Institutional Equities

4 October 2018
 Dhara Mehta, CFA– dhara.mehta@nirmalbang.com
Direct Line: 022-6273-8065

Table of Content Teresa John, CFA – teresa.john@nirmalbang.com

Madhurima Kane – madhurima.kane@nirmalbang.com
Mohit Khanchandani – mohit.khanchandani@nirmalbang.com

Section Page No.

NBIE Insights 3-9
Globe Trotting 10-19
Domestic Indicators 20-34
Market Indicators 35-41
Technical Charts To Watch 42-47
NBIE Top Picks 48

All Source: Bloomberg, NBIE Research

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NBIE - Global Insights
 US government debt yields largely remained close to 3% as political concerns continue to rattle investors. Japan’s Nikkei 225 hit the
highest level since November 1991 as the US dollar or USD touched a 11-month high against the yen. The trio spectre of rising interest
rates, strong USD and rising crude oil prices have impacted major consumption Ems like China, Brazil and India to the extent of -0.71/-1.29/-
0.62%, respectively. Average global EM fund in the Investment Association Global Emerging Markets sector has fallen by almost 10% year to
date, compared to 24.4% total return in 2017.

 The S&P 500 rose more than 7% and the Dow advanced 9%, with both indices rising in 11 out of the past 12 quarters. The Nasdaq gained
more than 7% over the quarter, and is up for the ninth straight quarter. Telecom & Industrial sectors have risen 3.1%/ 4.1%, respectively, last
fortnight as discrete major S&P sectors. The broadest indicator of the market, equal-weighted index like the S&P Equal-Weight Index, hit a
historic high. Automobile sector continues its worst run, delivering -18% in the past three months, but last fortnight some bottom-fishing
was witnessed.

 Prices of emerging market stocks are plummeting to new lows. Equity valuations at EMs are at more than a 40 % discount to the US
market in price/earnings terms than the historical average discount of 15% - the widest gap since 2002. India continues to outperform the
MSCI EM basket- with it being +2.23% (even after this correction) versus the region which is -2.65% in the past one year in USD terms.

 After the recent fall since the start of this year, FTSE World Index is consolidating well at the current level and is showing some signs of
upturn. Expect FTSE World Index to breach its current lows and enter the safe region led by Nikkei & DJIA in the coming fortnight. Nikkei is
ready to break out upwards after a long consolidation phase of nearly two years. EMs have been on the most rocky path since the start of
the year. Of the EMs, one of the biggest components is China which is facing tension on trade and tariff war developments.

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NBIE - Global Insights

 China and Brazil markets have opened the passage to a further fall from the current levels. The patterns are so inferior in both that MSCI EM
participants are giving indications of weak developments ahead. Shanghai markets along with Hong Kong are entering a new domain
which has not been tested in the past 10 years. The shrinkage in the pattern is so scary that there are chances of China markets falling (and
falling with speed) by 10% in the next two months. Political uncertainty has put Bovespa in a weak zone. Until election outcome, don’t
expect the markets to revert back to their past one-month high. Nifty, which was holding well until now, is regressing, but it is not bad like
Brazil or worse like China.

 Tight central bank policies, increased geo-political risks, rising macro concerns and decreasing co-movements among certain asset classes
are contributing to increased volatility in India. However, in the US the investors still remain complacent as the VIX continues to trade closer
to the 10-point mark despite central bank liquidity being tight YoY. Don’t see the US VIX moving pass 15 points this year, despite all
barometers moving against it right now.

 Indian and US 10-year bond yields are remaining in the average band differential of 500bps. However, the huge rally that the India 10-year
has witnessed in the past 10 months (~120bps) has moved ahead of the macro events. Given the same, we believe the recent cool-off
measures taken by the government should hold yields here.

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NBIE - Domestic Insights
 Economic activity slowed down MoM in August 2018, continuing the trend from July. Over the past three months, government expenditure
increased 18%, while tax collections were flat as GST collections were weak. This resulted in a weak fiscal situation, partly because of the
government’s inability to cushion the higher fuel price impact.

 The weakness in India’s trade has reflected in the Indian rupee or INR being at an all-time low. India’s CAD has risen from 0.4% (of GDP)
level achieved in the January-March quarter of 2016-17 to breach the 2% mark in the April-June quarter of 2018-19.The US dollar (USD) has a
much lower weight in the REER than it has in India’s trade (including in crude oil), most of which is settled in USD. So it was important for
the INR to fall by at least 14%-16% against the USD to make the real exchange rate more competitive than the REER.

 Manufacturing activity strengthened in September 2018, and PMI rose to 52.2 . The sentiment was tempered by slower infrastructure
sector’s growth and tepid automobile sales. In sync with this, GST collections rose to Rs 944.42bn in September 2018 compared with
Rs936.90bn in August.

 The core sector index, which measures output across eight infrastructure sectors, rose 4.2% in August 2018 compared with an upwardly
revised 7.3% in July. Core sector growth was lower on account of contraction in fertiliser (-5.3%) and crude oil (-3.7%) production and a
slow rise in natural gas (1.1%), coal (2.4%) and steel (3.9%) output. Cement production rose by a robust 14.3% to meet post-monsoon
demand while electricity generation was up 5.4%. Refinery products output was up 5.1%.

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NBIE - Domestic Insights

 Automobile sales were mixed once again in September 2018. Most commercial vehicle players reported double-digit growth in volume,
while in case of passenger vehicles the sales were subdued with negative to single-digit growth. In case of two-wheelers, sales were mixed
with a few players reporting strong double-digit YoY growth and a few posting single-digit YoY growth. Two-wheeler and passenger vehicles
are witnessing slow growth in the past three months because of various unavoidable and challenging factors which resulted in the
passenger vehicle industry reporting negative growth MoM.

 On YoY basis, non-food bank credit increased by12.4% in August 2018. Credit to agriculture and allied activities increased by 6.6% and to
industry it rose by 1.9%. Growth was mainly led by sub-sectors such as infrastructure, textiles, chemical & chemical products and ‘all
engineering’. Credit to the services sector expanded by 26.7% in August 2018. Personal loans increased 18.2% in the same month.

 Liquidity in India remained on a tight leash as corporates paid advance tax and dollar liquidity scarcity remained. Based on an assessment
of durable liquidity needs going forward and the seasonal growth in currency in circulation observed in the build-up to the festive season,
the Reserve Bank of India (RBI) has decided to conduct OMOs for an aggregate amount of Rs360bn in October 2018. In FY19, we expect the
RBI to conduct OMOs for at least Rs1,000bn to Rs1,200bn to ease liquidity in the market.

 The aggressive rise in yields has started to show in the MCLR rates as various banks looked at hiking their deposit and lending rates in the
past three months. Various banks announced an uniform increase of 20bps-25bps on their marginal cost just before the festive season.
The one-year MCLR, against which home loans are benchmarked, now stands at 8.45% as against 8.25% earlier .

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 NBIE - Domestic Insights

 As a result of liquidity scarcity and partly owing to revised rate expectations post recent INR depreciation, term spreads in the market have
risen rapidly. A two- year AAA PSU bond is trading at close to 9%. As discussed before, the swap curve is pricing in more than three back-
to-back rate hikes on account of which primary issuance in corporate bond market has slowed down substantially versus previous years.

 With a substantial recent rise in the USD and associated rise in EM risk premia, the environment for offshore financing has become
extremely challenging. In an already tight environment, recent credit episodes may have further heightened liquidity preference of the
market. In such a situation, the risk is of credit spread blowing out further. Refinancing pressure may quickly mount and balance sheet
growth may have to be rapidly curtailed.

 YTD against its regional peers, the INR is the worst-performing currency followed by Russian rouble which fell 18% in the same period.
High current account deficit countries having high dependence on imports have suffered the highest in the midst of US rate hikes, rising
crude oil prices and trade wars. Further, on account of US-China trade war, there is speculation that China may devalue its yuan to outdo
the US and this is likely to have a ripple effect on other currencies, including the INR.

 Post 1QFY19 result review, all eyes are now looking at 2QFY19 results more minutely as multiple factors have changed over the past three
months. Crude oil prices have risen by 20%, yields have topped 8% and liquidity in India remains in a tight mode as corporates arrange for
advance tax payment and the RBI heads to an aggressive rate hike cycle along with higher automobile fuel prices. Commentary of the
management will be minutely monitored to gauge the business sentiment and earnings performance in the coming quarters.

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NBIE - Market Insights
 Across-the-board selling was witnessed in all major sectoral indices with Realty, Automobile, Financial Services, FMCG, and Banking
registering more than a 10% decline last fortnight . Long delta positions in index options were the flavour of the series as option writers got
strangled throughout the series. Automobile index has fallen 2x versus Nifty in the past one year. The Automobile index is -16% versus Nifty
-8%. The market has proven us right in respect of the AVOID call on the sector and we remain negative on it until further change. INR
tailwind beneficiaries remain the best bets, although we continue to be nervous in respect of the market trend going forward.

 Banking, Automobile and Realty indices have broken their long-term support (200DMA)- and may slide further in a bearish connotation
fallout in the market in the coming week. We strictly remain NEGATIVE on all three sectors. IT index charts are indicating a strong trend
going forward. The short and medium MACD indicators are highly supportive of the index. Remain invested in the same. FMCG & Metals are
showing good signs of resilience at their key support levels. These indices are witnessing bullish crossovers on the NSE, giving a ‘Buy’
signal. Oil & Gas index remains above the support level. The index can offer best hiding ground in times like this. Healthcare index is in a
better space currently in the midst of a meltdown. However, the index is not giving us as much as comfort it was a month ago, but still
versus the other negative indices it can be a preferred “Hold.”

 Nifty Mid-cap and Small-cap indices have witnessed the wreckage following the financial crisis. In this wreckage, both the indices –Mid-
cap/Small –cap – have given up gains of the past 18 months (levels are lower compared with 1 January 2017). A cause for concern during
this entire downfall that started in early 2018 is that the advances- decline line has been moving lower. The falling line indicates that during
the rise there have been lesser number of stocks that moved higher and more number of stocks that declined. The time perspective of
investing in the market has changed. Cash is more valuable today than equities. Defty is and will remain on a downward slope, giving us
no signal on short, medium, or long MACD or any sign of reversal at all. This shows a grim picture on the INR front in the coming days.

 FIIs sold Rs77.69bn worth of Indian equities, pulling out Rs449.96bn since the start of FY19 . Inflows into equity mutual funds, including
equity-linked savings schemes, declined for the fourth straight month in August 2018. The general equity category sales witnessed a normal
16 % growth, but a sharp spike in redemption at 35 % because of profit-booking led to 9% reduction in net sales. Be watchful on the
redemption front in such a market scenario.

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NBIE - Technical Charts To Watch
 Shanghai Composite SE Index: After making a high of 3587 in Feb’18, the Shanghai Composite SE Index witnessed a sharp decline and
broke below key supports. But the index has managed to take support near the levels of 2640 and has seen some pullback over the past 2
weeks. Although the larger trend of the index remains down, the current pullback can extend to 2920 levels. While on the downside, the
2640 mark will continue to act as an important support.

 Crude Oil: The commodity has been in a steady uptrend and has been trending higher in a rising channel since Jun’17. Crude Oil recently
moved above its recent highs near the 81 levels and is expected to continue to trade with a positive bias. The current up move can extend
to 94 levels and on the downside, the immediate support lies at the 81 mark.

 USD/BRL: The Brazilian Real had depreciated sharply against the US Dollar over the past year. But the currency cross faced resistance
near the 4.2 mark and has turned down considerably. Currently the cross is trading close to the short term support levels near the 3.9 mark.
The next key support for the cross lies at the 3.7 levels while the 4.2 mark will continue to act as a major hurdle on the upside.

 Nifty: The Nifty was unable to sustain above the rising trend line around the 11700 levels which was followed by a sharp decline in the
month of September. The index has breached the short term supports of 11200 and has been extremely volatile over the past few weeks.
The Nifty has now broken the crucial trend line support near the 10750 levels on an intra-week basis and a convincing weekly close below
the 10600 mark won’t augur well for the medium term trend. The levels of 10950 will now act as the 1st hurdle for the index on the upside
while the next important support lies close the 10300 levels.

 Nifty Bank: A considerable decline has been witnessed in the Nifty Bank index over the past month and in the process it has broken the
important rising trend line support. Although the overall uptrend continues to remain intact, the short term trend has turned down and the
index can potentially decline to 23600 levels.

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Conclusion
 Interest rate is the biggest valuation measure. Therefore, if valuation measure tells you that a problem is coming but does not tell you what to do, then the market’s
answer is simply to "do nothing." After all, you will eventually recover the losses…right?

 Officially we are in an illiquid portfolio dilution phase. It is true that illiquidity is dependent on the state of the market (crisis vs. euphoria) as market conditions play a
major role. But it has also an idiosyncratic feature - the rise in the proportion of illiquid assets (infrastructure, institutional real estate illiquid corporate bonds) in
investors' portfolio is turning to be a major cause for concern. All the more, the dealers’ inventories and ability to trade also declines . A rise in the default rate of one
asset class led many investors to reassess the intrinsic illiquidity risk of their entire portfolio. It is clear that the longer the sovereign yields remain in a higher zone,
the longer will be the demand for safe and hard assets. The changing nature of the financing of the economy, where more and more actors are in charge of, and
dependent on collateral intermediation, is transforming the nature of financial risk. This has commenced and it is clear that the next crisis will multiply on account of
illiquid assets and collateral freeze, and not driven by credit or funding scarcity as the yields are depicting.

 The Fortnight Ahead

 Nifty is crushed and fried. From January 2017, the 10-year yield is +200bps, volume index is +50%, oil is up 40% , INR if -9% and Nifty is +32%. It is clear that whatever
extra bulge we are holding because of “Ache din investor sentiment” is being currently shed and will continue to be shed until we find the “mean”weight. Further, if
there is a chain reaction of defaults throughout the financial system, there can be another deep dive for the markets in the coming fortnight, especially in commercial
paper market. Therefore, we are not saying that markets can’t go higher before they go lower, but only saying that keep all Mahatma Gandhi’s good thoughts in
your mind and heart and ensure he is there in your wallet too for the fortnight.

NBIE Smart Quote:

“We are in a world where we dont know the
fundamental value of any asset”
Raghuram Rajan.

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Institutional Equities
 •U.S. government debt yields were largely remained closer to 3% as Political concerns from recent sessions continue to rattle investors.

World Macro
• Japan Nikkei 225 hits highest level since Nov. 1991 as dollar hits 11-month high against yen.
•The trio spectres of rising interest rates ,a strong dollar and rising Oil prices have impacted major consumption Ems-China,Brazil & India
are -0.71/-1.29/-0.62%.

Indicators •The average global EM fund in the Investment Association Global Emerging Markets sector has fallen by almost 10% in the year to date,
compared to a 24.4% total return in 2017.

Country Equity Perform ance (%) Real GDP (YoY %) CPI (YoY %) Yields (%)
1W 1M 3M 2016 2017 2018 2016 2017 2018 10Y 2Y
Japan Nikkei
Global 225 at a 28year
US - S&P -0.51 0.57 7.71 1.50 2.20 2.30 1.30 2.00 2.00 3.07 2.83 high on
expectations of
US - NASDAQ 1.29 -0.29 8.61 1.50 2.20 2.30 1.30 2.00 2.00 3.07 2.83
better offtake
Japan 1.60 6.07 8.81 1.10 1.50 1.10 -0.10 0.50 0.70 0.13 -0.11 on account of
Germany -1.48 -0.95 -0.48 1.90 2.10 1.80 0.40 1.70 1.60 0.47 -0.52 new trade
tarriffs. The
UK 0.27 1.14 -0.70 1.80 1.50 1.30 0.70 2.60 2.50 1.57 0.82 S&P 500 posted
France 0.12 1.74 3.36 1.20 1.70 1.60 0.30 1.10 1.20 0.80 -0.36 its best quarter
Italy -3.53 2.51 -3.63 0.90 1.40 1.20 -0.10 1.40 1.20 3.15 1.03 since the end of
2013
Canada -0.80 -0.89 -0.56 1.50 3.00 2.10 1.40 1.60 1.90 2.43 2.21
Australia 0.22 -1.10 2.00 2.50 2.30 2.70 1.30 2.00 2.20 2.67 2.03
Sw itzerland 1.03 1.38 5.67 1.40 1.30 1.70 -0.40 0.50 0.60 0.04 -0.70
Others
China 0.86 3.67 0.32 6.70 6.60 6.40 2.00 1.70 2.20 3.63 3.19 Key EM
consumption
India -1.91 -6.38 2.44 8.00 6.80 7.50 5.00 3.60 4.50 8.02 7.84
markets feel the
Brazil -0.13 3.48 9.04 -3.60 0.60 2.40 8.80 3.50 4.00 11.76 8.58 pressure on
South Korea 0.17 0.87 0.73 2.80 2.80 2.70 1.30 1.90 1.80 2.36 1.93 account of higher
US interest rates,
Russia -0.40 -2.19 8.75 -0.20 1.70 1.70 7.10 4.00 4.00 4.88 3.84
rising USD and
Mex ico 0.32 -0.09 4.25 2.30 2.10 2.20 2.80 5.80 3.70 7.94 7.73 rising Oil prices
Indonesia 0.32 -0.68 3.21 5.00 5.20 5.40 3.50 4.10 4.20 8.02 7.65 as all 3will impact
growth in same.
Taiw an 0.31 -0.43 4.61 1.50 2.20 2.20 1.40 0.80 1.30 0.83 0.52
HongKong -0.59 0.05 -2.50 2.00 3.40 2.50 2.40 1.70 2.50 2.47 2.25
Malay sia -0.31 -0.48 7.28 4.20 5.10 4.80 2.10 3.70 2.50 4.07 3.48
Vietnam 1.42 2.96 6.39 6.20 6.30 6.40 4.70 3.70 3.80 5.05 4.15

GLOBE TROTTING
12
 S&P - Sector •the S&P 500 rose more than 7% and the Dow advanced 9% with both indexes rising in 11 of the past 12 quarters. The Nasdaq
gained more than 7% over the quarter, and is up for its ninth straight quarter.

Performance •Telecom & Industrial Sector has risen 3.1%/ 4.1% in the last fortnight as a discrete major S&P sectors.
•The broadest indicators of the market, equal-weighted indexes like the S&P Equal-Weight Index, hit a historic high.
•Auto continues its worst run - delivering -18% in last 3months, however in last fortnight- some bottom fishing is seen.
& Valuation

Sector Monthly Sector Performance (%) PE (x)

1W 1M 3M 2018E 2019E Monthly Sector Performance (%)
5
IT 0.8 -0.3 8.8 19.5 17.7 4
Financials -4.0 -2.2 4.4 13.1 12.0 3
Health Care 0.9 2.9 14.5 17.7 16.3 2
1
Cons. Discretionary 0.6 1.0 8.2 23.3 20.8 -
Industrials -1.7 2.2 10.0 18.0 16.0 (1)
Cons. Staples -2.0 1.0 5.7 18.4 17.4 (2)
(3)
Energy 0.8 2.6 0.6 19.5 15.6 (4)
Utilities -0.7 -0.6 2.4 17.0 16.3

Cons. Staples
Cons. Discretionary
Financials

Industrials

Telecom
Energy

Autos
Health Care

Materials
Utilities

Real Estate
IT
Real Estate -1.5 -2.6 0.9 36.6 36.1
Materials -4.4 -2.1 0.4 15.7 14.7
Autos -4.9 -3.3 -12.8 6.4 6.3
Telecom 1.1 4.3 9.9 18.2 16.5

GLOBE TROTTING
13
 •Prices for emerging market stocks are plumbing fresh lows.
World vs • Equity valuations at EM are trading at more than a 40 % discount to the US market on price/earnings terms, than
historical average discount of 15% the widest gap since 2002.
• India continues to outperform the MSCI EM basket- with it being +2.23% (even after this correction) versus the
EM & India region which is -2.65% in last 1year. In USD terms.

140

The divergence
130 between the MSCI
EM to US is at a
20year low. Nifty is
120 now miming the Fall
in MSCI EM along
with other major
110 geographies. Given
the huge
outperformance Nifty
100 had- the sell-off too
will be rapid and
painful.
90

80

70

60
Feb-17

Feb-18
Feb-16
Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18
Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18
Aug-15

Dec-15

Dec-16

Nov-17
Dec-17

Sep-18
Sep-15

Nov-15

Aug-16
Sep-16

Nov-16

Aug-17
Sep-17

Aug-18
Jun-15

Jan-16

Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
May-15

May-16
May-15

May-17

May-18
Jul-15

Jul-16

Jul-17

Jul-18
Mar-16

Mar-17

Mar-18
MSCI India (%) MSCI EM (%) MSCI World (%)

GLOBE TROTTING
14
 •Post the recent fall since the start of this year, FTSE World is consolidating well at the current levels and showing
some signs of stability there.
Global P/E •Expect FTSE World Index to breach from the current lows and enter in Safe region lead by Nikkei & DJIA coming
fortnight. Nikkei is ready to break out upwards after a long consolidation of nearly 2years.

Indices •EMs have been on the most rocky path since the start of the year. Of the EMs One of the biggest components is
China- which is facing tensions on trade & tarriff war developments.

23 18
FTSE WORLD INDEX MSCI (EM)
22 17

21 16

20 15

19 14

18 13

17 12

16 11

15 10

Feb-16

Feb-17

Feb-18
Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18
Dec-15

Dec-16

Dec-17
Aug-16

Aug-17

Aug-18
Jun-16

Jun-17

Jun-18
Feb-16

Feb-17

Feb-18
Apr-16

Apr-17

Apr-18
Oct-15

Oct-16

Oct-17

Oct-18
Dec-15

Dec-16

Dec-17
Aug-16

Aug-17

Aug-18
Jun-16

Jun-17

Jun-18
PE MEAN +1SD -1SD PE MEAN +1SD -1SD

22 DOW JONES INDUSTRIAL AVERAGE NIKKEI 225

21 25
20 24
23
19 22
21
18
20
17 19
18
16 17
16
15
15
14 14
13
13 Aug-15

Aug-16

Aug-17

Aug-18
Jun-15

Jun-16

Jun-17

Jun-18
Feb-16

Feb-17

Feb-18
Apr-15

Apr-16

Apr-17

Apr-18
Oct-15

Oct-16

Oct-17
Dec-15

Dec-16

Dec-17
Feb-16

Feb-17

Feb-18
Apr-16

Apr-17

Apr-18
Oct-15

Oct-16

Oct-17

Oct-18
Dec-15

Dec-16

Dec-17
Aug-16

Aug-17

Aug-18
Jun-16

Jun-17

Jun-18

PE MEAN +1SD -1SD PE MEAN +1SD -1SD

GLOBE TROTTING
15
 •MSCI EM participants are giving indications of very weak developments ahead.
Global P/E •Shanghai markets along with Hong Kong are entering a new domain – which has not been tested in the last 10years. The Shrinkage in the
patterns are so frightful- that there are chances that China markets can fall (and fall with speed) by 10% in next 2months.

Indices
• Political uncertainty has put Bovespa in a weaker zone. Untill elections outcome, don’t expect markets to revert back to their last 1month
high s too.
•Nifty which was holding well untill now is now regressing-falling inline with Other major EM counteries.

26 SHANGHAI SE COMPOSITE
DAX INDEX 25
24
24 23
23
22
22
21
21
20
20
19 19
18 18
17 17
16 16
15 15
14 14
13 13
12 12
Aug-16

Aug-17

Aug-18
Jun-16

Jun-17

Jun-18

Feb-16

Feb-17

Feb-18
Apr-16

Apr-17

Apr-18
Oct-15

Oct-16

Oct-17

Oct-18
Feb-16

Dec-15

Dec-16

Dec-17
Feb-17

Feb-18

Aug-16

Aug-17

Aug-18
Apr-16

Apr-17

Apr-18

Jun-16

Jun-17

Jun-18
Oct-15

Oct-16

Oct-17

Oct-18
Dec-15

Dec-16

Dec-17
PE MEAN +1SD -1SD
PE MEAN +1SD -1SD

17 BRAZIL IBOVESPA INDEX NIFTY 50

16 25
15 24
23
14
22
13
21
12 20
11 19

10 18
17
9
Aug-15

Aug-16

Aug-17

Aug-18
Jun-15

Jun-16

Jun-17

Jun-18
Feb-16

Feb-17

Feb-18
Apr-15

Apr-16

Apr-17

Apr-18
Oct-15

Oct-16

Oct-17
Dec-15

Dec-16

Dec-17
Aug-16

Aug-17

Aug-18
Jun-16

Jun-17

Jun-18
Feb-16

Feb-17

Feb-18
Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18
Dec-15

Dec-16

Dec-17

PE MEAN +1SD -1SD PE MEAN +1SD -1SD

GLOBE TROTTING
16
 •US dollar at a 11month high as EM currencies touch a new all-time low.
Commodities •So far this year the Argentine peso is down 50% against the dollar, making it the worst-performing currency in
the world over the period. The Turkish lira is a close second, sliding almost 40% , while the others like Brazilian
& Currencies real, South African rand and Russian ruble are -10/-18% in same period.
•Brent crude touches highest since 2014 on Iran concerns. Brent is +9.6% in last 1month.

Currency Change 1M (%)

15
Currency Change 3M (%)
9.9 15
10 8.7
3.5
5.0 10
5 1.2 2.1
0.0 5 0.6
0
0
-5 -0.5 -0.6
-3.3 -2.5 -5 -0.7 -0.4 -1.5
-2.7 -3.5
-10 -5.1 -4.7
-10
-15 -15
-20 -20 -23.4
-25 -25
-23.8
-30 YEN
-30
IDR

INR
EURO

ARS
ZAR
MXN

NGN
GBP

BRL
TRY

-35 -32.0

ZAR
MXN

GBP

NGN
YEN

BRL
TRY
INR

IDR
EURO

ARS
16 16
Commodity Change 1M (%) Commodity Change 3M (%)
8.0
8 4.5 8
2.1
0.0 0.6
0 0
-0.4 -0.9
-2.5
-8 -5.4 -8

-16 -16

Bloomberg European

Lead Spot Index

Aluminium Spot Index
Gold Spot

LME Copper Spot

Baltic Dry Index

Silver Spot

Zinc Spot (For LME

Nickel Index
Lead Spot Index
Aluminium Spot Index
Bloomberg European

LME Copper Spot

Nickel Index

Gold Spot

Silver Spot

Baltic Dry Index

Zinc Spot (For LME

Dated Brent

Options)
Dated Brent

Options)

GLOBE TROTTING
17
 -

-
5

5
10
15
20
25
30
35

10
15
20
25
30
Apr-15 Apr-15
May-15 May-15
Jun-15 Jun-15
Jul-15 Jul-15
Aug-15 Aug-15
Sep-15 Sep-15
Oct-15 Oct-15
Nov-15 Nov-15
Dec-15 Dec-15
Jan-16 Jan-16
Feb-16 Feb-16
Indices
Mar-16 Mar-16
Apr-16 Apr-16
Volatility

May-16 May-16
Jun-16 Jun-16
Jul-16 Jul-16
Aug-16 Aug-16
Sep-16 Sep-16
Oct-16 Oct-16
Nov-16 Nov-16
Dec-16 Dec-16
Jan-17 Jan-17
INDIA VIX

GOLD VIX
Feb-17 Feb-17
Mar-17 Mar-17
Apr-17 Apr-17
May-17 May-17
Jun-17 Jun-17
Jul-17 Jul-17
being tighter. Y-o-Y

Aug-17 Aug-17
Sep-17 Sep-17
Oct-17 Oct-17
Nov-17 Nov-17
Dec-17 Dec-17
Jan-18 Jan-18
Feb-18 Feb-18
Mar-18 Mar-18
Apr-18 Apr-18
May-18 May-18
Jun-18 Jun-18
Jul-18 Jul-18
Aug-18 Aug-18
Sep-18 Sep-18
classes are contributing to increased volatility in India.

-
5
10
15
20
25
30
35
40
45
-
10
20
30
40
50
60
70
80
90

Apr-15
Apr-15
May-15
May-15
Jun-15
Jun-15
Jul-15
Jul-15
Aug-15
Aug-15
Sep-15
Sep-15
Oct-15
Oct-15
Nov-15
Nov-15
Dec-15
Dec-15
Jan-16
Jan-16
Feb-16
Mar-16 Feb-16
Mar-16
Apr-16
May-16 Apr-16
Jun-16 May-16
Jul-16 Jun-16
Aug-16 Jul-16
Sep-16 Aug-16
Oct-16 Sep-16
Nov-16 Oct-16
Dec-16 Nov-16
Jan-17 Dec-16
Jan-17
US VIX
OIL VIX

Feb-17
Mar-17 Feb-17
Apr-17 Mar-17
May-17 Apr-17
Jun-17 May-17
•Don’t see US VIX moving pass 15 points this year , despite all barometers are moving against it right now.

Jul-17 Jun-17
Aug-17 Jul-17
Sep-17 Aug-17
Oct-17 Sep-17
Nov-17 Oct-17
Dec-17 Nov-17
Jan-18 Dec-17
Feb-18 Jan-18
Mar-18 Feb-18
Apr-18 Mar-18
May-18 Apr-18
Jun-18 May-18
Jul-18 Jun-18
Aug-18 Jul-18
Sep-18 Aug-18
Sep-18
GLOBE TROTTING
•Tighter central banks policies, increasing geopolitical risks, rising macro concerns and decreasing co-movements among certain asset

•However in US- investors still remain complacent as VIX continues to trade closer to 10points mark despite the central bank liquidity

18
 Global Fundamental Indicators

Index PE Ratio (x) PBV Ratio (x) ROE (%) Div Yield (%)
2018E 2019E 2018E 2019E 2018E 2019E 2018E 2019E
DOW JONES INDUS. AVG 16.9 15.5 4.1 3.7 23.1 24.3 2.2 2.3
NASDAQ COMPOSITE INDEX 24.1 20.7 4.7 4.2 27.4 29.2 1.0 1.1
S&P 500 INDEX 18.1 16.4 3.4 3.1 18.2 19.0 1.9 2.0
RUSSELL 2000 INDEX 27.5 21.8 2.1 1.9 7.4 6.0 1.2 1.2
NIKKEI 225 17.1 15.2 1.8 1.7 10.5 10.5 1.8 1.9
DAX INDEX 13.4 12.0 1.6 1.5 11.5 12.1 3.2 3.5
FTSE 100 INDEX 13.5 12.5 1.8 1.7 10.7 10.8 4.4 4.5
CAC 40 INDEX 14.7 13.4 1.6 1.5 10.2 10.4 3.2 3.5
FTSE MIB INDEX 11.3 9.9 1.1 1.0 8.4 9.1 4.3 4.8
S&P/TSX COMPOSITE INDEX 15.6 13.7 1.7 1.6 12.1 12.7 3.0 3.2
ALL ORDINARIES INDX 15.9 15.0 2.0 1.9 12.3 12.2 4.3 4.4
SWISS MARKET INDEX 15.9 14.4 2.3 2.2 13.6 14.9 3.5 3.7

CSI 300 INDEX 11.8 10.2 1.5 1.4 12.8 12.7 2.7 3.0
Nifty 50 18.6 15.6 2.8 2.4 14.6 16.0 1.6 1.8
BRAZIL IBOVESPA INDEX 11.7 9.8 1.6 1.4 14.5 15.2 3.9 4.6
KOSPI INDEX 9.4 8.8 1.0 0.9 19.5 16.7 2.0 2.2
S&P/BMV IPC 16.8 14.6 2.3 2.1 17.0 18.2 2.2 2.5
JAKARTA COMPOSITE INDEX 15.7 13.7 2.3 2.1 17.0 17.4 2.2 2.5
TAIWAN TAIEX INDEX 14.2 13.6 1.8 1.7 13.8 13.8 4.1 4.4
HANG SENG INDEX 11.4 10.3 1.3 1.2 12.9 12.9 3.6 3.9
FTSE BURSA MALAYSIA EMAS 16.7 15.3 1.6 1.5 9.6 9.9 3.2 3.3
HO CHI MINH STOCK INDEX 17.5 14.6 3.2 2.8 19.4 19.4 1.5 1.6

GLOBE TROTTING
19
 •Indian and US 10 year yields are remaining in the average band differential of 500bps .
Liquidity & Valuation •However the huge run that the India 10year has seen in last 10months (~120bps) has superseded
ahead of the expected macro events. Given the same- we believe that the recent cool-off measures taken
Indicators by the government should hold Yields here.

US 10yr & India

8.5 3.4
10 Year Yields - India Vs US yields remain in
3.2
3.0 the 500bps
8.0 range. Baring the
2.8
2.6 2017- period
7.5 2.4 (Yield spread had
2.2 shrunk to
7.0 2.0 476bps)- the
1.8 range of spread
1.6 has been 500-
6.5 1.4 516bps.
1.2
6.0 1.0

Feb-16

Feb-17

Feb-18
Apr-16

Oct-16

Oct-17

Oct-18
Oct-15

Apr-17

Apr-18
Dec-17
Dec-15

Dec-16
Aug-15

Aug-16

Aug-17

Aug-18
Jun-15

Jun-16

Jun-17

Jun-18
India 10 Yr (%) US 10 Yr (%) (RHS)

NIFTY - Volatility & Valuation

13,000 48

43
11,000
38
9,000
33
India VIX is +36% in
7,000 28
last 2months. The
23 Nifty in proportion to
5,000
the same is -6% from
18
highs.
3,000
13

1,000 8
Feb-16

Feb-17

Feb-18
Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18
Aug-15
Sep-15

Nov-15
Dec-15

Aug-16
Sep-16

Nov-16
Dec-16

Aug-17
Sep-17

Nov-17
Dec-17

Aug-18
Sep-18
Jun-15

Jan-16

Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
Jul-15
May-15

Jul-16

Jul-17

Jul-18
May-16

May-17

May-18
Mar-16

Mar-17

Mar-18
NIFTY VIX P/E (RHS) AVERAGE PE

GLOBE TROTTING
20
 Back

Institutional Equities
 Aug-17 S ep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18
Currency in circulation (% YoY) (10.0) (8.1) (8.0) 39.7 80.0 75.5 57.1 37.0 32.9 29.8 27.7 22.2 19.3
M3 (% YoY) 6.7 5.6 6.5 8.4 10.0 10.4 10.3 9.5 10.6 10.0 10.4 9.9 10.8
Rural wage (% YoY) 7.3 7.0 5.7 4.4 4.4 3.1 3.7 3.0 2.4
Consumer durables production (% YoY) 4.3 (3.4) (8.6) 3.1 2.1 7.6 7.5 4.1 4.5 6.4 13.4 14.4
Consumer non-durables production (% YoY) 7.2 10.3 7.9 23.4 16.6 10.7 7.4 12.7 7.9 (2.1) 0.2 5.6
Motorvehicle sales (% YoY) 14.5 10.0 (1.8) 24.0 36.4 30.7 22.8 18.2 17.4 12.1 25.2 8.0 3.4
Heat Map – India At A Glance

Passenger Vehicle (% YoY) 13.8 11.3 (0.3) 14.3 5.2 7.6 7.8 6.4 7.5 19.7 37.5 (2.7) (2.5)
Commercial Vehicle (% YoY) 23.2 25.3 6.4 50.4 52.6 39.7 31.1 24.6 76.0 43.1 41.7 29.7 29.6
Two wheeler (% YoY) 14.7 9.1 (2.8) 23.5 41.5 33.4 23.8 18.3 16.9 9.2 22.3 8.2 2.9
Petrol consumption (% YoY) (0.7) 17.8 5.5 4.8 10.3 16.2 10.1 14.2 9.5 2.3 15.2 8.0 7.9
Diesel consumption (% YoY) (3.5) 16.6 (2.0) 7.5 8.5 14.6 6.1 8.0 2.7 0.3 7.8 4.9 4.3
Cement production (% YoY) 0.7 0.1 (1.3) 18.4 18.9 19.6 23.0 13.5 21.9 13.0 13.3 10.7
Steel production (% YoY) 2.1 3.7 8.4 17.1 2.5 1.7 5.0 4.8 3.0 0.7 3.4 6.0
IIP (% YoY) 4.5 4.1 2.0 8.5 7.3 7.5 6.9 4.6 4.8 3.9 6.9 6.6
Mining (% YoY) 9.2 7.8 (0.1) 1.4 1.2 0.3 (0.4) 3.1 4.0 5.8 6.6 3.7
Manufacturing (% YoY) 3.4 3.8 2.0 10.4 8.7 8.7 8.4 4.7 5.3 3.7 6.7 7.0
Electricity (% YoY) 8.3 3.4 3.2 3.9 4.4 7.6 4.5 5.9 2.1 4.2 8.5 6.7
Capital goods production (% YoY) 7.3 8.7 3.5 5.7 13.2 12.4 16.6 (5.7) 11.9 6.9 9.8 3.0
Capital goods imports (% YoY) 18.3 14.6 15.2 18.4 9.1 28.1 27.7 25.9 8.7 34.2 31.5 30.3 45.3
PMI Manufacturing Index 51.2 51.2 50.3 52.6 54.7 52.4 52.1 51.0 51.6 51.2 53.1 52.3 51.7
PMI Services Index 47.5 50.7 51.7 48.5 50.9 51.7 47.8 50.3 51.4 49.6 52.6 54.2 51.5
PMI Composite Index 49.0 51.1 51.3 50.3 53.0 52.5 49.7 50.8 51.9 50.4 53.3 54.1 51.9
Rail freight traffic (% YoY) 7.7 5.9 2.6 3.1 7.0 6.4 4.1 3.9 8.3 6.2 4.9 4.1 5.2
Air traffic (% YoY) 15.7 16.5 20.6 16.9 17.8 19.7 24.4 28.2 26.1 16.9 18.7 21.2
Major port tarffic (% YoY) (0.3) 3.1 3.4 4.8 5.0 12.9 9.1 2.9 1.8 3.0 7.1 4.8 9.4
Foreign tourist arrivals (% YoY) 11.0 18.9 18.1 14.4 15.1 8.4 10.1 13.4 4.4 5.1 2.7 3.5
Export growth (% YoY) 10.4 25.7 (1.1) 30.1 12.5 11.6 4.5 (0.7) 5.2 21.0 18.0 14.3 19.2
Import growth (% YoY) 21.4 18.1 7.6 20.8 21.0 26.0 10.4 7.1 4.6 13.5 19.5 28.8 25.4
Bank non-food credit growth (% YoY) 7.1 7.1 7.4 9.6 11.2 11.0 11.1 10.2 12.5 13.2 10.9 12.4 14.4
Personal credit (% YoY) 15.7 16.8 16.0 17.3 18.9 20.0 20.4 17.8 19.1 18.6 17.9 16.7
Credit to industry (% YoY) (0.3) (0.4) (0.2) 1.0 2.1 1.1 1.0 0.7 1.0 1.4 0.9 0.3
Credit to services (% YoY) 5.0 7.0 9.4 14.0 14.7 13.2 14.2 13.8 20.7 21.9 23.3 23.0
Deposit growth (% YoY) 8.9 8.2 8.7 3.0 3.6 4.6 5.4 6.2 7.7 8.1 6.8 7.8 9.9
Commercial Paper issuance (% YoY) (4.8) 12.7 23.5 22.8 13.1 20.0 22.1 (6.4) 1.8 19.3 49.3 96.5 71.1
Central Government expenditure (% YoY) (2.0) (12.1) 16.5 37.1 20.3 (4.7) 17.6 (36.6) (7.7) 15.1 22.4 15.5
Indirect tax (% YoY) (8.1) (0.0) (10.5) (25.5) (14.3) (21.3) (8.8) (43.4) 66.0 3.9 (10.9) (13.3)
CPI (% YoY) 3.4 3.3 3.6 4.9 5.2 5.1 4.4 4.3 4.6 4.9 4.9 4.2 3.7
Core CPI (% YoY) 4.5 4.6 4.6 4.9 5.1 5.1 5.2 5.4 5.9 6.2 6.4 6.3 5.9
Positiv e WPI (% YoY) 3.2 2.6 3.6 3.9 3.6 2.8 2.5 2.5 3.2 4.4 5.8 5.1 4.5
10 year G-Sec yields (% ) 6.5 6.7 6.9 7.1 7.3 7.4 7.7 7.4 7.8 7.8 7.9 7.8 7.9
Neutral Weighted average lending rate of Banks (% ) 10.6 10.5 10.4 10.4 10.3 10.2 10.3 10.2 10.2 10.1 10.1
Median MCLR (% ) 8.5 8.4 8.3 8.4 8.3 8.3 8.3 8.4 8.4 8.5 8.5 8.6
Watch
Negative (Red+ Amber) 14.0 8.0
22
18.0 8.0 5.0 7.0 5.0 7.0 6.0 7.0 7.0 5.0 4.0
Negativ e Positive (Green + Blue) 28.0 34.0 24.0 34.0 37.0 35.0 37.0 35.0 36.0 34.0 34.0 35.0 17.0
Domestic Macro •Economic activity has slowed MoM in August, continuing the trend from July .
•Over last three months, government expenditure increased 18%, while tax collections were flat, as GST
Indicators collections are weak. This has resulted in a weak fiscal situation, partly responsible for the government’s
inability to cushion higher fuel price impact.

GDP (%) IIP (%)

10
9.0
8.5
8.0
10.0 9.1 8 7.3 7.3 7.5
8.8 7.2
6.9 6.9
9.0 7.9 8.0 8.1 8.2 6.6
7.7
8.0 7.5 7.3 7.3 7.6 7.2
7.6
7.0 6
6.0
6.5 6.1 6.8 6.1 5.2 5.1 5.3
7.0 6.4 6.3 5.0 4.8
4.5 4.4 4.5
6.0 5.4 5.3 5.6 4.0 4.0 4.2 4.1 3.9
3.7 3.5
4 3.2
5.0 4.3 3.1 2.9
2.2 2.4
4.0 1.8
2 1.3 1.2
3.0 0.8 1.0
2.0
0
1.0
-0.3
-
-2
Sep-12
Dec-12

Sep-13
Dec-13

Sep-14
Dec-14

Sep-15
Dec-15

Sep-16
Dec-16

Sep-17
Dec-17
Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18
Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Sep-15

Sep-16

Sep-17
Jan-16

Jan-17

Jan-18
Jul-15

May-16

Jul-16

May-17

Jul-17

May-18

Jul-18
Mar-16

Mar-17

Mar-18
Nov-15

Nov-16

Nov-17
Quarterly GDP (%) Average (%)

CPI (%) 6.0 WPI (%) 5.5 5.7

5.1 5.1
4.8 4.5
4.3 4.0
7.0 3.9 3.7
4.0 3.6 3.6
3.2 3.1 3.0 2.7 2.7
6.1
5.8 5.8 2.3
6.0 5.6 5.7 5.5 1.8 2.1 1.9
5.4 2.0
5.3 5.2 5.1 1.1 1.4 1.3 0.9
5.0 5.1 0.6
4.8 4.9 4.9 4.9
5.0 4.6
4.4 4.4 4.4 -
4.2 4.3 4.2
3.9 -0.1
4.0 3.7 3.6 3.7 3.7
3.6 -1.1-0.9
3.4 3.3 3.3 -2.0
3.2
3.0 -2.0
3.0 -2.4-2.5-2.3
2.4 -4.0
2.2 -3.7
2.0 -4.8
1.5
-6.0 -5.6
-6.1
1.0
-8.0

Feb-16

Feb-17

Feb-18
Apr-16

Apr-17

Apr-18
Oct-15

Oct-16

Oct-17
Aug-15

Dec-15

Aug-16

Dec-16

Aug-17

Dec-17

Aug-18
Jun-16

Jun-17

Jun-18
-
Feb-16

Feb-17

Feb-18
Oct-15

Oct-16

Oct-17
Apr-16

Apr-17

Apr-18
Aug-15

Aug-16

Aug-17

Aug-18
Dec-15

Dec-16

Dec-17
Jun-16

Jun-17

Jun-18

DOMESTIC INDICATORS
23
 •CPI inflation stood at 3.7% in August 2018, down from 4.2% MoM. Core inflation stood at 5.87%,
Domestic Macro down from 6.3% MoM. Muted food prices were responsible for keeping inflation under check.
Prices of cereals and pulses have been inching up after the announcement of a hike in minimum
Indicators support price or MSP in July 2018.

150 CPI Components

145

140

135

130

125

120

115

May-18
May-17
Feb-17

Mar-18
Mar-17

Feb-18
Jul-17

Jul-18
Dec-16

Nov-17
Nov-16

Dec-17
Aug-16

Oct-16

Apr-17

Sep-17

Aug-18
Sep-16

Aug-17

Oct-17

Apr-18
Jan-18
Jan-17

Jun-17

Jun-18
Food & Beverages Clothing & Footwear Housing
Misc: Education Misc: Health Misc: Household Goods and Services

DOMESTIC INDICATORS
24
Business Confidence • The weakness in India’s trade has reflected in INR being at an all-time low.
• India’s CAD has risen from the 0.4% (of Gross Domestic Product) level achieved in the January-March quarter of 2016-17
to breach the 2% mark in the April-June quarter of 2018-19.
Indicators • the dollar has a much lower weight in the REER than it has in India’s trade (including in oil) most of which is settled in
dollars. So it was important for the INR to fall by atleast 14-16% against the dollar to make the real exchange rate more
competitive than the REER.

50.0 46.3 49.1 40.0

India Merchandise Imports (YoY%) India Merchandise Exports (YoY%) 30.6
40.0 33.1 27.9 25.7
30.0
26.1 28.8
30.0 15.4 23.1 25.4 19.8 20.2 19.2
21.8 19.6 21.1 21.3 17.5 17.6
19.0 18.1 20.0 14.3
20.0 14.9 12.4
10.7 9.6 8.3 8.1 9.1
8.1 10.4 7.6 10.4
7.2 4.6 10.0 4.6 5.7 4.3 4.4 3.9 4.5 5.2
10.0 2.3
0.5
- -
-2.5 -0.3 -1.1 -0.7
-10.0 -10.0
-20.0 -14.1
-20.0
-30.0
-30.0
-40.0
-50.0 -40.0

Feb-17

Feb-18
Oct-16

Apr-17

Oct-17

Apr-18
Aug-16

Sep-16

Aug-17

Sep-17

Aug-18
Nov-16

Dec-16

Nov-17

Dec-17
Jan-17

Jun-17

Jan-18

Jun-18
Jul-17

Jul-18
May-17

May-18
Mar-17

Mar-18
Aug-16

Sep-16

Aug-17

Sep-17

Aug-18
Jan-17

Jun-17

Jan-18

Jun-18
May-17

May-18
Jul-17

Jul-18
Mar-17

Mar-18
Feb-17

Feb-18
Oct-16

Oct-17
Apr-17

Apr-18
Nov-16

Dec-16

Nov-17

Dec-17

106
India Real Effective Exchange Rate (%)
105
104
103
102
101
100
99
98
97
96
Aug-16

Sep-16

Aug-17

Sep-17
Jan-17

Jun-17

Jan-18

Jun-18
Jul-16

May-17

Jul-17

May-18

Jul-18
Mar-17

Mar-18
Feb-17

Feb-18
Oct-16

Oct-17
Apr-17

Apr-18
Nov-16

Dec-16

Nov-17

Dec-17

DOMESTIC INDICATORS
25
Business Confidence •Manufacturing activity strengthens in September, PMI rises to 52.2
•Sentiment was tempered by slower infrastructure sector growth and tepid auto sales
Indicators •In sync with this, GST collections rose to Rs 94,442 crore in September compared with Rs 93,690
crore in August,

56.0 Manufacturing PMI

54.4 54.7 Services PMI
54.0 56.0 54.7 54.5
53.1 54.2
52.4 52.6 52.3 52.5 52.5 52.6 52.4 52.1 52.3 54.0 53.1
52.1 52.2 52.6
51.7 51.8 51.6 51.6 51.7 52.0 51.5 51.7 51.7 51.4 51.5
52.0
50.9 51.2 51.2 51.0 51.2 52.0
50.3 50.7 50.9
50.3
50.5 50.7 50.4 50.7 50.3
50.2
49.6
49.6 50.0 48.7 48.5
50.0 47.5 47.8
48.0 46.7 46.8
47.9 45.9
48.0 46.0
44.0
46.0 42.0
40.0
44.0

Feb-17

Feb-18
Oct-16

Apr-17

Oct-17

Apr-18
Aug-16

Sep-16

Nov-16

Dec-16

Aug-17

Sep-17

Nov-17

Dec-17

Aug-18
Jan-17

Jun-17

Jan-18

Jun-18
May-17

Jul-17

May-18

Jul-18
Mar-17

Mar-18
Aug-16
Sep-16

Aug-17
Sep-17

Aug-18
Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
Jul-16

Jul-17

Jul-18
May-16

May-17

May-18
Mar-16

Feb-17
Mar-17

Feb-18
Mar-18
Apr-16

Oct-16

Apr-17

Oct-17

Apr-18
Nov-16
Dec-16

Nov-17
Dec-17

Composite PMI
60.0 54.6 55.4
53.3 54.1 51.9
52.4
49.1 47.6 49.4 50.7
52.3 51.3 52.5 52.7 51.1 51.3 50.3 53.0 52.5 49.7 50.8 51.9 50.4
49.0
50.0 46.0

40.0

30.0

20.0

10.0

-
Aug-16

Sep-16

Aug-17

Sep-17

Aug-18
Jan-17

Jun-17

Jan-18

Jun-18
May-17

May-18
Jul-17

Jul-18
Feb-17

Mar-17

Feb-18

Mar-18
Apr-17

Apr-18
Oct-16

Oct-17
Nov-16

Dec-16

Nov-17

Dec-17

DOMESTIC INDICATORS
26
 0
5
10
15
20
25
30
35
Jul-14
Aug-14
Sep-14
Oct 14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Domestic

Apr-16
May-16
Jun-16
Jul-16

Cement Production (Mn Tonnes)

Aug-16
Sep-16

0
20000
40000
60000
80000
100000
120000
140000
Oct-16
Nov-16
Cement Production

Jul-14 Dec-16
Industrial Indicators

Aug-14 Jan-17
Sep-14 Feb-17
Oct 14 Mar-17
Nov-14 Apr-17
Dec-14 May-17

Growth (% YoY)
Jan-15 Jun-17
Jul-17
Feb-15 Aug-17
Mar-15 Sep-17
Apr-15 Oct-17
May-15 Nov-17
Jun-15 Dec-17
Jul-15 Jan-18
Feb-18
Aug-15 Mar-18
Sep-15 Apr-18
Oct-15 May-18
Nov-15 Jun-18
Dec-15 Jul-18
0
5

Jan-16
-5
10
15
20
25

-20
-15
-10

Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16

Electricity Generation (Mn KWH)

Sep-16
Oct-16
0
10
20
30
40
50
60
70
80

Nov-16
Electricity Generation

Dec-16 Jul-14
Jan-17 Aug-14
Feb-17 Sep-14
Mar-17 Oct 14
Apr-17 Nov-14
compared with an upwardly revised 7.3% in July.

May-17 Dec-14
Jun-17 Jan-15
Feb-15
Jul-17 Mar-15

Growth (% YoY)
Aug-17 Apr-15
Sep-17 May-15
Oct-17 Jun-15
Nov-17 Jul-15
Dec-17 Aug-15
Sep-15
Jan-18 Oct-15
Feb-18 Nov-15
Mar-18 Dec-15
Apr-18 Jan-16
May-18 Feb-16
Jun-18 Mar-16
Jul-18 Apr-16
May-16
0
5

Jun-16
10
15
20
25

Jul-16
Coal Production (Mn Tonnes)

Aug-16
Sep-16
Oct-16
Coal Production

Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Growth (% YoY)

Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
0
5

-5
10
15
20
25

-15
-10
meet the post-monsoon demand while electricity generation was up 5.4%. Refinery products output was up 5.1%.
a slow rise in natural gas (1.1%), coal (2.4%) and steel (3.9%) output. Cement production rose a robust 14.3% to
• Core sector growth was lower on account to contraction in fertiliser (-5.3%) and crude oil (-3.7%) production and
• The core sector index, which measures output across eight infrastructure sectors, rose 4.2% in August

DOMESTIC INDICATORS
27
 Auto Sales
• Automobile sales are a mix bag once again in September.
• Most CV players reported double-digit growth in volume while in case of passenger vehicles the sales were
subdued with negative to single-digit growth. In case of two-wheelers, sales were mixed with a few players
YoY Growth (%) reporting strong double-digit YoY growth and a few posting single-digit YoY growth.
•Two Wheelers and Passenger Vehicles are seeing slow growth in last 3months due to various unavoidable and
challenging factors which have resulted in the PV Industry reporting negative growth m-o-m .

(%) (%)
200 60
50
150
40
100
30
50 20
10
0
0
-50
-10
-100 -20
Feb-17

Mar-17

Feb-18

Mar-18
Apr-17

Apr-18
Aug-17

Sep-17

Nov-17

Dec-17

Aug-18

May-17

May-18
Jan-17

Jun-17

Jan-18

Jun-18

Feb-17

Mar-17

Feb-18

Mar-18
Apr-17

Oct-17

Apr-18
Jul-17

Jul-18

Nov-17

Dec-17
Aug-17

Sep-17

Aug-18
Jan-17

Jun-17

Jan-18

Jun-18
May-17

May-18

Jul-17

Jul-18
Oct-17

CV MHCV LCV Passenger cars Utility vehicles MPVs

(%)
60
50
40
30
20
10
0
-10
-20
May-17

May-18
Feb-17

Mar-17

Feb-18

Mar-18
Apr-17

Oct-17

Apr-18
Nov-17

Dec-17
Aug-17

Sep-17

Aug-18
Jan-17

Jun-17

Jan-18

Jun-18
Jul-17

Jul-18
Two-wheelers Motorcycle Scooters

DOMESTIC INDICATORS
28
 •On y-o-y basis, non-food bank credit increased by 12.4% in August 2018
Fortnightly Credit •Credit to agriculture and allied activities increased by 6.6% and to industry rose by 1.9 per cent
•Growth was mainly lead by sub-sectors such as ‘infrastructure’, ‘textiles’, ‘chemical and chemical products’

Deposit Growth and ‘all engineering’ accelerated.

•Credit to the services sector expanded by 26.7 per cent in August 2018 Personal loans increased by 18.2 per
cent in August 2018

System Credit Growth (All Scheduled Banks %) 18

15 System Deposit Growth (All Scheduled Banks %)

13
15

11 12

9 9

7 6

5 3

3 0

Feb-17

Feb-18
Apr-17

Apr-18
Oct-16

Oct-17
Nov-16

Dec-16

Nov-17

Dec-17
Aug-16

Sep-16

Aug-17

Sep-17

Aug-18

Sep-18
Jan-17

Jun-17

Jan-18

Jun-18
Jul-16

May-17

Jul-17

May-18

Jul-18
Mar-17

Mar-18
Feb-17

Feb-18
Oct-16

Apr-17

Oct-17

Apr-18
Aug-16

Sep-16

Nov-16

Dec-16

Aug-17

Sep-17

Nov-17

Dec-17

Aug-18

Sep-18
Jan-17

Jun-17

Jan-18

Jun-18
May-17
Jul-16

May-18
Jul-17

Jul-18
Mar-17

Mar-18

Credit Growth - YoY (%)

30

25

20

15

10

(5)

(10)
Aug-15
Sep-15

Aug-16
Sep-16

Aug-17
Sep-17

Aug-18
Jan-16

Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
May-16

May-17

May-18
Jul-16

Jul-17

Jul-18
Feb-16
Mar-16

Feb-17
Mar-17

Feb-18
Mar-18
Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18
Nov-15
Dec-15

Nov-16
Dec-16

Nov-17
Dec-17
Personal Agri Industry Services Personal

DOMESTIC INDICATORS
29
 Domestic •Liquidity in India remained on the tight leash as Corporate pay Advance Tax & Dollar liquidity remains in shortage.
•Based on an assessment of the durable liquidity needs going forward and the seasonal growth in currency in circulation observed

Liquidity in build-up to the festive season, RBI has decided to conduct OMOs for an aggregate amount of Rs360 billion in the month of
October 2018.
•In FY19- We expect RBI to conduct OMOs of atleast Rs 1000bn to Rs 1200bn to cushion liquidity in the market.

500 50 CP

400 - 7.0 120

(50)
300 6.0
100
(100)
200 (150) 80
5.0

100 (200) 60

- (250) 4.0

40
(300)
(100) 3.0
(350) 20

(200) (400) 2.0

-
(300) (450)
Feb-16

Feb-17

Feb-18
Apr-16

Apr-17

Apr-18
Aug-15

Aug-16

Aug-17

Aug-18
Dec-15

Dec-16

Dec-17
Jun-16

Jun-17

Jun-18
1.0
Oct-15

Oct-16

Oct-17 (20)

- (40)

Feb-16

Feb-17

Feb-18
Aug-15

Nov-15

Aug-16

Nov-16

Aug-17

Nov-17

Aug-18
May-16

May-17

May-18
Rs Bn. OMO - Sale OMO - Purchase Net OMO (RHS)
Commercial Paper OS (Rs. Tn) % YoY (RHS)

India Banking Liquidity Index

2,000

1,000

-1,000

-2,000

-3,000

-4,000

-5,000
Sep-15

Sep-16

Sep-17

Sep-18
Jan-16

Jan-17

Jan-18
Jul-16

Jul-17

Jul-18
May-16

May-17

May-18
Mar-16

Mar-17

Mar-18
Nov-15

Nov-16

Nov-17

DOMESTIC INDICATORS
30
 •The aggressive rise in yields have started to show in the MCLR rates as various Banks look to hike
Money Supply &the deposit and the lending rates in the last 3months.
•Various Banks have announced a uniform increase of 20-25 bps on its marginal cost just before the

MCLR Rate festive Season.

•The one-year MCLR, against which home loans are benchmarked now stands at 8.45% as against
8.25% earlier

50
Money Supply
40

30

20

10

(10)

(20)

(30)
Sep-15
Nov-15

Sep-16
Nov-16

Sep-17
Nov-17
Jan-16

Jan-17

Jan-18
Jul-15

Jul-16

Jul-17

Jul-18
May-16

May-17

May-18
Mar-16

Mar-17

Mar-18
M1 M3

9.6 MCLR Rate (%)

9.4

9.2

9.0

8.8

8.6

8.4

8.2

8.0
Aug-16
Sep-16

Aug-17
Sep-17
Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
May-16

May-17

May-18
Jul-16

Jul-17

Jul-18
Mar-17

Mar-18
Feb-17

Feb-18
Oct-16

Oct-17
Apr-16

Apr-17

Apr-18
Nov-16
Dec-16

Nov-17
Dec-17

DOMESTIC INDICATORS
31
 Bond • As a result of liquidity uncertainty and partly owing to revised rate expectations post recent INR depreciation, term spreads in
the market have risen rapidly.

Yields •A 2 year AAA PSU bond is dealing at close to 9%. As discussed before, the swap curve is pricing in more than 3 back to back
rate hikes from here, on account of which primary issuances in the corporate bond market have slowed substantially versus
previous years.

Bond Yields - AAA (%)

9.0
Bond Yields - AA (%)
9.5
8.5 9.0

8.5
8.0
8.0
7.5
7.5

7.0 7.0

6.5

Feb-17

Feb-18
Apr-17

Oct-17

Apr-18

Oct-18
Nov-17
Dec-17
Aug-17
Sep-17

Aug-18
Sep-18
Jun-17

Jan-18

Jun-18
Jul-17

Jul-18
May-17

May-18
Mar-17

Mar-18
6.5
Feb-17

Feb-18
Apr-17

Oct-17

Apr-18

Oct-18
Aug-17
Sep-17

Aug-18
Sep-18
Nov-17
Dec-17
Jun-17

Jan-18

Jun-18
Jul-17

Jul-18
May-17

May-18
Mar-17

Mar-18

Bond Yields - BBB (%)

Bond Yields - A (%)
12.5
11.0
12.0
10.5 11.5
11.0
10.0
10.5
9.5 10.0
9.0 9.5
9.0
8.5 8.5
8.0 8.0
7.5
7.5
Feb-17

Feb-18
Apr-17

Oct-17

Apr-18

Oct-18
Nov-17
Dec-17
Aug-17
Sep-17

Aug-18
Sep-18
Jun-17

Jan-18

Jun-18
Jul-17

Jul-18
May-17

May-18
Mar-17

Mar-18
Feb-17

Feb-18
Apr-17

Oct-17

Apr-18

Oct-18
Nov-17
Dec-17
Aug-17
Sep-17

Aug-18
Sep-18
Jun-17

Jan-18

Jun-18
Jul-17

Jul-18
May-17

May-18
Mar-17

Mar-18

DOMESTIC INDICATORS
32
 India Yields
• With a substantial recent rise in US dollar and associated rise in emerging market (EM) risk premia, the environment for
offshore financing has become extremely challenging.
• In an already tight environment, recent credit episodes may have further heightened liquidity preference of the market.
Indicators In such a situation, the risk is for credit spreads to further blow out. Refinancing pressures may quickly mount and
balance sheet growths may have to be rapidly curtailed.

8.5 8.5
2Y Rates (%) 10Y Rates (%)
8.0

 we
8.0
7.5
7.5
7.0

6.5 7.0

6.0
6.5
5.5

5.0 6.0

Aug-15

Aug-16

Aug-17

Aug-18
Jun-15

Jun-16

Jun-17

Jun-18
Feb-16

Feb-17

Feb-18
Apr-15

Apr-16

Apr-17

Apr-18
Oct-15

Oct-16

Oct-17

Oct-18
Dec-15

Dec-16

Dec-17
Feb-16

Feb-17

Feb-18
Apr-15

Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18
Aug-15

Aug-16

Aug-17

Aug-18
Dec-15

Dec-16

Dec-17
Jun-15

Jun-16

Jun-17

Jun-18
8.0
Repo Rate (%)

7.5

7.0

6.5

6.0

5.5
Aug-15

Aug-16

Aug-17

Aug-18
Jun-15

Jun-16

Jun-17

Jun-18
Feb-16

Feb-17

Feb-18
Oct-15

Oct-16

Oct-17
Apr-15

Apr-16

Apr-17

Apr-18
Dec-15

Dec-16

Dec-17

DOMESTIC INDICATORS
33
 •YTD against its regional peers- INR is the worst performing currency followed by Russia Rouble which -18% in

India Currency the same period. High current account deficit countries having high dependence on Imports have suffered
highest in midst of US rate hikes, rising Oil prices and trade wars.

Indicators
• Further on account of US:China Trade wars, there is speculation that China may devalue the yuan to outdo the
US; this is likely to have a ripple effect on other currencies, including the rupee.

%change
Currency (wrt USD)
1M YTD CY18
Rupee -2.57 -11.93
Euro -0.01 -3.33
Chinese Yuan -0.27 -5.27
British Pound 0.60 -3.52
Japanese Yen -2.52 -1.09
Indonesian Rupaiah -0.42 -9.47
Philippines Peso -0.86 -7.52
South Korean Won 0.35 -4.00
Thai Baht 1.67 0.95
Vietnamese Dong -0.13 -2.62

DOMESTIC INDICATORS
34
 •Post 1QFY19 result review, all eyes are now looking at the Q2FY19 results more minutely as multiple factors
India Fundamental have changed over the last 3months. Oil has risen by 20%, Yields have crossed 8%, Liquidity in India remain in a
tight mode as Corporates arrange for Advance Tax payments and RBI headed to an aggressive rate hike cycle

Indicators along with higher Auto Fuel prices .

•Commentary of management will be minutely noted to guage Business sentiment & earnings performance in
coming quarters.

16 3.5
ROE (%) & P/BV (x) 14 EV/EBITDA (%)
13

15 3.0 13
12
12
14 2.5
11
11
13 2.0 10
10

12 1.5 9

Aug-15

Aug-16

Aug-17

Aug-18
Apr-15

Apr-16

Apr-17

Apr-18
Dec-15

Dec-16

Dec-17
Aug-15

Aug-16

Aug-17

Aug-18
Apr-15

Apr-16

Apr-17

Apr-18
Dec-15

Dec-16

Dec-17

ROE (%) P/BV (x) (RHS)

Dividend Yield (%) EPS(Rs) & P/E (x)

500 26.0
1.6
23.5 465.3
22.5 24.0
450
1.5 20.7 22.0
20.4 22.6
400 427.8
20.0 20.0
1.4 401.7
389.2
350
366.2 19.4 383.3 18.0
1.3 17.5 335.4 16.0
300 11.4
307.3 16.1 16.2
14.0
1.2 250 272.7 13.8 12.0
226.4 260.0 221.2
1.1 200 10.0
Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17
Apr-15

Apr-16

Apr-17

Apr-18
Dec-15

Dec-16

Dec-17
Aug-15

Aug-16

Aug-17

Aug-18

Nifty EPS Nifty PE (RHS)

DOMESTIC INDICATORS
35
 Back

Institutional Equities
 •Across-the-board selling was witnessed in all major sectoral indices with Realty, Auto, Financial services, FMCG, and Bank
Nifty Sector recording more than 10% declines last fortnight . Long delta positions in index options were the flavour of the series as
options writers got strangled throughout the series.
•Auto has fallen 2x v/s Nifty in the last 1year. The Auto Index is -16% v/s Nifty -8%. The market has proven us right on the
Indices AVOID Call on Sector and we will remain Negative on it untill further change.
•INR Tailwind beneficiaries remain best hiding ground, thou we continue to be nervous on markets trends ahead.

Nifty Sectoral Indices P/E (x) ROE (%) ROA (%) EV/EBITDA (x)
2018E 2019E 2018E 2019E 2018E 2019E 2018E 2019E
Autos 16.8 13.9 17.8 19.8 10.2 11.5 8.2 7.3
Banking 23.0 15.6 7.5 12.4 0.5 0.8 - -
Realty 17.4 14.0 5.4 6.5 2.7 3.5 12.2 10.5
Commodities 73.4 61.5 18.0 18.8 - - 28.1 23.8
Monthly Sector Performance (%)
FMCG 37.8 33.0 - - 21.5 22.8 25.1 22.2
5.0
IT 19.6 17.5 24.0 24.5 18.0 18.3 13.6 12.2
0.2
Metal & Steel 9.2 8.4 18.3 18.1 9.7 9.6 4.8 4.5 -
Oil & Gas 12.7 11.1 13.9 14.2 6.1 6.4 8.6 7.6 -0.4 -1.1
-5.0
Pharma 27.7 21.3 11.5 13.5 7.9 9.7 17.4 14.0 -4.3 -4.0
Pow er & Infra 20.9 16.4 11.5 11.2 3.3 4.4 10.7 9.3 -10.0
BSE TECK Index 24.3 20.9 20.8 21.9 12.3 13.1 13.6 12.0 -10.5 -9.8 -9.6
-10.9
-15.0 -12.9
Nifty Sectoral Indices Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 -20.0
IT 3.5 2.6 5.0 11.3 -1.4 -2.3 11.8 -2.3 2.4 4.3 8.4 0.2 -20.4
-25.0
Autos 5.2 -0.7 6.3 -3.3 -3.9 -3.0 7.4 -5.4 -2.6 2.5 0.3 -12.9

Commodities
Power & Infra
Banking

BSE TECK Index

Realty
FMCG
Metal & Steel

Pharma
IT

Autos

Oil & Gas

Oil & Gas 13.6 -2.7 0.9 1.4 -3.2 -5.6 4.2 -1.8 -1.4 13.6 4.0 -0.4
Banking 4.0 1.3 0.8 7.2 -8.3 -3.4 5.2 5.6 -2.2 5.3 1.1 -10.5
Power & Infra 10.4 -1.8 3.4 -0.5 -4.6 -3.6 5.2 -4.8 -6.3 1.0 4.2 -9.8
Commodities 7.0 2.8 5.8 -2.3 -3.6 -1.4 7.5 -1.0 -0.2 4.3 2.5 -10.9
Metal & Steel 9.2 -5.1 7.1 3.2 -1.8 -12.1 7.5 -4.8 -4.3 -3.1 9.2 -4.3
FMCG 4.9 0.5 4.0 1.0 -2.3 -1.5 10.1 0.1 0.5 7.0 6.1 -9.6
Realty 11.3 6.9 6.5 -0.6 -5.2 -10.0 9.6 -8.5 -7.9 0.5 1.1 -20.4
Pharma 6.4 -5.3 4.1 -2.4 -4.5 -6.7 8.4 -9.3 11.6 0.1 13.2 -4.0
BSE TECK Index 6.5 1.8 5.4 6.6 -1.3 -3.4 9.0 -1.8 2.9 3.1 5.9 -1.1
*Sep-18 reflects prices as on 14th Sep 2018

MARKET INDICATORS
37
Relative Sector •Banking, Auto and Realty have broken their Long term supports (200DMA)- and the indices have formed
a Falling Window pattern , which means a downside gap on the charts in coming weeks .
•Strictly remain in an NEGATIVE on all 3 untill further change in view.
Performance
1.25 AUTOS 0.039
REALTY
1.20
0.034
1.15

1.10 0.029
1.05
0.024
1.00

0.95 0.019

0.90 0.014
Dec-16

Dec-17
Oct-16

Oct-17

Oct-18
Jun-16

Jun-17

Jun-18
Feb-17

Feb-18
Aug-16

Aug-17

Aug-18
Apr-16

Apr-17

Apr-18

Dec-16

Dec-17
Oct-16

Oct-17

Oct-18
Jun-16

Jun-17

Jun-18
Feb-17

Feb-18
Aug-16

Aug-17

Aug-18
Apr-16

Apr-17

Apr-18
2.60 BANKING 0.50 COMMODITIES
2.50 0.49
0.48
2.40
0.47
2.30 0.46
2.20 0.45
2.10 0.44
0.43
2.00
0.42
1.90 0.41
1.80 0.40
Dec-16

Dec-17

Dec-16

Dec-17
Oct-16

Oct-17

Oct-18

Oct-16

Oct-17

Oct-18
Jun-16

Jun-17

Jun-18

Jun-16

Jun-17

Jun-18
Feb-17

Feb-18

Feb-17

Feb-18
Aug-16

Aug-17

Aug-18

Aug-16

Aug-17

Aug-18
Apr-16

Apr-17

Apr-18

Apr-16

Apr-17

Apr-18
50 DMA

MARKET INDICATORS
38
Relative Sector •IT Index chart are indicating stronger trends ahead. The short and the medium MACD indicators are very supportive of
the Index. Remain invested in same.
•FMCG & Metals are showing good signs of resilience at their key supports. The indices are witnessing bullish
Performance crossovers on NSE, giving a ‘buy’ signal.
•O&G remain above the support trends. The index can offer best hiding ground in times like this.

3.00
FMCG • 0.45 METAL & STEEL
2.90
0.40
2.80
2.70 0.35
2.60
0.30
2.50
2.40 0.25
2.30
0.20
2.20
Feb-17

Feb-18
Aug-16

Aug-17

Dec-17

Aug-18
Apr-16

Dec-16
Oct-16

Apr-17

Oct-17

Apr-18

Oct-18
Jun-16

Jun-17

Jun-18
0.15

Dec-16

Dec-17
Oct-16

Oct-17

Oct-18
Jun-16

Jun-17

Jun-18
Feb-17

Feb-18
Aug-16

Aug-17

Aug-18
Apr-16

Apr-17

Apr-18
1.60 IT 1.50 OIL & GAS
1.50
1.40
1.40
1.30
1.30
1.20 1.20
1.10
1.10
1.00
1.00
0.90
0.80 0.90
Dec-16

Dec-17

Dec-16

Dec-17
Oct-16

Oct-17

Oct-18

Oct-16

Oct-17

Oct-18
Jun-16

Jun-17

Jun-18

Jun-16

Jun-17

Jun-18
Feb-17

Feb-18

Feb-17

Feb-18
Aug-16

Aug-17

Aug-18

Aug-16

Aug-17

Aug-18
Apr-16

Apr-17

Apr-18

Apr-16

Apr-17

Apr-18
50 DMA

MARKET INDICATORS
39
 •Healthcare Index is in a better space currently in midts of the meltdown.
Relative Sector •However the Index is not giving us as much as comfort it was a month back, still, versus the other
negative Indices it can be a preferred “Hold”

Performance •Defty is and will remain on a downward slope- . It is giving us no signal on short, medium, or long
MACD any signs of reversals at all. Which shows a grim picture on the Rupee front in coming future.

1.70 PHARMA 0.37 POWER & INFRA

1.60
1.50 0.35
1.40 0.33
1.30
1.20 0.31
1.10
1.00 0.29
0.90 0.27
0.80
0.70 0.25
Dec-16

Dec-17

Dec-16

Dec-17
Oct-16

Oct-17

Oct-18

Oct-16

Oct-17

Oct-18
Jun-16

Jun-17

Jun-18

Jun-16

Jun-17

Jun-18
Feb-17

Feb-18

Feb-17

Feb-18
Aug-16

Aug-17

Aug-18

Aug-16

Aug-17

Aug-18
Apr-16

Apr-17

Apr-18

Apr-16

Apr-17

Apr-18
0.56 DEFTY
0.54

0.52

0.50

0.48

0.46

0.44
Nov-16
Dec-16

Nov-17
Dec-17
Oct-16

Oct-17

Oct-18
Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
May-16

May-17

May-18
Feb-17
Mar-17

Feb-18
Mar-18
Jul-16

Jul-17

Jul-18
Aug-16
Sep-16

Aug-17
Sep-17

Aug-18
Sep-18
Apr-16

Apr-17

Apr-18
50 DMA

MARKET INDICATORS
40
 •Nifty mid-cap & small cap indices have seen wreckage on back of financial crises. In this wreckage both the indices –
Key Market Mid/Small Cap has given up gains of last 18monhs (levels are lower than 1st Jan 2017).
• A concerning sign during this entire downfall that started in early 2018 is that the Advance decline line has been moving

Data
lower. A falling line indicates that during the rise there have been lesser number of stocks that are moving higher and more
number of stocks that are falling.
•Time perspective of investing in the market has changed. Cash is more valuable today than equities.

190 NIFTY - MIDCAP - SMALLCAP 20 Nifty 100 Top Gainers & Losers (%)
15
170 10
5
150
-
(5)
130
(10)
110 (15)
(20)
90 (25)

ABB

LUPIN

DIVISLAB
WIPRO

OFSS

NTPC
NMDC

BAJAJ-AUTO

HAVELLS
GODREJCP

TITAN
BEL

BANKBARODA

LICHSGFIN
GLENMARK

SUNTV

IDEA
AUROPHARMA

SRTRANSFIN
SHREECEM
70
Feb-16

Feb-17

Feb-18
Apr-15
Apr-15

Apr-16

Apr-17

Apr-18
Oct-15

Oct-16

Oct-17
Nov-15
Dec-15
Dec-15

Nov-16
Dec-16

Nov-17
Nov-17
Dec-17
Aug-15
Sep-15

Aug-16
Sep-16

Aug-17
Sep-17

Aug-18
Sep-18
Jun-15

Jan-16

Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
Jul-15

Jul-16
Jul-16

Jul-17

Jul-18
Jul-18
May-15

May-16

May-17

May-18
Mar-16

Mar-17
Mar-17

Mar-18
NIFTY NIFTY MIDCAP NIFTY SMALLCAP

3,000
0.9 TOTAL VOLUME NSE & BSE (Rs Bn) AD Line
0.8 2,000 Advance Decline Ratio
0.7
0.6 1,000
0.5
0
0.4
0.3 -1,000
0.2
0.1 -2,000
0
-3,000
Aug -16

Sep -16

Aug -17

Sep -17

Aug -18

Sep -18
Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
May-16

May-17

May-18
Jul-16

Jul-17

Jul-18
Mar-16

Mar-17

Mar-18
Feb-17

Fe b-18
Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18
Nov-16

Dec-16

Nov-17

Dec-17

Sep-17

Aug-18

Sep-18
Jan-18

Jun-18
May-18

Jul-18
Mar-18
Feb-18
Oct-17

Apr-18
Dec-17
Nov-17

MARKET INDICATORS
41
 •FIIs sold Rs7,769cr worth of Indian equities, pulling out Rs44,996cr since the start of FY18-19.
Institutional •Inflows into equity mutual funds, including equity-linked savings schemes, declined for the fourth
straight month in August.
Ownership Vs Index •The general equity category sales saw a normal 16 % but a sharp spike in redemptions of 35 %
because of profit-booking saw a 9% reduction in net sales.
•Be watchful on Redemptions in such a market scenario.

300 45,000

40,000
200
35,000

100 30,000

25,000
0
20,000

-100 15,000

10,000
-200
5,000

-300 -
Sep-13

Sep-15

Sep-17
Sep-12

Sep-14

Sep-16

Sep-18
Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18
Mar-14

Mar-16

Mar-18
Mar-13

Mar-15

Mar-17
Dec-13

Dec-15

Dec-17
Dec-12

Dec-14

Dec-16
FII (Rs Bn) DII (Rs Bn) SENSEX Index

MARKET INDICATORS
42
 Back

Institutional Equities

Mohit Khanchandani – mohit.khanchandani@nirmalbang.com

Direct Line: 022-6273-8041
 China: Takes Support
Shanghai Composite SE Index – Weekly Chart CMP: 2821

Pullback can extend

to 2920 levels

Break down from support levels

Index took support near the 2640 mark which has been followed by a pullback

TECHNICAL CHARTS
 Crude Oil: Continues to Trend Higher
Crude Oil - Weekly Chart CMP: 84.88
Up move can extend to 94 levels

Move above previous highs

Rise has been in an upward

sloping channel

TECHNICAL CHARTS
 US Dollar/Brazilian Real: At Support Levels
USD/INR - Weekly Chart CMP: 3.9409
The currency cross has turned down sharply from resistance levels

Key support near

the 3.9 mark

TECHNICAL CHARTS
 NIFTY: Gains Downside Momentum
NIFTY Index - Weekly Chart CMP: 10627
Index faced resistance at the rising
trend line and has corrected sharply

Break of short
term supports

A convincing close below the support levels

of 10600-10750 will confirm a medium term
trend change to the downside

TECHNICAL CHARTS
 Banks: Corrects Sharply
Nifty Bank Index- Weekly Chart CMP: 25288

Break of rising trend

line support

The fall can extend

to 23600 levels

TECHNICAL CHARTS
 Back
NBIE TOP PICKS
Automobile FMCG
Eicher Motors Britannia Industries
Gabriel India Gillette India
Hero MotoCorp Hindustan Unilever
Maruti Suzuki India Jubilant Foodworks
Swaraj Engines Nestle India
Banks and Financials Hotel
Bank of Baroda Lemon Tree
Can Fin Homes Media
City Union Bank Inox Leisure
DCB Bank PVR
Federal Bank Mid-caps
ICICI Bank Mold-Tek Packaging
Manappuram Finance Thomas Cook (India)
PNB Housing Finance Oil & Gas
RBL Bank Indraprastha Gas
Ujjivan Financial Services Real Estate
Yes Bank NESCO
Capital Goods and Consumer Electricals Prestige Estates
Apar Industries Pharmaceuticals
IFB Industries Aurobindo Pharma
KEC International Dishman Carbogen Amcis Ltd
Power Mech Projects Dr. Reddy’s Labs
Solar Industries Indoco Remedies
Triveni Turbine Jubilant Life Sciences
Whirlpool of India Sequent Scientific
Cements
JK Cement
The Ramco Cements
Sagar Cements
All stocks prices in this PPT are based 17 August 2018 closing levels.

49
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50