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NEWS U CAN USE
Dec 13, 2019
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The Week that was…
9
th
Dec to 13
th
Dec
2
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Indian Economy
• Consumer price index-based inflation rate increased to 5.54% in Nov 2019 from 4.62% in
Oct 2019 and 2.33% in Nov 2018. The increase came on account of rising food prices and
the figure is well above the Reserve Bank of India’s medium target of 4%. Consumer Food
Price Index increased to 10.01% in Nov 2019 from 7.89% in Oct 2019 and a decline of
2.61% in the same period of the previous year.
• Government data released showed Index of Industrial Production (IIP) shrunk 3.8% in Oct
2019 compared to a contraction of 4.3% in Sep 2019. Manufacturing and electricity
declined 2.1% and 12.2% in Oct 2019, respectively, while the mining sector contracted
8.0% in the same month. From Apr to Oct 2019, IIP growth eased to 0.5% YoY from 5.7%
recorded in the corresponding period last year.
• Government data showed that India’s trade deficit narrowed to $12.12 billion in Nov 2019
from $17.58 billion in the same period of the previous year. India’s trade deficit narrowed
as imports fell 12.71% YoY to $38.11 billion in Nov 2019 while exports came down at a
comparatively slower rate of 0.34% YoY to $25.98 billion in the same month. Oil imports
fell 18.17% to $11.06 billion in Nov 2019 from $13.52 billion in the year-ago period.
• A major global rating agency has said it will downgrade India's sovereign rating if the
country's economic growth does not recover, media reports showed. The agency has
maintained its lowest investment grade rating (BBB) for India. Anything below this could
impact India’s benchmark 10-year bond yields, the reports said.
3
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4
Domestic Equity Market Indices
Indices 13-Dec-19 1 Week Return YTD Return
S&P BSE Sensex 41,009.71 1.40% 13.70%
Nifty 50 12,086.70 1.39% 11.27%
S&P BSE Mid-Cap 14,830.40 1.11% -3.94%
S&P BSE Small-Cap 13,332.66 -0.05% -9.34%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date
Advances
Declines
Advance/Decline Ratio
09-Dec-19 735 1,116 0.66
10-Dec-19 500 1,357 0.37
11-Dec-19 696 1,123 0.62
12-Dec-19 1,081 744 1.45
13-Dec-19 1,197 629 1.90
Source: NSE
• Indian equity markets gained in the
week ended Dec 13, 2019. Sentiment
was boosted on trade optimism as
reports showed U.S. and China have
signed an in-principle phase one deal.
Expectations of a clear victory in U.K.
elections also boosted sentiment. The
strong global cues overshadowed weak
retail inflation data for Nov 2019 and
industrial output data for Oct 2019.
• Market sentiments were also boosted
after the U.S. Federal Reserve
maintained status quo in its monetary
policy review as expected and hinted
there may not be any rate change
throughout 2020.
• However, fall in domestic car sales in
Nov 2019 were a dampener which
capped the gains.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
28.78 28.17 28.64 42.15
P/B
2.97 3.73 2.36 1.88
Dividend Yield
1.13 1.24 1.10 1.13
Source: NSE,BSE
Value as on Dec 13, 2019
Indian Equity Market
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5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,087.7 3.40% -1.00%
S&P BSE Bankex
36,496.3 2.08% 5.52%
S&P BSE CD
25,070.5 0.38% 0.05%
S&P BSE CG
17,006.4 0.67% -5.66%
S&P BSE FMCG
11,513.4 -0.45% -3.73%
S&P BSE HC
13,376.1 0.21% 3.23%
S&P BSE IT
15,005.8 -1.12% -1.01%
S&P BSE Metal
9,788.8 3.74% 2.87%
S&P BSE Oil & Gas
14,878.7 1.56% -2.12%
Source: BSE * Value as on Dec 13, 2019
• S&P BSE Metal was the major gainer, up 3.74%
followed by S&P BSE Auto, up 3.40% and S&P
BSE Bankex, up 2.08%.
• The metal sector was buoyed by trade
optimism as the bickering of the world’s two
largest economies has been badly impacting
global trade for quite some time now and the
metals sector suffers under such
circumstances. With the U.S. and China almost
there with a phase one trade deal, the sector
got a much-awaited boost.
Indian Derivatives Market Review
• Nifty Dec 2019 Futures stood at 12,142.35, a premium of 55.65 points above the spot
closing of 12,086.70. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 67.88 lakh crore as against Rs. 77.06 lakh crore for the week to Dec 6.
• The Put-Call ratio stood at 0.75 against the previous week’s close of 1.00.
• The Nifty Put-Call ratio stood at 1.63 against the previous week’s close of 1.25.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
4.97 5.05 5.09 5.69
91 Day T-Bill
5.04 5.02 5.08 5.95
07.32% 2024, (5 Yr GOI)
6.59 6.45 6.23 6.80
06.45% 2029, (10 Yr GOI)
6.79 6.67 6.53 --
Source: Thomson Reuters Eikon Value as on Dec 13, 2019
• Bond yields surged amid worries over
a fiscal slippage and the government’s
plan for additional borrowing. Market
sentiments were further dampened
following comments from a major
global rating agency that it may lower
India’s rating if the growth of the
Indian economy does not come along
expected lines.
• Losses were extended after retail
inflation for Nov 2019 rose higher than
expected, which lowered the
possibility of further easing of
monetary policy.
• Yield on the 10-year benchmark paper
(6.45% GS 2029) rose 12 bps to close
at 6.79% compared with the previous
week’s close of 6.67% after trading in
a range of 6.64% to 6.84%.
Domestic Debt Market
6.63
6.70
6.77
6.84
9-Dec 10-Dec 11-Dec 12-Dec 13-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 6.86 121
3 Year 6.50 7.51 101
5 Year 6.74 7.92 118
10 Year 6.90 8.17 127
Source: Thomson Reuters Eikon
Value as on Dec 13, 2019
• Yields on gilt securities increased across
the maturities in the range of 4 bps to 27
bps barring 1-year paper which closed
steady.
• Corporate bond yields increased across
the maturities in the range of 2 bps to 29
bps. The maximum increase was witnessed
on 5-year paper and the minimum increase
was witnessed on 2-year paper.
Domestic Debt Market (Spread Analysis)
0
10
20
30
4.50
5.50
6.50
7.50
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 13-Dec-19 06-Dec-19
Yield in %
Change in bps
Source: Thomson Reuters Eikon
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8
• The Reserve Bank of India (RBI) has tightened rules for asset reconstruction companies
(ARCs). RBI has restricted them from buying financial assets from their sponsor firms and
lenders on a bilateral basis. However, the central bank has allowed ARCs to participate in
auctions of such assets.
• Media reports showed the government will soon launch a National Policy on Official
Statistics. This is being mulled because of various controversies related to the alleged
suppression of bad news, undermining the credibility of government data. The Ministry of
Statistics and Programme Implementation (MoSPI) has begun work on a cabinet note on the
policy that seeks to provide “timely and credible social and economic data.”
• The government has announced that for the fourth tranche to be transferred to
beneficiaries under the PM Kisan income support scheme, their bank accounts need to be
linked with Aadhaar. The first three tranches went out without this step of authentication,
media reports showed.
• Media reports showed the government plans to take steps to boost exports, including to
emerging markets through preferential and free trade agreements. Union minister said
efforts are being undertaken to increase exports to emerging markets of Africa, Latin
America through PTAs/FTAs (preferential/free trade agreements). Based on feedback from
Engineering Export Promotion Council India, non-tariff barriers for engineering sector have
been identified.
Regulatory Updates in India
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9
• As per media reports, the Insurance Regulatory and Development Authority of India
(IRDAI) is working to come out with standardised guidelines for insurance products
designed particularly for dwelling houses and small commercial shops. Presently,
commercial establishments and houses are not covered under any standardised insurance
norms. The need to come in with such standardisation increased following rising losses
seen in small houses and small commercial establishments during natural disasters. The
insurance regulator is expected to form and introduce standardised norms in the coming
months.
• According to a circular issued by IRDAI, instead of solely depending on the insurer,
policyholders can now choose third-party administrator at the time of buying a health
insurance policy or at the time of renewal. The objective of the move is to give customers
flexibility. The insurer explicitly shall provide the list of the TPAs engaged, from amongst
whom the policyholder may choose a TPA of their choice, at the time of proposal or the
renewal as the case may be.
• As per media reports, IRDAI has permitted insurance companies to invest in debt ETFs of
central public sector enterprises (CPSEs). IRDAI has considered this category as an eligible
class of investment. The insurance regulator has said that such debt ETFs should be issued
by mutual funds that have invested in securities issued by CPSEs and registered and
regulated by the Securities and Exchange Board of India (SEBI).
Regulatory Updates in India (contd..)
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• The U.S. and China announced that they reached a phase-one trade deal. According to
media reports, the trade deal includes a rollback a rollback of some of the China tariffs and
halts additional levies that was scheduled to come into effect from Dec 15. Meanwhile,
China has agreed to purchase U.S. agricultural products, but the amount is below what U.S.
was reportedly pushing to get.
• The U.S. Federal Reserve left rates unchanged in its monetary policy review after three
consecutive interest rate cuts. The decision was widely expected. The U.S. Federal Reserve
Chief opined that persistent inflation rise would be required to increase interest rate and
indicated that rates would remain on hold through 2020.
• The European Central Bank left its key interest rates, asset purchases and forward
guidance unchanged. The Governing Council decided to hold the refinance rate unchanged
at a record low 0%, the deposit rate at -0.50% and the marginal lending rate at 0.25%.
• Data from Eurostat showed euro zone industrial production decreased for the second
straight month in Oct 2019. Industrial output dropped 0.5% from Sep 2019, when
production was down 0.1%.
• A Commerce Department report showed retail sales in the U.S. rose by far less than
expected in Nov 2019. Retail sales edged up 0.2% in Nov after climbing 0.4% in Oct 2019.
10
Global News/Economy
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11
Global Indices
Indices
13-Dec-19
1-Week
Return
YTD
Return
Russell 3000 1,393.60 0.69% 31.14%
Nasdaq 100 8,487.71 1.08% 34.09%
FTSE 100 7,353.44 1.57% 9.29%
DAX Index 13,282.72 0.88% 25.80%
Nikkei Average 24,023.10 2.86% 20.03%
Straits Times 3,214.05 0.61% 4.73%
Source: Thomson Reuters Eikon Value as on Dec 13, 2019
U.S.
• U.S. markets gained in the week ended
Dec 13, 2019. U.S.-China trade optimism
helped the stocks move higher as both
the sides gave encouraging signs which
eventually culminated in the in-principle
signing of a phase one trade deal.
• Also, the U.S. Federal Reserve decided
to maintain status quo in interest rates
which contributed to the upside.
Europe
• European markets gained as media reports showed the U.S. and China have brokered a
phase one deal. A decisive general election result in Britain also boosted sentiment.
Asia
• Asian equity markets gained on trade optimism. Media reports showed China saying it is
committed to resolving trade issues. Also, British Prime Minister’s party came out as clear
winners in the elections and claimed a majority in Parliament which added to the gains.
The U.S. Federal Reserve leaving interest rates unchanged and hinting there would not be
any change in the near future provided additional support.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury bond
fell 2 bps to close at 1.82% compared to
the previous week’s close of 1.84%.
• U.S. Treasury prices grew as investors
got concerned following weak Chinese
trade data for Nov 2019. China's trade
surplus came in at $38.73 billion in Nov
as against $42.81 billion surplus in Oct
2019.
• Gains were extended due to uncertainty
over U.K. election that could clarify the
outcome of Britain's exit from the
European Union.
• However, gains were restricted towards
the end of the week as investors
cheered progress in resolving the U.S.-
China trade dispute and a decisive
general election result in Britain.
Global Debt (U.S.)
1.75
1.81
1.87
1.93
9-Dec 10-Dec 11-Dec 12-Dec 13-Dec
Yield in %
US 10-Year Treasury Yield
Movement
Source: Thomson Reuters EikonSource: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel) 69.28 68.34
Gold ($/Oz) 1,475.56 1,459.51
Gold (Rs/10 gm) 37,691 38,032
Silver ($/Oz) 16.93 16.56
Silver (Rs/Kg) 43,884 44,062
Source: Thomson Reuters Eikon *Value as on Dec 13, 2019
Gold
• Gold prices rose after the U.S. Federal
Reserve kept interest rates on hold and
indicated that no rate hike is likely next
year amid persistently low inflation. Lack
of details regarding the trade deal
between U.S. and China further
improved the safe-haven appeal of the
bullion. Renewed concerns over political
uncertainty in U.S. also contributed to
the upside.
Brent Crude
• Oil prices surged as investors cheered
progress in resolving the U.S.-China
trade dispute and a decisive general
election result in Britain.
Baltic Dry Index
• The Baltic Dry Index fell due to lower
capesize and panamax activities.
Commodities Market
9.60
10.00
10.40
10.80
11.20
13-Nov-19 23-Nov-19 3-Dec-19 13-Dec-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
2.24%
1.38%
1.10%
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
70.72 71.32
Pound Sterling
95.28 93.88
EURO
78.97 79.19
100 Yen
64.53 65.61
Source: RBI Figures in INR , *Value as on Dec 13, 2019
Rupee
• The rupee rose against the greenback
following gains in the domestic equity
market amid growing optimism over a
trade deal between the U.S. and China.
Euro
• The euro rose against the greenback as
investors cheered progress in resolving the
U.S.-China trade dispute and a decisive
general election result in Britain.
Pound
• The pound rose against the greenback
following a decisive general election result
in Britain which eased uncertainty over
Brexit to some extent.
Yen
• The yen weakened against the greenback
as investors cheered progress in resolving
the U.S.-China trade dispute.
Currencies Markets
9.80
10.00
10.20
10.40
13-Nov-19 23-Nov-19 3-Dec-19 13-Dec-19
USD GBP Euro JPY
Currency Prices ( in terms of
INR)
Rebased to 10
Currency Movement
-0.28%
-0.84%
-1.65%
1.49%
Source: Thomson Reuters Eikon
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15
The Week that was…
9
th
Dec to 13
th
Dec
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16
The Week that was (Dec 9 – Dec 13)
Date Events Present Value Previous Value
Monday,
December 09, 2019
• Japan Gross Domestic Product Annualized s.a. (QoQ) (3Q F) 1.8% 0.2%
• Japan Trade Balance - BOP Basis (Yen) (Oct) ¥254.0b ¥1.1b
• Eurozone German Trade Balance (Oct) 21.5b 21.2b
Tuesday,
December 10, 2019
• China Consumer Price Index (YoY) (Nov) 4.5% 3.8%
• Eurozone German ZEW Survey Expectations (DEC) 10.7 -2.1
• China New Yuan Loans China (Nov) 1390.0b 661.3b
• U.K. Industrial Production (YoY) (Oct) -1.3% -1.4%
• Eurozone ZEW Survey - Economic Sentiment (Dec) 11.2 -1.0
Wednesday,
December 11, 2019
• U.S. Consumer Price Index (YoY) (Nov) 2.1% 1.8%
• U.S. Real Avg Hourly Earning (YoY) (Nov) 1.1% 1.2%
Thursday,
December 12, 2019
• U.S. Fed Interest Rate Decision 1.75% 1.75%
• India Index of Industrial Production (Oct) -3.8% -4.3%
• India Consumer Price Index Inflation (Nov) 5.54% 4.62%
• Germany Consumer Price Index (YoY) (Nov F) 1.1% 1.1%
• European Central Bank Interest Rate Decision 0.0% 0.0%
• Eurozone Industrial Production (MoM) (Oct) -2.2% -1.8%
Friday,
December 13, 2019
• India Trade Deficit (Nov) $12.12 B $11.01 B
• China Foreign Direct Investment (YoY) (Nov) 1.5% 7.4%
• U.S. Retail Sales Advance (MoM) (Nov) 0.2% 0.4%
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17
The Week Ahead
16
th
Dec to 20
th
Dec
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18
Day Event
Monday,
Dec 16, 2019
• Japan Nikkei Japan PMI Manufacturing (Dec P)
• China Industrial Production (YoY) (Nov)
• Eurozone Markit Eurozone Composite PMI (Dec P)
• U.K. Markit/CIPS UK Composite PMI (Dec P)
• U.S. Markit US Composite PMI (Dec P)
Tuesday,
Dec 17, 2019
• U.K. ILO Unemployment Rate 3Mths (Oct)
• U.S. Housing Starts (MoM) (Nov)
• U.S. Industrial Production (MoM) (Nov)
Wednesday,
Dec 18, 2019
• U.K. Consumer Price Index (YoY) (Nov)
• Eurozone Euro-Zone Consumer Price Index (YoY) (Nov F)
• Eurozone German IFO Expectations (Dec)
Thursday,
Dec 19, 2019
• Bank of Japan Monetary Policy Review
• Bank of England Monetary Policy Review
• U.S. Existing Home Sales (MoM) (Nov)
Friday,
Dec 20, 2019
• Japan National Consumer Price Index (YoY) (Nov)
• Eurozone German GfK Consumer Confidence (Jan)
• U.K. Gross Domestic Product (YoY) (3Q F)
• U.S. Gross Domestic Product Annualized (QoQ) (3Q T)
The Week Ahead
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