1/5/2019 Wealth Overview

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Manufacturing PMI stays strong

Speak of the Week 1 day ago

Manufacturing PMI stays strong

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1/5/2019 Wealth Overview

(https://www.icicibank.com/campaigns/mailers/2016-june/sotw-17-06-2016/voice130.html)

Indian Economic Update

The Nikkei India Manufacturing Purchasing Manager’s Index (PMI) dropped to 53.2 in
December of 2018 from an 11-month high of 54.0 in the previous month.
Still, the latest figure was the second-greatest in 2018 and contributed to highest
quarterly average since Q3 FY 2012.
Output growth slowed, amid competitive pressures, labour issues and challenging
public policies, and job creation weakened to a four-month low as companies were
cautious about making hiring decisions ahead of next year’s elections. Meanwhile,
backlogs were accumulated to the quickest extent since May and new orders went up at
the second-quickest rate in 2018, with exports rising for the 14th straight month. On the
price front, input cost inflation eased to a 34-month low, which translated into broadly no
change in factory gate charges.
India's total collection under the Goods and Services Tax (GST) fell to INR 947.26
billion in December from INR 976.37 billion in November, according to the finance
ministry. The GST collections in December were the lowest in three months.

Global Update

Apple Inc. cut its revenue outlook for the first time in almost two decades, citing
weakness in the Chinese economy. The announcement spurred sharp currency moves,
with the Yen and US Treasuries surging amid concerns of a global slowdown.
Congressional leaders were unable to strike a deal to end a partial shutdown of the
federal government at a meeting with President Mr Trump.

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1/5/2019 US Institute for Supply Management (ISM) manufacturing index fell sharply
Wealthfrom 59.3 to
Overview
54.1 in December.
Eurozone Manufacturing PMI dropped to 51.4 in December 2018 from 51.8 in the
previous month, in line with market expectations.
China’s manufacturing for the month of December showed factory activity contracted for
the first time in 19 months. The Caixin/Markit Manufacturing PMI, a private survey, fell
to 49.7 in December from 50.2 in November.

Equity
Indian equities ended lower, in line with global indices on fears of a worldwide slowdown which
was intensified after certain countries reported a weak PMI manufacturing data.

During the week Sensex lost 1.06% to close at 35695.1 while Nifty declined 1.22% to close at
10727.35.

Debt
Government bond prices remained in a thin band. Support was provided by the fall in global
bond yields, with the benchmark German bunds yield dropping to their lowest since April 2017
as business surveys in China and the Euro zone underlined worries over the global growth
outlook. The fall in crude oil prices also supported the bond rally. However, profit booking by
some market players capped gains. Some traders trimmed holding on report that the Centre
may announce benefit transfer plans for farmers.

The 10Y benchmark yield ended at 7.46% as compared to the previous week’s close of
7.39%.

Oil
Oil prices are trading higher. The current downward pressure on oil is expected to attenuate
as Organisation of Petroleum Exporting Countries (OPEC)+ members start curbing the
production down by 1.2 million barrels per day (bpd). The U.S. added two oil rigs but Canada
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1/5/2019 slashed as many as 43 as of December 28 from a week earlier, according to Wealth
data released
Overview by
Baker Hughes. This year saw a record high production by U.S., Russia and Saudi Arabia. US
crude production stood at a record 11.7 million bpd in late 2018, making America the world's
biggest oil producer.

Gold
Gold prices are trading higher on safe-haven demand, amid global growth concerns. Gold
rose to its highest level in over six months on Wednesday as weak factory activity data in
Europe and Asia compounded concerns of a global economic slowdown and weighed on
stock markets. Markets are looking for views from Federal Reserve Chairman Mr Jerome
Powell on the US economic outlook and hints about rate hikes in 2019.

Currency
Indian Rupee was trading mostly unchanged.
The Rupiah and Baht led an advance in Asian currencies after disappointing U.S.
manufacturing data, falling Treasury yields and more stock losses weighed on the Dollar.
Dollar index is trading lower. The declining U.S. equity futures and partial shutdown of the U.S.
government continued to weigh upon the market sentiments of investors.

Source: ICICI Bank Research, Private Banking Investment Strategy Team, Bloomberg and
CRISIL.

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