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NEWS U CAN USE
Dec 20, 2019
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The Week that was…
16
th
Dec to 20
th
Dec
2
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Indian Economy
• Government data showed that India’s Wholesale Price Index (WPI) based inflation
increased to 0.58% in Nov 2019 from 0.16% in Oct 2019 and from 4.47% during the same
month of the previous year. The WPI Food Index grew from 7.65% in Oct to 9.02% in Nov.
Food inflation increased to 11.08% in Nov from 9.8% in Oct because of rise in price of
onions.
• Media reports showed the Reserve Bank of India (RBI) in the first of its kind open market
operation, will carry out a simultaneous sale and purchase of bonds. The RBI said it will buy
Rs. 100 billion ($1.4 billion) worth of the current benchmark 10-year bond while selling
four bonds maturing in 2020 for an equivalent amount. This is being seen as an attempt to
bring longer-term yields lower and is similar to the 'Operation Twist' that the U.S. had seen
near the start of the decade. Bond yields have been rising from the time RBI unexpectedly
left its key repo rate unchanged earlier in Dec 2019.
• A prominent global rating agency has affirmed India's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BBB-' with a stable outlook. The agency said its outlook on India's
GDP growth is still solid against that of peers.
• Media reports showed the GST Council in its 38th meeting decided to leave rates
unchanged. The council voted to tax lotteries under the highest slab of 28%. This will be
implemented across India. It decided to extend the annual date of GSTR 9 filing to Jan 31,
2020 and waive off late fee for all taxpayers who have not filed GSTR1 from Jul 2017 to
Nov 2019.
3
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4
Domestic Equity Market Indices
Indices
20-Dec-19
1 Week Return
YTD Return
S&P BSE Sensex
41,681.54 1.64% 15.56%
Nifty 50
12,271.80 1.53% 12.97%
S&P BSE Mid
-Cap 14,835.97 0.04% -3.90%
S&P BSE Small
-Cap 13,391.03 0.44% -8.95%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date
Advances
Declines
Advance/Decline Ratio
16-Dec-19 831 1035 0.80
17-Dec-19 1073 755 1.42
18-Dec-19 856 966 0.89
19-Dec-19 930 863 1.08
20-Dec-19 888 938 0.95
Source: NSE
• Indian equity markets gained in the
week ended Dec 20, 2019, with bourses
touching record highs bolstered by the
U.S.-China trade deal. Initially, markets
were weak when government data
showed wholesale inflation increased in
Nov 2019. Inflation has been breaching
the Reserve Bank of India’s mid-term
target of 4% in the past few months.
• Markets gained on the back of strong
global cues in the aftermath of U.S. and
China signing a phase one deal.
• Investors looked forward to the GST
Council’s meeting. The Reserve Bank of
India governor’s recent comments that
there is scope for reducing interest
rates further after taking into
consideration growth and inflation
data, supported sentiment.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
29.18 28.60 28.34 42.31
P/B
3.01 3.79 2.34 1.88
Dividend Yield
1.11 1.22 1.11 1.13
Source: NSE,BSE
Value as on Dec 20, 2019
Indian Equity Market
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5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,207.1 0.66% 0.70%
S&P BSE Bankex
36,859.1 0.99% 3.94%
S&P BSE CD
24,993.8 -0.31% -0.73%
S&P BSE CG
17,059.7 0.31% -4.43%
S&P BSE FMCG
11,501.8 -0.10% -2.15%
S&P BSE HC
13,397.7 0.16% -0.55%
S&P BSE IT
15,661.3 4.37% 3.08%
S&P BSE Metal
10,100.0 3.18% 7.49%
S&P BSE Oil & Gas
14,868.2 -0.07% -3.78%
Source: BSE * Value as on Dec 20, 2
019
• S&P BSE Teck and S&P BSE IT were the major
gainer, both up 4.37%, followed by S&P BSE
Metal, up 3.18% and S&P BSE Realty, up
1.45%.
• The metal sector gained as the U.S.-China
trade deal after 18 months of to and fro has
brought the much-required relief to the
sector.
• S&P BSE Consumer Durables was the major
loser, down 0.31% followed by S&P BSE FMCG,
down 0.10%.
Indian Derivatives Market Review
• Nifty Dec 2019 Futures stood at 12,290.00, a premium of 18.20 points above the spot
closing of 12,271.80. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 67.43 lakh crore as against Rs. 67.88 lakh crore for the week to Dec 13.
• The Put-Call ratio stood at 0.91 against the previous week’s close of 0.75.
• The Nifty Put-Call ratio stood at 1.73 against the previous week’s close of 1.63.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
5.09 4.97 5.07 5.81
91 Day T
-Bill
5.04 5.04 5.06 5.95
07.32% 2024, (5
Yr GOI)
6.43 6.59 6.16 6.64
06.45% 2029, (10 Yr GOI)
6.60 6.78 6.46
Source: Thomson Reuters Eikon
Value as on Dec 20, 2019
• Bond yields plunged as investors
resorted to buying notes to benefit
from the recent rise in yields. The
yields fell further after RBI’s
announcement of purchasing 10-year
benchmark bond of up to Rs. 100
billion and selling one-year bonds of a
similar value in the upcoming week.
• However, gains were capped following
RBI governor’s comment on widening
of the fiscal deficit, which dampened
market sentiments. He said that the
government may have to invoke the
Fiscal Responsibility and Budget
Management (FRBM) Act’s escape
clause.
• Yield on the 10-year benchmark paper
(6.45% GS 2029) fell 18 bps to close at
6.60% compared with the previous
week’s close of 6.78%.
Domestic Debt Market
6.20
6.55
6.90
16-Dec 17-Dec 18-Dec 19-Dec 20-Dec
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 5.94 6.97 103
3 Year 6.38 7.42 104
5 Year 6.53 7.70 117
10 Year 6.71 7.93 122
Source: Thomson Reuters Eikon
Value as on Dec 20, 2019
• Yields on gilt securities plunged across the
maturities in the range of 12 to 29 bps,
barring 1 & 2-year papers that increased
29 & 1 bps, respectively.
• Corporate bond yields dropped across the
curve in the range of 8 to 28 bps, barring 1
& 2-year papers that increased 5 & 4 bps,
respectively.
• Spread between AAA corporate bond and
gilt contracted across segments by up to
24 bps, leaving 3- & 15-year papers that
expanded 4 & 10 bps.
Domestic Debt Market (Spread Analysis)
-40
0
40
4.60
6.20
7.80
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 20-Dec-19 13-Dec-19
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
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8
• Monetary Policy Committee (MPC) meeting minutes showed policymakers felt there is room
to reduce interest rates further to limit any further weakening in growth. Status quo was
maintained by MPC because of rising food prices. The Reserve Bank of India unexpectedly
left its key repo rate unchanged at 5.15% earlier in Dec 2019, even as it cut its forecast for
economic growth to its lowest in over a decade. The minutes showed members felt the
current rise in the headline inflation rate could moderate by the second quarter of 2020-21.
Some expressed concern on the possibility of a spillover to non-food inflation.
• According to media reports, the Prime Minister said the government is working to
decriminalise provision of Companies Act. This will make it easier to do business in the
country. The Prime Minister said business failure is not a crime and failure of companies is
not always because of financial mismanagement. Only who have risk taking capacity can lead
the country and society, he added.
• RBI governor has said the Reserve Bank of India (RBI) plans to gradually tighten regulation
of non-banking financial companies (NBFCs), media reports showed. This will be done
without causing any harm to the recovery of the sector. The governor said NBFC regulation
is not as strong as banks and changes are being made to the sector. Among the thing being
mulled are a chief risk officer and a liquidity coverage ratio (LCR) requirement to take care of
asset-liability (ALM) mismatches.
Regulatory Updates in India
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9
• Media reports showed the government could limit surge pricing by cab aggregators at
three times the base fare – with riders – and retain their commission at about 20%.
Government could restrict surge pricing to certain times of the day and the total number
of hours or rides when it is applicable may be limited.
• According to a report, GST compensation payment of nine states, including Gujarat,
Maharashtra and Kerala, could double to Rs. 60,000-70,000 crore in FY20. Government’s
timing of release of such grants to states would critically affect their cash flows, the report
said. The states are Karnataka, Kerala, Gujarat, Maharashtra, Punjab, Haryana, Rajasthan,
Tamil Nadu and West Bengal.
• As per media reports, insurance companies have pitched the Insurance Regulatory and
Development Authority of India (IRDAI) for a 100% foreign direct investment (FDI) limit in
the sector using the automatic route. This will help expand the sector coverage by drawing
Rs. 40,000 crore to Rs. 60,000 crore from the FDIs. The insurance regulator said that such
suggestions will be considered by the government in discussion with the stakeholders.
• International Monetary Fund chief economist has said the government should undertake
structural reforms such as bank clean-up and labour reforms to address the slowdown in
domestic demand. She said policies should focus on managing the slowdown in domestic
demand, and on boosting productivity growth and supporting employment creation in the
medium term.
Regulatory Updates in India (contd..)
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• A Commerce Department report showed U.S. economic growth in the third quarter was
unrevised from the previous estimate. Real gross domestic product jumped 2.1% in the
third quarter, unchanged from the estimate released last month and in line with
expectations. Growth in the second quarter was 2.0%.
• Commerce Department data showed U.S. housing starts surged up 3.2% to an annual rate
of 1.365 million in Nov 2019 after spiking 4.5% to 1.323 million in Oct 2019.
• Data from the Office for National Statistics showed the U.K. economy recovered at a
slightly faster than previously estimated pace in the third quarter, as the trade deficit
narrowed notably. Gross domestic product grew 0.4% sequentially, slightly faster than the
0.3% growth estimated initially and in contrast to the 0.2% decline seen in the second
quarter.
• The Bank of England left its interest rate unchanged. However, two members called for a
rate cut citing weaker economic growth and rising spare capacity. At the Monetary Policy
Committee meeting, the governor and six other members voted to maintain the interest
rate at 0.75%.
• The Bank of Japan left its massive monetary stimulus unchanged and maintained its
upbeat view on the economy despite the sales tax hike hurting spending. The Policy Board
of the BoJ voted 7-2 to retain the interest rate at -0.1% on current accounts that financial
institutions maintain at the central bank.
10
Global News/Economy
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11
Global Indices
Indices
20-Dec-19
1-Week
Return
YTD
Return
Russell 3000
1,420.65 1.94% 33.68%
Nasdaq 100
8,678.49 2.25% 37.10%
FTSE 100
7,582.48 3.11% 12.70%
DAX Index
13,285.96 0.02% 25.83%
Nikkei Average
23,816.63 -0.86% 19.00%
Straits Times
3,212.39 -0.05% 4.68%
Source: Thomson Reuters Eikon
Value as on Dec 20, 2019
U.S.
• U.S. markets gained handsomely
touching all-time highs as U.S. and China
finally agreed to sign the so-called
phase one agreement in Jan 2019.
Under the pact U.S. will not put the
additional tariffs on Chinese imports
that were scheduled to start from Dec
15, 2019. China on its part will buy more
U.S. agricultural products. Upbeat
corporate news supported sentiment.
Europe
• European markets traded higher on trade optimism after the U.S. and China entered a
phase one trade deal. Investors have now become hopeful of a long-term solution to the
problem. Some weakness was seen over U.K. Prime Minister’s resolve to block an
extension of European Union trade talks beyond 2020.
Asia
• Asian equity markets bucked the global trend and were subdued in the week. The
possibility of a no-deal Brexit and data showing Japanese exports declined for the 12th
straight month in Nov 2019 kept markets under pressure.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury
Treasuries surged 10 bps to close at
1.92% compared to the previous week’s
close of 1.82%.
• U.S. Treasury prices fell initially as
market participants grew optimistic
following a preliminary trade deal
between U.S. and China.
• Losses were extended after the growth
of the U.S. economy for the third
quarter of 2019 came in line with
market expectations. However, further
losses were restricted after initial
jobless claims for the week ended Dec
14 fell lower than market expectations.
Global Debt (U.S.)
1.80
1.89
1.98
16-Dec 17-Dec 18-Dec 19-Dec 20-Dec
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
70.50 69.28
Gold ($/Oz)
1,477.95 1,475.56
Gold (Rs/10 gm)
37,957 37,691
Silver ($/Oz)
17.19 16.93
Silver (Rs/Kg)
44,222 43,884
Source: Thomson Reuters Eikon *
Value as on
Dec 20, 2019
Gold
• Gold prices rose marginally as market
participants awaited further
developments on U.S.-China trade deal
and renewed uncertainty over Brexit.
Political uncertainty in U.S. also added to
the gains.
Brent Crude
• Brent crude prices surged as market
participants grew optimistic following
the announcement of an initial trade
deal between U.S. and China. Prospects
of lower U.S. crude supplies added to
the gains.
Baltic Dry Index
• The Baltic Dry Index fell due to lower
capesize and panamax activities.
Commodities Market
9.40
10.30
11.20
20-Nov-19 30-Nov-19 10-Dec-19 20-Dec-19
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
1.54%
1.76%
0.16%
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
71.16 70.72
Pound Sterling
92.62 95.28
EURO
79.11 78.97
100 Yen
65.09 64.53
Source: RBI Figures in INR , *
Value as on
Dec 20, 2019
Rupee
• The rupee weakened against the
greenback following intervention by the
Reserve Bank of India and month end
dollar demand from oil importers.
Euro
• The euro weakened against the greenback
following encouraging U.S. industrial
output and housing data for Nov 2019.
Pound
• The pound weakened against the
greenback on renewed concerns that
Britain may exit the European Union
without a trade deal in place.
Yen
• The yen weakened against the greenback
following better-than-expected U.S.
industrial output data and housing data
for Nov 2019.
Currencies Markets
9.70
10.05
10.40
20-Nov-19 30-Nov-19 10-Dec-19 20-Dec-19
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
0.16%
-2.79%
0.62%
0.87%
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15
The Week that was…
16
th
Dec to 20
th
Dec
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16
The Week that was (Dec 16 –Dec 20)
Date Events
Present
Value
Previous
Value
Monday,
December 16, 2019
• Japan Nikkei PMI Manufacturing (Dec P)
48.8 48.9
• China Industrial Production (YoY) (Nov)
6.2% 4.7%
• China Retail Sales (YoY) (Nov
8.0% 7.2%
• Eurozone Markit Eurozone Composite PMI (Dec P)
50.6 50.6
• U.K. Markit/CIPS UK Composite PMI (Dec P)
48.5 49.3
• U.S. Markit US Composite PMI (Dec P)
52.2 52.0
• U.S. NAHB Housing Market Index (Dec)
76.0 70.0
Tuesday,
December 17, 2019
• U.K. ILO Unemployment Rate 3Mths (Oct)
3.8% 3.8%
• U.S. Housing Starts (MoM) (Nov)
3.2% 4.5%
• U.S. Industrial Production (MoM) (Nov)
1.1% -0.9%
Wednesday,
December 18, 2019
• Japan Trade Balance (Nov)
-¥82.1b ¥15.7b
• U.K. Consumer Price Index (YoY) (Nov)
1.5% 1.5%
• Eurozone Consumer Price Index (YoY) (Nov F)
1.0% 0.7%
• Eurozone German IFO Expectations (Dec)
93.8 92.3
Thursday,
December 19, 2019
• Japan BOJ Rate Decision
-0.1% -0.1%
• U.K. Bank of England Bank Rate
0.8% 0.8%
• U.S. Existing Home Sales (MoM) (Nov)
-1.7% 1.5%
Friday,
December 20, 2019
• Japan National Consumer Price Index (YoY) (Nov)
0.5% 0.2%
• Eurozone German GfK Consumer Confidence (Jan)
9.6 9.7
• U.K. Gross Domestic Product (YoY) (3Q F)
1.1% 1.0%
• U.S. Gross Domestic Product Annualized (QoQ) (3Q T)
2.1% 2.1%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
23
rd
Dec to 27
th
Dec
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18
Day Event
Monday,
Dec 23, 2019
•
Japan All Industry Activity Index (MoM) (Oct)
•
U.S. New Home Sales (MoM) (Nov)
Tuesday,
Dec 24, 2019
•
U.S. Durable Goods Orders (Nov P)
Wednesday,
Dec 25, 2019
•
Japan Corporate Service Price (YkoY) (Nov)
•
U.S. Existing Home Sales (MoM) (Nov)
Thursday,
Dec 26, 2019
•
Japan Construction Orders (YoY) (Nov)
•
Japan Housing Starts (YoY) (Nov)
•
U.S. Initial Jobless Claims (Dec 21)
•
U.S. MBA Mortgage Applications (Dec 20)
Friday,
Dec 27, 2019
•
Eurozone German Retail Sales (YoY) (Nov)
•
Japan Jobless Rate (Nov)
•
Japan Industrial Production (YoY) (Nov P)
•
Japan Large Retailers' Sales (Nov)
•
U.S. DOE U.S. Crude Oil Inventories (Dec 20)
The Week Ahead
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The information herein is meant only for general reading purposes and contains all factual and statistical information pertaining to Industry and
markets which have been obtained from independent third party sources and which are deemed to be reliable. The information provided cannot be
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