President at a meeting of NATO
leaders near London said that
discussions with China were going “very
well”.
• At the end, Treasury prices fell after
nonfarm payroll growth increased by
the most in 10 months in Nov 2019. As
jobs reports showed underlying
strength in the U.S economy, it has
offset a series of mixed U.S. economic
reports earlier in the week.
Global Debt (U.S.)
1.64
1.72
1.80
1.88
2-Dec 3-Dec 4-Dec 5-Dec 6-Dec
US 10-Year Treasury Yield Movement
Source: Thomson Reuters EikonSource: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities Last Closing* 1-Week Ago
Brent Crude($/Barrel) 68.34 66.34
Gold ($/Oz) 1459.51 1463.90
Gold (Rs/10 gm) 38032 37876
Silver ($/Oz) 16.56 17.02
Silver (Rs/Kg) 44062 44303
Source: Thomson Reuters Eikon *Value as on Dec 06, 2019
Gold
• Gold prices eased following reports that
U.S.-China are agreeing on the tariffs
thatwouldberolledbackinaphase-one
trade deal. China announced to waive
import tariffs from soybeans and pork
shipment from U.S.
Brent Crude
• Brent crude prices increased following
Saudi Arabia’s and Russia’s agreement to
further trim oil production to limit the
oversupply and support the
commodity’s price. The oil exporting
countries have decided to deepen cuts
by 500,000 bpd to 1.7 million bpd for
the first quarter of 2020.
Baltic Dry Index
• TheBalticDryIndexroseduetohigher
capesize and panamax activities.
Commodities Market
9.00
9.50
10.00
10.50
11.00
6-Nov-19 16-Nov-19 26-Nov-19 6-Dec-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
‐2.70%
3.01%
‐0.30%
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
71.32 71.73
Pound Sterling
93.88 92.66
EURO
79.19 78.98
100 Yen
65.61 65.51
Source: RBI Figures in INR , *Value as on Dec 06, 2019
Rupee
• The Indian rupee rose against the
greenback following selling of the
dollars by foreign banks and on hopes of
a trade deal between U.S. and China.
Euro
• Euro rose against the weak greenback
after ISM based U.S. manufacturing
sector weakened in Nov 2019 along with
an unexpected rebound in Chinese
manufacturing activity in Nov 2019.
Pound
• Pound surged against the U.S. dollar on
hopes that the U.K.’s Conservative Party
will win next week's British election.
Yen
• Yen rose against the greenback after ISM
based U.S. manufacturing sector
weakened and downbeat U.S. private
sector job growth data.
Currencies Markets
9.80
10.00
10.20
10.40
6-Nov-19 16-Nov-19 26-Nov-19 6-Dec-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
1.31%
-0.57%
0.15%
0.28%
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15
The Week that was…
02
nd
Dec to 06
th
Dec
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16
The Week that was (Dec 02– Dec 06)
Date Events Present Value Previous Value
Monday,
December 02, 2019
• China Caixin Manufacturing PMI (Nov) 51.80 51.70
• U.S. ISM Manufacturing PMI (Nov) 48.10 48.30
• Germany Markit Manufacturing PMI (Nov) 44.10 43.80
• U.K. Markit Manufacturing PMI (Nov) 48.90 48.30
• U.S. Markit Manufacturing PMI (Nov) 52.60 52.20
Tuesday,
December 03, 2019
• India Services PMI 52.70 49.20
• U.K. BRC Like-For-Like Retail Sales (YoY) (Nov) -4.90% 0.10%
Wednesday,
December 04, 2019
• U.S. ISM Non-Manufacturing PMI (Nov) 53.90 54.70
• China Caixin Services PMI (Nov) 53.50 51.10
• Germany Markit Composite PMI (Nov) 49.40 49.20
• U.K. Markit Services PMI (Nov) 49.30 48.60
Thursday,
December 05, 2019
• Eurozone Gross Domestic Product s.a. (YoY) (Q3) 1.20% 1.20%
• Germany Factory Orders (MoM) (Oct) -0.40% 1.50%
• U.S. Trade Balance (Oct) -47.2B -51.1B
• U.S. Initial Jobless Claims (Nov 29) 203K 213K
Friday,
December 06, 2019
• U.S. Nonfarm Payrolls (Nov) 266K 156K
• U.S. Michigan Consumer Sentiment Index (Dec) (P) 99.20 96.80
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17
The Week Ahead
09
th
Dec to 13
th
Dec
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18
Day Event
Monday,
Dec 09, 2019
• Germany Trade Balance (Oct)
Tuesday,
Dec 10, 2019
• China Consumer Price Index (YoY) (Nov)
• Germany ZEW Survey - Economic Sentiment (Dec)
• U.K. Industrial Production (MoM) (Oct)
• U.K. Gross Domestic Product (MoM) (Oct)
• Eurozone ZEW Survey - Economic Sentiment (Dec)
Wednesday,
Dec 11, 2019
• U.S. Fed Interest Rate Decision
• U.S. Consumer Price Index (YoY) (Nov)
• Japan Machinery Orders (YoY) (Oct)
Thursday,
Dec 12, 2019
• India Index of Industrial Production (Oct)
• India Consumer Price Index Inflation (Nov)
• Germany Harmonized Index of Consumer Prices (YoY) (Nov)
• European Central Bank Interest Rate Decision
Friday,
Dec 13, 2019
• India Wholesale Price Index Inflation (Nov)
• U.S. Retail Sales Control Group (Nov)
The Week Ahead
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