FIIs/FPIs have bought Indian equity shares worth Rs. 22 billion in the month of July 2018 and worth Rs. 0.75 billion in August 2018.
The Nifty Index futures witnessed rise in open interest by 15% for the August series. There was rise in open interest for September & October series in the last week by 13% & 431% respectively. Implied volatility (IV) rose for call option and fell for put option in the last week. Fall in IV for put option and rise in IV for call option shows unsteady support for Nifty at present levels.
Global Economy
The US unemployment rate fell to 3.9% in July 2018 from 4% in June 2018, matching market expectations. The jobless rate touched an 18-year low of 3.8% in May 2018. Non-farm payrolls in the US increased by 157,000 in July 2018, following an upwardly revised 248,000 in June 2018 and below market expectations of 190,000.
The US trade deficit widened 7.3% to USD 46.3 billion in June 2018 from a revised USD 43.2 billion in the previous month and below market expectations of USD 46.5 billion. Exports dropped 0.7% to USD 213.8 billion while imports rose 0.6% to USD 260.2 billion.
The Federal Reserve kept the target range for the federal funds rate at 1.75% to 2% during its August 2018 policy meeting, in line with market expectations. Policymakers said the labor market has continued to strengthen and economic activity has been rising at a strong rate, suggesting a rate hike at its next meeting in September 2018 is likely.
The Bank of England voted unanimously to raise the Bank Rate by 25bps to 0.75% during its August 2018 policy meeting, saying recent data appeared to confirm that the dip in output in the first quarter was temporary and that the labor market has continued to tighten, and wage growth has firmed. Also, the bank reiterated that an ongoing tightening of monetary policy over the forecast period will be appropriate to return inflation sustainably to the 2% target.
Bank of Japan held its policy rate unchanged during its August 2018 policy meeting. The BOJ maintained its target for the 10-year government bond yield at around 0% and the short-term interest rate target at -0.1%. Policy makers expect more time than expected to achieve inflation target of 2%.
The ECB held its benchmark refinancing rate at 0% on 26th July 2018 and reiterated that the monthly pace of the net asset purchases will be reduced to 15 billion Euros from September to December 2018 and will then end.
The number of Americans filling for unemployment benefits rose by 1,000 to 218,000 in the week ending in 28th July 2018 from the previous week’s unrevised level of 217,000. It compares with market expectations of 220,000.
Stocks of crude oil in the US went up by 3.803 million barrels in the week ended 27th July 2018, following a 6.147 million drop in the previous week. It compares with market expectations of a 2.794 million decrease.
Global Service PMI Levels:
The IHS Markit US Services PMI was revised lower to 56 levels in July 2018 from a preliminary reading of 56.2 levels and 56.5 in June 2018. The rise in services output was steep overall, despite softening to the weakest since April 2018.
The IHS Markit Eurozone Services PMI decreased slightly to 54.2 levels in July 2018 from an earlier estimate of 54.4 levels and compared to June’s four-month high of 55.2 levels. It was the second-lowest reading during the past year-and-a-half. Output eased with growth at two-month lows in Germany, France and Italy.
The IHS Markit Brazil Services PMI increased to 50.4 levels in July 2018 from 47 levels in June 2018. New orders rose the most in four months and output was raised accordingly.
The Nikkei Japan Services PMI edged down to 51.3 levels in July 2018 from 51.4 levels in the preceding month. New business continued to rise and firms faced greater capacity pressures.
Global Market
Wall Street closed in the green on Friday, as solid earnings reports and job gains in the manufacturing sector more than offset escalating trade tensions between the United States and China. During the week, Dow Jones gained by 0.05%, Nasdaq surged by 1% and S&P 500 rose by 0.76%.
European stock markets closed in the green on Friday despite trade war concerns, as tech shares continued to rally on the back of Apple gains and after strong earnings results from Royal Bank of Scotland and Credit Agricole lifted sentiment. During the week, FTSE declined by 0.55% and DAX slipped by 2%.
Indian Market
The Sensex and Nifty gained by 0.59% & 0.74% respectively on weekly basis.
The Reserve Bank of India increased its key policy repo rate by 25bps to 6.5% during August policy meeting, in line with market expectations and following a similar hike in the previous meeting. Policymakers reinforced that the decision is consistent with a neutral monetary policy stance.
Click here to read our analysis on “RBI Will Have to Continue Rate Hikes to Catch Up With the Yield Curve- RBI August 2018 Policy Review”.
India’s fiscal deficit narrowed to Rs. 4.29 trillion in April-June 2018 from Rs. 4.42 trillion in the same period of the previous fiscal year, as revenues jumped 33.3% to Rs. 2.79 trillion and total expenditure went up at a slower 8.7% to Rs. 7.08 trillion. The budget gap was equivalent to 68.7% of the government’s target for the whole financial year, compared with 80.8% a year ago.
The Nikkei India Services PMI rose to 54.2 levels in July 2018 from 52.6 levels in the previous month. The reading pointed to the second straight month of growth in the services sector and the fastest since October 2016. New orders expanded the most since June 2017.
Industry and Stock Specific trends
The sectoral indices closed mostly in positive during last week. The S&P BSE PSU, Bankex, IT and Oil & Gas indices had gained by 3.67%, 1.09%, 0.61% and 2.50% respectively. S&P BSE Auto index had declined by 0.61% in last week.
Titan Ltd Witnesses highest rise in turnover in Stock Derivatives
The Nifty Index futures witnessed rise in open interest by 15% for the August series. There was rise in open interest for September & October series in the last week by 13% & 431% respectively. Implied volatility (IV) rose for call option and fell for put option in the last week. Fall in IV for put option and rise in IV for call option shows unsteady support for Nifty at present levels.
Titan Ltd witnesses rise in turnover in Stock Derivatives
Titan has witnessed rise in open interest in the stock future segment in the last week. Share price of Titan Ltd gained by 4.5% in last week. Titan Company Ltd management had reported Q1Fy19 results, revenue from operation surged by 7% (Y-o-Y) to Rs. 43 billion and net profit increased by 31% (Y-o-Y) to Rs. 3.5 billion. Titan’s growth was mainly driven by strong profits from its jewellery business. The company’s jewellery products, sold mostly under the brand name Tanishq, typically rake in around 80% of total revenue. Revenue from the division grew 5.65% (Y-o-Y) to Rs 3.6 billion during Q1Fy19.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown rise in the open interest across Index Options, Stock futures, Index futures and Stock Options on a week on week basis.
Currency
Indian rupee appreciated by 0.12% against USD, USD/INR pair closed at Rs. 68.54 in the last week.
