SBM Weekly

TOP STORIES OF THE WEEK OCT 19

ECONOMIC NEWS:
India
  • The Reserve Bank of India-led Monetary Policy Committee is likely to cut repo rate by 25 basis point to 5.15% in December MPC meeting, the fifth cut in a row, while maintaining "accommodative" stance due to persistent concerns on economic growth, addressing which remains a priority for the apex bank amid benign inflation, a poll conducted by TickerNews showed. The poll was conducted after publication of RBI MPC minutes for October.
  • India on Wednesday relaxed its rules for setting up fuel stations in the country after a gap of 17 years, opening to non-energy companies a sector long eyed by global oil majors. Under the new rules, any company with a net worth of Rs 2.5 billion will be eligible for marketing rights, a government statement said, paving the way for convenience stores, shopping malls and hypermarkets to sell fuel. The new rules will help in attracting investment and create jobs, Information and Broadcasting Minister PrakashJavadekar told a news conference. Global oil companies including Saudi Aramco, Trafigura’s Puma Energy and France’s Total have said they are interested in setting up fuel stations in India.
  • Indian Prime Minister Narendra Modi’s ruling party retained its control over a big western state on Tuesday and was left scouting for an ally to keep hold of a northern state, after the two election races turned out to be closer than forecast. Political leaders and analysts said the broad trends from Maharashtra, home to financial capital Mumbai, and the northern state of Haryana showed that while Modi remained the most popular leader, there were pockets of resistance emerging to his dominance. Modi’s Bharatiya Janata Party (BJP) and a regional ally sewed up a comfortable win in Maharashtra, cornering 161 of the state assembly’s 288 seats, while in Haryana, the BJP won 40 seats, with the main opposition, Congress party, close behind at 31 seats.
GLOBAL
  • The US and China are “close to finalising some sections” of an interim agreement to ease trade tensions between the two countries, the US trade representative said on Friday. The US is in negotiation with China to address issues including trade deficits, intellectual property theft and forced technology transfers. Both the countries have, after year-long trade war, finally taken a turn for the better by reaching a tentative "phase one" deal. Between now and mid-November, the two sides will engage in further discussions to finalise the details of an agreement to be signed by presidents Xi Jinping and Donald Trump at the upcoming summit of the Asia-Pacific Economic Cooperation forum.
  • European Union ambassadors meeting in Brussels on Friday agreed in principle to allow the UK to delay Brexit beyond Oct 31 but will announce the length of the extension only next week. The EU's move is expected to have a strong bearing in the UK Parliament, which is likely to vote on British Prime Minister Boris Johnson's Dec 12 General Election demand early next week to break the Brexit impasse.
  • ECB as expected, left interest rates and other key elements of its monetary policy unchanged, on Thursday. The ECB said its Governing Council left the interest rate on its deposit facility at negative 0.5%, while its main lending rate remains at 0%. President Mario Draghi repeated that rates would be kept at "present or lower levels" until inflation, which has remained stubbornly low, "robustly" converges with its target of near but just below 2%. The ECB last month announced the controversial restart of its asset-buying program, which had been wound down last December. The ECB will begin buying assets at a pace of 20 billion euros a month, beginning in November. Thursday's meeting was the final policy gathering overseen by ECB President Mario Draghi, whose non-renewable eight-year term ends on Oct. 31. Draghi will be succeeded by Christine Lagarde, the former head of the International Monetary Fund.
CORPORATE NEWS:
India
  • The Supreme Court ruled in favour of the Union Government on the adjusted gross revenue (AGR) issue for telecommunication sector, giving a body blow for stressed telecom companies in the country. A bench led by Justice Arun Mishra, A A Nazeer and M R Shah, gave the ruling after a legal tussle that lasted more than a decade. Upholding the definition of AGR as determined by the Department of Telecommunication, the apex court held that telecom companies should pay nearly Rs 92,000 crore of AGR and may have to pay penalty and fines on the fees not paid. Bharti Airtel and Vodafone said they were deeply disappointed by the verdict.
  • The probe into Infosys whistleblower complaint deepened after the allegations of "unethical practices" is being investigated by US' Securities and Exchange Commission (SEC) and Indian regulator Securities and Exchange Board of India (SBI). The company has also admitted that it is facing a class action lawsuit in US. Meanwhile, the company is trying its best to allay investor fears. Infosys' audit committee has retained law firm Shardul Amarchand Mangaldas & Co to conduct an independent probe into the allegations. It also asked both the law firm and auditor Ernst & Young to submit the final report on these allegations in the next two weeks.
  • ITC Ltd, India’s largest cigarette maker, on Thursday reported a 36.16% jump in its September quarter stand-alone profit, beating analysts' estimates. Net profit of the company rose to Rs 4,023.10 crore for the quarter ended September 30, from Rs 2,954.67 crore in the year-ago period. Revenue from operations for the September quarter grew by 5.31% from the year-ago period to touch Rs 11,871.47 crore from Rs 11,272.51 crore in the same quarter last year, according to the company’s filings with the stock exchanges.
GLOBAL
  • Amazon delivered another quarter of sales growth above 20%, but its push for faster delivery hit its bottom line. The profit fell by about 26% to $2.1 billion in three months to September. The company said it spent nearly $10 billion on shipping costs in the most recent quarter, up 46% from last year. Amazon gave fourth-quarter revenue guidance in the range of $80 billion and $86.5 billion, far below the analysts’ estimate of $87.4 billion, indicating a slowdown in purchases during holiday shopping season.
  • Microsoft posted the first quarter of its 2020 financial result, reporting revenue of $33.1 billion and a net income of $10.7 billion. Revenue rose 14% and net income increased by 21% boosted by cloud and Office revenues.
    Microsoft’s Surface revenue performed well in this same period last year, thanks to a boost from the introduction of the lower-cost Surface Go. During this quarter Microsoft didn’t refresh or release any Surface products, and revenue has dipped 4% as a result. During the quarter Microsoft opened new datacentres regions in Germany and Switzerland, while Microsoft’s cloud push into India is being enabled by its partnership with local telecommunications company Jio, which is helping the company to target small business in the region.
  • The ratings agencies downgraded Twitter on the back of social media company's dismal performance and its shares plunged over 20% on Thursday on product issues and lower-than-expected earnings. Twitter revenue rose 9% from a year earlier to $824 million, missing analysts' estimates of $874 million. Operating income was $44 million, reflecting lower-than-expected revenue and no significant changes in investments. Net income was $36.52 million for the quarter, down from $789.18 million. Twitter said it expected total revenue for Q4 to be between $940 million and $1.01 billion and operating income to be between $130 million and $170 million.
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Macroeconomic
Indicators		 Latest Release Number Release Date Data For Previous Release Number Previous Release Date Data For
INDIA
CPI Inflation 3.99 14-Oct-19 Sep '2019 3.28 12-Sep-19 Aug '2019
Core CPI 4.20 14-Oct-19 Sep '2019 4.25 12-Sep-19 Aug '2019
IIP -1.10 11-Oct-19 Aug '2019 4.6 12-Sep-19 Jul '2019
GDP 5.00 30-Aug-19 Apr-Jun FY20 5.80 31-May-19 Jan-Mar FY19
Manufacturing PMI 51.4 1-Oct-19 Sep '2019 51.4 3-Sep-19 Aug '2019
Services PMI 48.7 4-Oct-19 Sep '2019 52.4 4-Sep-19 Aug '2019
Trade Deficit (USD Billion) -10.86 15-Oct-19 Sep '2019 -13.45 16-Sep-19 Aug '2019
Current Account Deficit (% of GDP) -14.3$ Bln (2% of GDP) 30-Sep-19 Apr-Jun FY20 -4.6$ Bln (0.7% of GDP) 28-Jun-19 Jan-Mar FY19
FDI inflow (USD Billion YTD) 16.329 5-Sep-19 Apr-Jun 2019 12.752 4-Aug-19 Apr-Jun 2018
FII/FPI Net Equity Investments (INR Cr Financial YTD) 61041 24-Oct-19 So far 2019 62156 18-Oct-19 So far 2019
FII/FPI Net Debt Investments (INR Cr Financial YTD) 28105 24-Oct-19 So far 2019 28085 18-Oct-19 So far 2019
Foreign Currency Reserves (USD Billion) 439.712 18-Oct-19 11-Oct-19 439.712 18-Oct-19 11-Oct-19
GLOBAL
US Non-Farm Payroll 136000 4-Oct-19 Sep '2019 130000 6-Sep-19 Aug '2019
US Unemployment Rate 3.50 4-Oct-19 Sep '2019 3.70 6-Sep-19 Aug '2019
US CPI 1.70 10-Oct-19 Sep '2019 1.70 9-Sep-19 Aug '2019
US GDP 2.00 26-Sep-19 Apr-Jun 2019 2.00 25-Aug-19 Jan-Apr 2019
EU CPI 0.80 16-Oct-19 Sep '2019 1.00 18-Sep-19 Aug '2019
EU GDP 0.20 6-Sep-19 Q2 2019 0.40 5-Aug-19 Q1 2019
China PMI 51.40 30-Sep-19 Sep '2019 50.40 1-Aug-19 Aug '2019
China GDP 6.00 17-Oct-19 Q3 2019 6.20 14-Jul-19 Q2 2019
Market Indices Latest Release Number Release Date Previous Release Number Previous Release Date Change
INDIA
S&P BSE Sensex 39058.06 25-Oct-19 39298.38 18-Oct-19 -240.32
Nifty 50 11583.90 25-Oct-19 11661.85 18-Oct-19 -77.95
GLOBAL
S&P 500 3022.5500 25-Oct-19 2986.2000 18-Oct-19 36.3500
DJIA 26958.0600 25-Oct-19 26770.2000 18-Oct-19 187.8600
Nikkei 225 22799.8100 25-Oct-19 22492.6800 18-Oct-19 307.1300
Hang Seng 26667.3900 25-Oct-19 26719.5800 18-Oct-19 -52.1900
FTSE 100 7324.4700 25-Oct-19 7150.5700 18-Oct-19 173.9000
Market Indicators Latest Release Number Release Date Previous Release Number Previous Release Date Change
RATES - INDIA
RBI Policy Repo Rate 5.15 4-Oct-19 5.40 7-Aug-19 -0.25
Overnight MIBOR 5.25 25-Oct-19 5.25 18-Oct-19 0.00
PSU CD 12 M 5.95 25-Oct-19 6.05 18-Oct-19 -0.10
Manufacturing CP 12 M 6.15 25-Oct-19 6.25 18-Oct-19 -0.10
1 Yr. T-Bill 5.28 25-Oct-19 5.27 18-Oct-19 0.01
5 Yr. Benchmark GSEC 6.2726 25-Oct-19 6.2883 18-Oct-19 -0.0157
10 Yr. Benchmark GSEC 6.5004 25-Oct-19 6.5185 18-Oct-19 -0.0181
2 Yr. AAA Bond PSU 6.74 25-Oct-19 6.85 18-Oct-19 -0.11
3 Yr. AAA Bond PSU 6.77 25-Oct-19 6.95 18-Oct-19 -0.18
5 Yr. AAA Bond PSU 7.00 25-Oct-19 7.13 18-Oct-19 -0.13
10 Yr. AAA Bond PSU 7.62 25-Oct-19 7.66 18-Oct-19 -0.04
RATES – GLOBAL
FED Fund Rate 2.00 19-Sep-19 2.25 1-Aug-19 -0.25
USD LIBOR 3M 1.9281 25-Oct-19 1.9533 18-Oct-19 -0.0251
USD LIBOR 6M 1.9333 25-Oct-19 1.9518 18-Oct-19 -0.0185
USD LIBOR 12M 1.9558 25-Oct-19 1.9873 18-Oct-19 -0.0315
US Treasuries 2 Yr. 1.63 25-Oct-19 1.58 18-Oct-19 0.0500
US Treasuries 10 Yr. 1.80 25-Oct-19 1.76 18-Oct-19 0.0400
CURRENCY Open High Low Close Date
USD/INR SPOT 71.0400 71.0600 70.8700 70.8800 25-Oct-19
USD/INR 1 Year FWD Premium (Annualized %) 3.9492 3.9801 3.9266 3.9604 25-Oct-19
USD/INR NSE FUT 70.9825 71.0775 70.8800 70.9025 25-Oct-19
EUR/INR NSE FUT 79.1000 79.1000 78.7425 78.7800 25-Oct-19
GBP/INR NSE FUT 91.2000 91.2950 90.8450 90.9225 25-Oct-19
JPY/INR NSE FUR 65.4100 65.4250 65.2550 65.3075 25-Oct-19
COMMODITY & OTHER INDICATORS Latest Release Number Release Date Previous Release Number Previous Release Date Change
BRENT 61.98 25-Oct-19 59.42 18-Oct-19 2.56
NYMEX Crude Oil 56.66 25-Oct-19 53.78 18-Oct-19 2.88
Gold MCX Spot Price 38630 25-Oct-19 38241 18-Oct-19 389.00
Dollar Index 97.84 25-Oct-19 97.28 18-Oct-19 0.56
UPCOMING EVENTS
Date Event
INDIA
Monday
05:30pm RBI to announce details of weekly bond auction
Tuesday
10:30 - 12pm RBI to auction 13 states loan worth Rs 15,342 cr
Wednesday
10:30 - 12pm RBI to auction 3 Treasury bills worth Rs 16,000 cr
RBI to release Reserve Money data (Oct 25)
Thursday
5 - 5.30pm Govt to release fiscal deficit (Sep)
5 - 5.30pm Govt to release IIP core (Sep)
Friday
10:30am Nikkei India Manufacturing PMI (Oct)
5:00pm RBI to release FX Reserve data (Oct 25)
5:00pm RBI to release WMA (ways and means advance)
to central govt (Rs bln) (Oct 25)
to state govt (Rs bln) (Oct 25)
UPCOMING EVENTS
Day/Time Country Event
GLOBAL EVENTS
Monday
05:20am Japan Corporate Service Price Index (Sep)
02:30pm EURO Private loans, M3 Money Supply (Sep)
04:30pm UK CBI Distributive Trades Survey (Oct)
06:00pm US Chicago Fed National Activity Index (Sep)
06:00pm US Goods Trade Balance (Sep)
08:00pm US Dallas Fed Manufacturing Business Index (Oct)
10:30pm UK BoE's Silvana Tenreyro speech
Tuesday
05:00am Japan CPI (Oct)
12:15pm Australia RBA's Governor Lowe Speech
12:30pm Germany Import Price Index (Sep)
01:15pm France Consumer Confidence (Oct)
01:30pm Spain Retail Sales (Sep)
03:00pm UK Consumer credit (Sep)
06:25pm US Redbook Index (Oct)
07:30pm US Consumer Confidence
07:30pm US Pending Home Sales (Sep)
Wednesday
02:00am US API’s Weekly Statistical Bulletin
05:20am Japan Retail trade (Sep)
n/a Australia HIA New Home Sales (Sep)
06:00am Australia CPI (Q3)
12:00pm France GDP (Q3)
12:30pm UK Nationwide Housing Price (Oct)
01:15pm France Consumer Spending (Sep)
01:30pm Spain CPI (Oct)
02:25pm Germany Unemployment rate (Oct)
03:30pm Eurozone Business Climate, Industrial Confidence, Econ Sentiment Indicator (Oct)
04:30pm Germany CPI (Oct)
05:45pm US ADP Employment Change (Oct)
06:00pm US GDP (Q3)
08:00pm US EIA Crude Oil Stock Change (Oct 18)
11:30pm US Fed's Monetary Policy Statement
11:30pm US Fed Interest Rate Decision
01:00am US FOMC Press Conference
Thursday
05:20am Japan Industrial Production (Sep)
05:20am Japan Foreign Investment in Japan stocks (Oct 25)
24hrs UK Brexit Deadline
05:31am UK Gfk Consumer Confidence (Oct)
06:00am Australia Export, Import price index (Q3)
07:00am Australia Building Permits (Sep)
07:30am China Non-manufacturing PMI (Oct)
07:30am China NBS manufacturing PMI (Oct)
n/a Japan BoJ policy statement
10:30am Japan Consumer confidence Index, Housing starts (Sep)
12:30pm Germany Retail Sales (Sep)
01:15pm France CPI (Oct)
01:30pm Spain GDP (Q3)
02:30pm Spain CAB (Aug)
03:30pm Eurozone GDP (Q3), Unemployment Rate (Sep), CPI (Oct)
06:00pm US Initial Jobless Claims (Oct 25)
06:00pm US Personal Spending, Income (Sep)
07:15pm US Chicago PMI (Oct)
08:00pm US EIA Natural Gas Storage Change (Oct 25)
Friday
03:30am Australia Commonwealth Bank Manufacturing PMI (Oct)
04:00am Australia AiG Performance of Mfg Index (Oct)
05:20am Japan Unemployment Rate (Sep)
24hrs Eurozone All Saints's Day
06:00am Australia PPI (Q3)
06:00am Japan Jibun Bank Manufacturing PMI (Oct)
07:15am China Caixin Manufacturing PMI (Oct)
10:30am Japan Vehicle Sales (Oct)
03:00pm UK Markit Manufacturing PMI (Oct)
06:00pm US Non-Farm Payrolls (Oct)
06:00pm US Unemployment Rate (Oct)
07:15pm US Markit Manufacturing PMI (Oct)
07:30pm US ISM Manufacturing PMI (Oct)
10:30pm US Baker Hughes US oil Rig Count

SBM Weekly Issue 2: For week ended 25 October 2019

Disclaimer: The content provided in this newsletter has been sourced from TickerPlant Limited and Vested Finance Inc. SBM Bank (India) Ltd. does not take responsibility or liability for the provision or accuracy of the content provided.