Weekly Review June 29, 2018
Key Economic News International Domestic According to the Commerce Department report, real Gross Domestic Product (GDP) of U.S. rose 2.0% YoY in the Mar quarter of 2018, slower than market forecast and the previous estimate of 2.2% rise. The slower rise is attributed to downward revision in private inventory investment, consumer spending, and exports. In the Dec quarter of 2017, GDP rose 2.9% YoY. S&P Global Ratings has affirmed its 'AA+' sovereign credit ratings and 'stable' outlook on the U.S. According to the rating agency, the rating reflects flexibility and diversity of the economy, institutional strength, extensive flexibility of economic policy. Being the issuer of the U.S. dollar, which is world's leading reserve currency also added to its merit. According to the data published by the Office for National Statistics showed, the UK s GDP grew 0.2% QoQ in the Mar quarter of 2018, from 0.1% rise estimated previously, reflecting improvement in construction output. Nonetheless, GDP growth is much slower than 0.4% rise in Dec quarter of 2017. Government data showed that India's fiscal deficit for the period from Apr to May of 2018 stood at Rs. 3.45 lakh crore or 55.3% of the budget estimate for FY19. However, this is lower than 68.3% of the budget estimate of the corresponding period of the previous year. Total expenditure for the period from Apr to May of 2018 stood at Rs 4.73 lakh crore, or 19.4% of the budget estimate for FY19. Total receipts stood at Rs. 1.27 lakh crore or 7.0% of the budget estimate for FY19. Tax revenue was at Rs. 1.02 lakh crore, or 6.9% of the full-year target. Capital expenditure accounted 21.3% of the FY19 target, compared to 17.0% in the corresponding period of the previous year. According to the Financial Stability Report by the Reserve Bank of India (RBI), the Indian banking sector will continue to remain under stress as gross non-performing advances (GNPA) ratio will increase further. RBI estimated that GNPA of scheduled commercial banks could rise to 12.2% by Mar 2019 from 11.6% in Mar 2018. RBI added that the system-level capital to risk-weighted assets ratio (CRAR) may decline from 13.5% to 12.8% during the same period.
Index value Index value Domestic Equity Market Index value Index value Surging oil prices and heat of trade war weighs on Indian markets 10,870 Nifty 50 YTD Return : 2.67% Nifty 100-0.99% -1.13% YTD Return : 0.88% 11,200 10,710 11,000 Movement during the Week 10,550 30-May-18 14-Jun-18 29-Jun-18 Movement during the Week 10,800 30-May-18 14-Jun-18 29-Jun-18 19,100 Nifty Mid Cap 100 YTD Return : -13.87% -2.23% 8,000 Nifty Small Cap 100 YTD Return : -21.8% -3.44% 18,400 7,400 Movement during the Week 17,700 30-May-18 14-Jun-18 29-Jun-18 Movement during the Week 6,800 30-May-18 14-Jun-18 29-Jun-18 Source : BSE and NSE Percentage change are on W-o-W basis and YTD is absolute return.
Rs. crore Domestic Equity Market NSE Advance/Decline Ratio Date Advances Declines Advance/Decline Ratio 25-Jun-18 478 1322 0.36 26-Jun-18 552 1237 0.45 27-Jun-18 271 1570 0.17 28-Jun-18 430 1356 0.32 29-Jun-18 1348 459 2.94 Source: NSE Ratios S&P BSE Sensex Nifty 50 Nifty Mid Cap 100 Nifty Small Cap 100 P/E 22.5 25.9 48.4 71.8 P/B 2.9 3.6 3.1 1.9 Dividend Yield 1.3 1.2 0.7 0.6 Source: BSE & NSE Values as on June 29, 2018 Indian equity markets closed on a lower note. Decline in oil & gas and banking stocks weighed on the indices. Stocks of oil marketing companies fell due to rise in oil prices amid risk of supply disruption. Also, rupee touched a new low because of higher inflation and widening fiscal deficit. On the global front, trade row between U.S. and other major global economies continued to weigh on market sentiment. Worries that the U.S. President s approach towards trading activities may prove to be detrimental to global economic growth muted buying interest. 3600 FII Net Investment DII Net Investment 500-2600 30-May-18 9-Jun-18 19-Jun-18 29-Jun-18 Source: SEBI
Domestic Equity Market Indices Sectoral Indices Last Returns (in %) Closing* 1-Wk 1-Mth S&P BSE Auto 23,838.3-3.4-3.0 S&P BSE Bankex 29,250.6-2.2-0.5 S&P BSE CD 20,206.7 0.0-3.6 S&P BSE CG 17,488.2-1.8-8.3 S&P BSE FMCG 11,213.3 0.7-0.2 S&P BSE HC 14,003.6-2.1 6.0 S&P BSE IT 13,920.1 2.2 4.2 S&P BSE Metal 13,064.5 0.5-4.2 S&P BSE Oil & Gas 13,659.5-5.1-4.8 S&P BSE Power 1,946.64-3.0-8.7 S&P BSE Realty 2,073.37-3.8-8.1 Source: MFI Explorer *Values as on June 29, 2018 On the sectoral front, S&P BSE Oil & Gas (- 5.05%) stood as the major loser followed by S&P BSE Realty (-3.81%) and S&P BSE Auto (- 3.39%). S&P BSE Power and S&P BSE Bankex fell (-2.96%) and (-2.16%), respectively. Decline in auto stocks reflects lingering concerns over auto tariff threat by the U.S and fall in oil & gas stocks reflects surging oil prices. S&P BSE Information Technology stood as the major gainer (2.17%). Gains in information technology stocks were because of the weak rupee as the sector derives substantial revenue from exports. S&P BSE IT S&P BSE FMCG S&P BSE Metal S&P BSE CD S&P BSE CG S&P BSE HC S&P BSE Bankex S&P BSE Power S&P BSE Auto S&P BSE Realty S&P BSE Oil & Gas -5.1-3.8-3.4 1-Week Return as of June 29, 2018-3.0-1.8-2.1-2.2-6 -4-2 0 2 4 Source: MFI Explorer Weekly Return in (%) 0.0 0.7 0.5 2.2
Yield in % Domestic Debt Market Rise in global crude oil prices and weakness in domestic currency pushed up bond yields Debt Indicators (%) Current Value* 1-Wk Ago 1-Mth Ago 6-Mth Ago Call Rate 6.21 6.25 5.89 6.10 91 Day T-Bill 6.49 6.46 6.37 6.22 07.80% 2021, (5 Yr GOI) 7.75 7.68 7.57 6.96 07.17% 2028, (10 Yr GOI) 7.90 7.82 7.76 7.33 Source: Thomson Reuters Eikon; CCIL *Values as on June 29, 2018 8.00 7.85 7.70 Source: CCIL 10 -Yr Benchmark Bond ( % ) 25-Jun 26-Jun 27-Jun 28-Jun 29-Jun Bond yields rose following rally in the global crude oil prices and weakening domestic currency that raised worries about faster pace of consumer inflation growth rate going forward. Media reports stating that the Union cabinet may discuss raising minimum support prices of some crops by up to 15% in its next meeting fuelled concerns of increase in domestic inflationary pressures, which also weighed on market sentiment. However, further losses were restricted as market participants resorted to short covering. Yield on the 10-year benchmark paper (7.17% GS 2028) increased 8 bps to close at 7.90% from the previous week s close of 7.82% after trading in a range of 7.81% to 7.94%.
Yield in % Domestic Debt Market Maturity G-Sec Yield (%) Corporate Yield (%) Spread bps 1 Year 7.14 8.29 115 Yields on gilt securities increased across the maturities by up to 11 bps. Corporate bond yields increased across the maturities in the range of 3 bps to 11 bps barring 15-year paper that fell 1 bps. The maximum increase was witnessed on 2-year paper and the minimum on 10-year paper. 3 Year 7.90 8.65 75 5 Year 8.10 8.77 67 10 Year 8.06 8.78 72 Source: Thomson Reuters Eikon Values as on June 29, 2018 Spread between AAA corporate bond and gilt contracted across 3 to 5 years maturities, 10- and 15-year papers by up to 7 bps. Spread expanded across the remaining maturities in the range of 2 to 4 bps barring 7-year paper that closed steady. 8.40 India Yield Curve Shift (%) (W-o-W) 14 7.10 5.80 3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs Source: Thomson Reuters Eikon Change in bps 29-Jun-18 22-Jun-18 7 0 Change in bps
Index value International Markets 25400 25050 24700 24350 Dow Jones YTD Return : -1.81% -1.26% Movement during the week 24000 30-May-18 9-Jun-18 19-Jun-18 29-Jun-18 U.S. markets largely traded lower on lingering concerns of global trade war between the U.S. and other major economies. The U.S. government proposed a bill Foreign Investment Risk Review Modernization Act that would help to protect the U.S. from potential threats of foreign investment. Dull U.S. economic data further dented sentiment including weaker than expected economic growth for the first quarter, fall in U.S. durable goods order for May 2018 and higher than expected rise in initial jobless claims for the week ended Jun 23, 2018. Europe Indices Last Closing* Returns (in %) 1-Wk 1-Mth YTD Concerns over global trade continued to weigh on investor sentiment. Weak economic data further dented sentiment, including U.K. consumer sentiment and Eurozone economic confidence data in Jun, 2018. CAC-40 Index 5,323.5-1.2-2.1 0.2 DAX Index 12,306.0-2.2-2.8-4.7 FTSE 100 7,636.9-0.6 0.1-0.7 Source: Thomson Reuters Eikon *Values as on June 29, 2018 Some respite was seen after China eased restrictions on foreign investments in various sectors and the European Union (EU) summit reached a consensus on immigration policy. Also, the People's Bank of China would lower the reserve ratios for some banks.
International Markets Hang Seng Strait Times Return Value as of June 29,2018 % Change YTD % Change week -3.22-1.31-3.94-0.57 Asian markets mostly traded low on persisting trade tensions between U.S. and China and after the U.S. government hinted to block Chinese investment in U.S. technology firms. Concerns over U.S. proposal to review foreign investments by a committee in the U.S. and urging other nations to stop crude import from Iran further dented sentiment. Nikkei -2.02-0.94-4 -3-2 -1 0 Source: MFI Explorer Weekly Return in (%) Some respite was seen on news that reserve requirement ratio would be lowered in a few Chinese banks and China has eased foreign investment restrictions in some sectors.
Global Commodity Prices Commodities Rebased to 10 10.60 Global Commodity Movement 4.59% Gold Gold prices moved down over the week on expectations of a faster pace of rate hike by the U.S. Federal Reserve (Fed). 10.00 9.40 29-May-18 8-Jun-18 18-Jun-18 28-Jun-18 29-Jun-18 Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl) Source: Thomson Reuters Eikon Performance of various commodities Commodities Last Closing* -2.15% -1.28% 1-Wk Ago Brent Crude($/Barrel) 76.78 73.41 Gold ($/Oz) 1,252.25 1268.49 Gold (Rs/10 gm) 30,341 30,484 Silver ($/Oz) 16.08 16.40 Silver (Rs/Kg) 39,221 39,626 Source: Thomson Reuters Eikon *Values as on June 29, 2018 The downside was limited on persisting concerns over global trade war. Meanwhile, the U.S. President has proposed to review foreign investments under the Committee on Foreign Investment in the U.S. Crude Brent crude prices remained higher following production problems at one of Canada's largest oil sands facilities and probable supply disruptions from Venezuela and Libya. Additionally, the U.S. Energy Information Administration (EIA) said in its weekly report that crude oil inventories fell by 9.891 million barrels in the week ended Jun 22, 2018. Baltic Dry Index The Baltic Dry Index fell 0.89% on the back of lower capesize and panamax activities.
Currency Prices ( in terms of INR) -1.81% Currency Rebased to 10 10.20 9.95 Source: RBI Movement of Rupee vs. Other Currencies Currency Currency Movement 9.70 29-May-18 8-Jun-18 18-Jun-18 28-Jun-18 29-Jun-18 USD GBP Euro JPY Last Closing * 1-Wk Ago U.S. Dollar 68.58 67.77 Pound Sterling 89.93 89.96 EURO 79.85 78.86 100 Yen 62.02 61.61 1.26% 1.19% -0.03% 0.67% Source: RBI Figures in INR, *Values as on June 29, 2018 Rupee The rupee fell against the greenback and breached the 69-level for the first time ever in one of the sessions following losses in the domestic equity market as persistent concerns of a trade war between U.S. and China weighed on sentiment. The greenback sales by exporters, several state-run banks and private banks restricted further losses. Euro Pound Yen The euro fell initially against the greenback amid lingering concerns over a global trade war. However, the trend reversed later after European Union leaders reached an agreement on migration that eased concerns of a political crisis in Germany. The pound weakened against the greenback amid uncertainty over the impact of Brexit on the British economy and doubts as to whether the Bank of England will raise interest rates at all in 2018. The yen weakened against the greenback after a moderation in the U.S. administration's approach to Chinese investment in the U.S. Concerns that the U.S. Federal Reserve will continue to raise interest rates in 2018 also kept the yen under pressure.
Key Mutual Funds News SBI Mutual Fund has revised benchmark of several schemes effective from Jun 25, 2018. Accordingly, the benchmarks of SBI Overnight Fund, SBI Magnum Ultra Short Duration Fund, SBI Magnum Low Duration Fund, SBI Savings Fund, SBI Magnum Income Fund, SBI Dynamic Bond Fund, SBI Credit Risk Fund, SBI Banking & PSU Fund, SBI Debt Hybrid Fund and SBI Magnum Children s Benefit Fund have been changed to CRISIL CBLO Index, Nifty Ultra Short Duration Debt Index, Nifty Low Duration Debt Index, Nifty Money Market Index, CRISIL Medium to Long Term Debt Index, Nifty Composite Debt Index, CRISIL Credit Risk Index, Nifty Banking & PSU Debt Index, Nifty 50 Hybrid Composite Debt 15:85 and Nifty 50 Hybrid Composite Debt 15:85, respectively. According to media reports, the Securities and Exchange Board of India has allowed HDFC Asset Management Company to issue initial public offer. Mirae Asset Mutual Fund has revised the exit load of Mirae Asset India Equity Fund, Mirae Asset Emerging Bluechip Fund, Mirae Asset Great Consumer Fund, Mirae Asset Healthcare Fund and Mirae Asset Hybrid Equity Fund. Accordingly, in case of investors who have opted for Systematic Withdrawal Plan (SWP), exit load shall be nil on the withdrawal of first 15% of the allotted units on or before completion of 365 days from the date of allotment of units. In case of redemption in excess of such limit, exit load will be 1% in case of redemption within 1 year from the date of allotment. No exit load will be charged in case of redemption after 1 year from the date of allotment. For investors who have not opted for SWP under the plan, exit load will be 1% in case of redemption of allotted units within 1 year from the date of allotment. No exit load will be charged in case of redemption after 1 year from the date of allotment. Principal Mutual Fund has revised the benchmark of Principal Tax Savings Fund, Principal Personal Tax Saver Fund and Principal Arbitrage Fund from S&P BSE 200, S&P BSE 100 and CRISIL Liquid Fund Index to Nifty 500, Nifty 500 and Nifty 50 Arbitrage Index, respectively. The change is effective from Jun 27,2018.
Disclaimer All information contained in this document has been obtained by ICRA Online Limited from sources believed by it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and ICRA Online Limited in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and ICRA Online Limited shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our holding company, ICRA Limited (ICRA), and should not be construed as any indication of credit rating or grading of ICRA for any instruments that have been issued or are to be issued by any entity. This newsletter is for customer information only and does not constitute an investment advice or an offer to purchase or sell securities. Persons accessing this document are advised to obtain independent professional advice wherever necessary. All rights of the newsletter are reserved with ICRA Online Ltd, the provider of the newsletter. Trust-Plutus Wealth Managers (India) Private Limited and TrustPlutus Family Office & Investment Advisers (India) Private Limited is not responsible for any error or omission in the data or for any losses suffered on account of information contained in this newsletter. Mutual fund investments are subject to market risk. Please read the offer document before investing into mutual funds. This document may not be reproduced, distributed or published for any purpose.