Dec 15 2018

Rupee Slips As RBI Chief Shuffle And State Polls

Weekly Synopsis

15th December, 2018

Indian Rupee

The Indian rupee fell for a second straight week against the dollar, as a surprise resignation by the nation’s central bank governor and setback for the ruling party in some key state elections weighed on investor sentiment. The rupee settled lower at 71.90 to a dollar, against 71.68 at previous close. After opening at 71.79 and remained in a 71.69-72.03 band.

In a surprise move, governor of the Reserve Bank of India Urjit Patel served his resignation on Dec.10 after market hours, effective immediately. His resignation, which cited personal reasons, came amid reported differences with the government on matters relating to regulation and liquidity. Patel’s resignation came a day ahead of the assembly election results of five states, which showed an electoral reversal for the BJP in three important Indian states including Madhya Pradesh and Rajasthan.

India’s Nov trade deficit inexp=eci at $16.67 billion trade ministry. India’s nov exports at $26.5 billion. India’s nov. Imports 43.17 billion India’s nov oil imports up 41.3 persent y/y to 13.49 billion.

At 4.64 Percent Y/Y 4.70%; Oct WPI was at 5.28%India’s fuel price index in WPI INWPIE=ECIUP 16.28% Y/Y in nov vs 18.44% Y/Y in oct India’s nov manufacturing inflation INWPIM=Eci at 4.21%Y/Y vs 4.49% Y/Y in oct.India’s wholesale price food index INWPFI=ECI down -1.96% Y/Y in nov vs -0.64% Y/Y in oct.India’s sept WPI inflation revised to 5.22% Y/Y from 5.13% earlier.

India’s industrial output INIP=ECI in October grew a stronger-than-expected 8.1 percent from a year earlier, government data showed on Wednesday. A poll of economists had forecast 5.7 percent growth in October. October’s growth was almost double that of a downwardly revised 4.47 percent year-on-year increase in September, the data showed.

India’s direct tax collection grew 14.7 percent from a year earlier to 5.51 trillion rupees ($77.77 billion) during April to November, the finance ministry said in a statement on Monday.Citing provisional figures, the ministry said net direct tax collections in the first eight months of this fiscal year ending in March 2019 represent 48 percent of the total budgeted estimates for the 2018/19 fiscal year

Local Markets

Indian shares eked out a slightly positive finish on Friday, with the NSE closing above 10,800 points for the first time in 10 days, buoyed by gains in energy, IT and telecom sectors. The broader NSE index closed 0.13 percent firmer at 10,805.45, while the benchmark BSE index ended 0.09 percent higher at 35,962.93. NSE clocked in a weekly gain of 1.05 percent, while the BSE ended 0.81 percent firmer for the week.

The Reserve Bank of India’s board deliberated on the central bank’s governance framework and has decided that the matter required further examination, the central bank said on Friday.The statement released after the central bank’s board meeting, which was headed by the new RBI Governor Shaktikanta Das, said they reviewed the current economic situation and various domestic and global challenges.

Indian telecom firm Bharti Airtel rises as much as 10 pct, rival Vodafone Idea Ltd gains as much as 8 pct. Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Dec 13 set aside sector regulator Telecom Regulatory Authority of India’s (TRAI) rule on predatory pricing for lack of transparency in the guidelines over determining market share and rates of services.

Foreign investors net bought $57.81 million of Indian shares yesterday, data from National Securities Depository Ltd. showed. In December so far, foreign investors have net bought $296.72 million worth in local equities and $372.05 million worth domestic bonds.

 

Global Markets

A gauge of global stocks tumbled on Friday after weak economic data from China and Europe intensified global growth worries as investors weighed the broader impact of the trade dispute between the United States and China. Euro zone business ended the year on a weak note, expanding at the slowest pace in over four years as new order growth all but dried up, hurt by trade tensions and violent protests in France, a survey showed.

Wall Street’s three major indexes slumped on Friday as weak data from China and Europe stoked fears of a global economic slowdown. The Dow Jones Industrial Average fell 496.87 points, or 2.02 percent, to 24,100.51, the S&P 500 lost 50.59 points, or 1.91 percent, to 2,599.95 and the Nasdaq Composite dropped 159.67 points, or 2.26 percent, to 6,910.67.

The dollar shone on Friday, reaching a 19-month high against a basket of currencies, as investors preferred the safety of the world’s reserve currency in the wake of worrisome political and economic news outside the United States. The euro weakened as the euro zone economy showed more signs of a slowdown.

U.S. industrial production rose in November, according to data released on Friday. The Federal Reserve reported that industrial output rose 0.6% last month after declining 0.2% in October. October’s reading was revised down from an initial 0.1% rise. The forecast was industrial production rising 0.3%. Manufacturing production was unchanged in November, compared to expectations for a 0.3%.

 

U.S. retail sales rose rose 0.2% in November the Commerce Department said on Friday. This was compared to a revised 1.1% in the previous month. Economists had forecast a reading of 0.1%. Core retail sales which exclude automobiles, gasoline, building materials and food services, rose 0.2% in November, after a 1.0% increase in the previous month. The consensus forecast was for a reading of 0.2%.

Growth in Retail sales and industrial output in China slowed more than expected in November, official data showed on Friday. Retail sales grew 8.1% year on year, according to China’s National Bureau of Statistics, compared with the median forecast of 8.8%. The growth was the weakest pace since 2003.

The U.S. federal government ran a $205 billion deficit in November, according to data released on Thursday by the Treasury Department. Treasury said federal spending in November was $411 billion, up 18 percent from the same month in 2017, while receipts were $206 billion, down 1 percent compared to November 2017.

The number of Americans filing applications for jobless benefits tumbled to near a 49-year low last week, which could ease concerns about a slowdown in the labor market and economy. Initial claims for state unemployment benefits dropped 27,000 to a seasonally adjusted 206,000 for the week ended Dec. 8.

U.S. consumer prices were unchanged in November, held back by a sharp decline in the price of gasoline, but underlying inflation pressures remained firm amid rising rents and healthcare costs. The strength in underlying inflation reported by the Labor Department on Wednesday supports views that the Federal Reserve will raise interest rates at its Dec. 18-19 policy meeting.

U.S. consumer price growth slowed in November, underlining arguments for the Federal Reserve to take a pause in monetary policy tightening after the rate hike expected at its meeting next week. The Labor Department said on Wednesday its consumer price index (CPI) was unchanged from a month earlier, slowing from the 0.3% increase seen in November.

The German government on Tuesday cut its economic growth forecast for this year as Economy Minister Peter Altmaier predicted an economic expansion of around 1.5 to 1.6 percent, below his previous forecast of 1.8 percent.

The UK unemployment rate remained unchanged in October, while wage inflation picked up to its fastest pace in 10 years, according to official data released Tuesday. The Office for National Statistics reported that the unemployment rate was 4.1% in October, unchanged from a month earlier and in line with expectations.

Britain’s economy lost speed as expected in the three months to October, reflecting falling car sales and factory stoppages due to weaker demand, raising questions about the economy’s health ahead of Brexit. Gross domestic product growth in the three months to October slowed to 0.4 percent from an unusually robust 0.6 percent in the third quarter of 2018.