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SEBIBULLETIN
January2017 VOL. 15 NUMBER 1
(LOGO)
SECURITIES AND EXCHANGE BOARD OF INDIA
EDITORIAL COMMITTEE
Mr. AnantaBarua
Mr. J. Ranganayakulu
Mr. S. V. MuraliDhar Rao
The Securities and Exchange Board of India Bulletin is issued by the Department of Economic and Policy Analysis, Securities and Exchange Board of India under the direction of an Editorial Committee. SEBI is not responsible for accuracy of data/information/interpretations and opinions expressed in the case of signed articles/speeches as authors are responsible for their personal views. SEBI has no objection to the material published herein being reproduced, provided an acknowledgement of the same is made. The soft copy of SEBI Bulletin is available free of cost to the subscribers/readers, who register at [email protected] along with their complete address. A readable version of SEBI Bulletin is available at http://www.sebi.gov.in. Any comments and suggestions on any of the features/sections may be sent to [email protected]
CONTENTS
CAPITAL MARKET REVIEW
GLOBAL MARKET REVIEW - JANUARY2017
HIGHLIGHTS OF DEVELOPMENTS IN INTERNATIONAL SECURITIES MARKET
ANNEX
PUBLICATIONS
CAPITAL MARKET REVIEWI. Trends in Primary Market
A. Public and Rights Issues
The primary securities market continues to show an upward trend in capital mobilisation. During December 2016, the primary market sawfive issuesthatmobilised`1,381crore compared to `1,209croremobilised through six issues in November 2016. There were fivepublic issues and norights issues during the month. All the public issues were IPOs.
Exhibit 1: Primary Market Trends (Public & Rights Issues)Items Dec-16 Nov-16 2016-17$ 2015-16$
No. of
Issues
Amount (`
crore)No. of Issues
Amount (`
crore)
No. of
Issues
Amount (`
crore)
No. of
Issues
Amount (`
crore)
1 2 3 4 5 6 7 8 9a. Public Issues 5 1,381 4 530 80 48,407 62 31,023(i) Debt 0 0 0 0 10 23,893 12 18,764(ii) Equity, of which IPOs 5 1,381 3 520 69 24,505 50 12,259FPOs 0 0 1 10 1 10 0 0b. Rights Issues 0 0 2 679 5 1,298 9 8,631Total Equity Issues a(ii)+b 5 1,381 6 1,209 75 25,812 59 20,890Grand Total (a+b) 5 1,381 6 1,209 85 49,70
5 71 39,653
Notes: 1. IPOs - Initial Public Offers, FPOs - Follow on Public Offers 2. Amount raised through debt issues for the last two months are provisional. 3. $ denotes as at the end of December of the respective years.Source: SEBI
B. Private Placement
1. QIPs Listed at BSE and NSE
Qualified Institutional Placement (QIP) is an alternative mode of resource raising available for listed companies to raise funds from domestic market. In a QIP, a listed issuer issues equity shares or non-convertible debt instruments along with warrants and convertible securities other than warrants to Qualified Institutional Buyers only. In December 2016, there were twoQIP issues which raised`76crore, compared to no QIP issues in the previous month. (Table 10)
2. Preferential Allotments Listed at BSE and NSE
Preferential allotment also serves as an alternative mechanism of resource
mobilization wherein a listed issuer issues shares or convertible securities to a select group of persons. There were 34 preferential allotments (amounting to `3,125crore) listed at BSE and NSE during December 2016, compared to 23 preferential allotments (amounting to `2,567 crore) listed during November2016. (Table 11).
3. Private Placement of Corporate Debt Private placement mechanism dominates the resource mobilization through corporate bonds. In December 2016, `59,587crore was raised through private placement route in the corporate bond market and there was no public debt issue. (Table 12 and Exhibit 1A).
Further, in December 2016, the total amount mobilised through public issues and private placement of both debt and equity combined stood at `64,168crore as compared to`42,421crore in November 2016.
Exhibit 1A: Total Resources Mobilised by Corporate Sector (`crore)
Month
Equity Issues Debt Issues Total Resource Mobilisation (4+7)
Public & Rights
Private Placemen
tsTotal(2+3) Public
Private Placemen
tsTotal(5+6)
1 2 3 4 5 6 7 82015-16 25,077 65,102 90,179 34,112 4,58,073 4,92,185 5,82,3642016-17$ 25,810 34,519 60,329 23,892 4,78,974 5,02,866 5,63,195Apr-16 3,569 3,829 7,398 0 41,079 41,079 48,477May-16 847 5,480 6,327 899 59,801 60,700 67,028Jun-16 1,518 2,070 3,589 1,000 33,576 34,576 38,165Jul-16 1,659 1,525 3,184 500 36,774 37,274 40,458Aug-16 2,636 580 3,216 14,000 71,165 85,165 88,381Sep-16 7,703 7,928 15,631 7,493 67,952 75,445 91,076Oct-16 5,287 7,339 12,626 0 70,396 70,396 83,021Nov-16 1,209 2,567 3,777 0 38,645 38,645 42,421Dec-16 1,381 3,201 4,581 0 59,587 59,587 64,168
Notes: 1. Private placement of Equity includes, amount raised through preferential allotments, QIP and IPP mechanism.2. Public Equity Issues includes IPO, FPO & Rights issues of common equity shares. 3. $ indicates as on the last day of December 2016.
Source: SEBI
II. Resource Mobilisation by Mutual Funds
In December2016, there were net inflows to mutual funds amounting to `10,924crore. While net inflows to private sector mutual funds were `6,856crore, public sector mutual funds witnessed netinflows of`4,068crore. In November 2016, income/debt oriented schemes witnessed net outflows of `7,427crore, while growth/equity funds and balanced schemes received net inflows of `10,103crore and `3,947 crore respectively. Further, the FoF (Fund of funds) schemes investing overseas and gold ETFs registered net outflows during December2016. The cumulative net assets under management by all mutual funds decreased by 0.2 per cent to `16,46,337crore as on December 31, 2016 from `16,50,011 crore as on November 30, 2016 (Tables 52 & 54)
III. Trends in the Secondary Market
The Indian stock market remained almost flat inDecember2016. During the month, the benchmark indices, S&P BSE Sensex and Nifty 50 fell by 0.1 percent and 0.5 percent respectively to close at 26,626.5 and 8,185.8 respectively on December 31, 2016 (Figure 1). Sensex and Nifty touched their intraday highs of 26,803.8and 8,275.0 respectively on December 09, 2016. Both Sensex and Nifty touched their intraday lows of 25,753.7 and 7,893.8on December26, 2016.
Figure 1: Movement of Sensex and Nifty
Jan
-16
Feb-1
6
Mar-
16
Apr-
16
May-
16
Jun
-16
Jul-
16
Au
g-1
6
Sep-1
6
Oct
-16
Nov-
16
Dec-
1620,000
21,00022,00023,00024,00025,00026,00027,00028,00029,00030,000
6,000
6,500
7,000
7,500
8,000
8,500
9,000
Sensex (LHS) Nifty (RHS)
Sen
sex
Nif
ty
Reflecting the steady trend in market movements, the market capitalisation of BSE and NSE fell by 1.5 percent and 1.7 percent to `1,06,23,347crore and `1,04,39,621crore respectively, at the end of December 2016 from `1,07,88,709 crore and `1,06,18,012 crorerespectively, recorded at the end of November 2016. The P/E ratios of S&P BSE Sensex and Nifty 50 were 20.6 and 21.9 respectively at the end of December2016 compared to 20.6 and 21.6 respectively a month ago (Exhibit 2).
Exhibit 2: The Basic Indicators in Cash Segment
2016-17$ 2015-16 Dec-16 Nov-16
Percentage
change over
previous month
1 2 3 4 5 6A. Indices S&P BSE Sensex 26,626 25,342 26,626.5 26,652.8 -0.1Nifty 50 8,186 7,738 8,185.8 8,224.5 -0.5B.Market Capitalisation
BSE1,06,23,
34794,75,3
281,06,23,34
71,07,88,
709 -1.5
NSE1,04,39,
62193,10,4
711,04,39,62
11,06,18,
012 -1.7C. Gross Turnover
BSE 53,9057,40,08
9 53,905 70,178 -23.2
NSE 3,42,74742,36,9
83 3,42,747 4,72,856 -27.5D. P/E RatioS&P BSE Sensex 20.6 19.3 20.6 20.6 0.0Nifty 50 21.9 20.9 21.9 21.6 1.5E. No.of Listed CompaniesBSE 5,820 5,911 5,820 5,870 -0.9NSE 1,840 1,808 1,840 1,833 0.4
Source: BSE, NSE
The monthly turnover of BSE (cash segment) decreased by 23.2 percent to `53,905crore in December 2016 from `70,178 crore in November 2016. The monthly turnover of NSE (cash segment) also decreased by 27.5 percent to `3,42,747crore in December 2016 from `4,72,856 crore in November 2016.
Figure 2: Trends in Average Daily Values of Sensex and BSE Turnover
Jan-1
6
Feb
-16
Mar
-16
Apr-
16
May
-16
Jun-1
6
Jul-
16
Aug-1
6
Sep
-16
Oct
-16
Nov-
16
Dec
-160
1,000
2,000
3,000
4,000
15,00016,00017,00018,00019,00020,00021,00022,00023,00024,00025,00026,00027,00028,00029,00030,000
3,1
79
2,7
22
3,0
89
2,7
32
2,7
05
2,7
61 3
,402
3,3
67 3,7
96
3,3
95
3,3
42
2,4
50
Average Daily Turnover at BSE
Avg
. D
aily
Tu
rnove
r
Avg
. D
aily
val
ue
of
Sen
sex
Figure 3: Trends in Average Daily Values of Nifty and NSE Turnover
Jan-1
6
Feb-
16
Mar
-16
Apr
-16
May
-16
Jun-
16
Jul-
16
Aug
-16
Sep-
16
Oct
-16
Nov-
16
Dec
-166,000
9,000
12,000
15,000
18,000
21,000
24,000
6,000
6,500
7,000
7,500
8,000
8,500
9,000
17,6
04
16,4
59
17,8
47
17,1
93
17,6
20
17,4
31 20,3
67
21,3
92
22,9
46
20,2
71 22,5
17
15,5
79
Average Daily Turnover at NSE
Avg
. D
aily
Tu
rnove
r
Avg
. D
aily
val
ue
of
Nif
ty
The correctionin the prices of equity shares inDecember 2016 was widespread, with blue-chip indices, broad-based indices and sectoral indices (except S&P BSE Teck, S&P BSE FMCG, Nifty ITand Nifty FMCG) all registering losses during the month. Among BSE indices, in December 2016, S&P BSE Healthcare index decreased the most (6.40 percent), followed by S&P BSE Metal index (5.22 percent) and S&P BSE Capital Goodsindex (2.71 percent). Among NSE indices, in December2016, Nifty Pharmaindex decreased the most(7.34 percent), followed by Nifty PSU Bank index (6.21 percent) and Nifty Midcap 100 index (3.73 percent). During December2016, the daily volatility of S&P BSE Metal index was the highest at 1.49 percent, followed by S&P BSE Consumer Durables index (1.14 percent) and S&P BSE
FMCGindex (1.04 percent). At NSE during the same period, among all the indices, daily volatility of Nifty PSU Bank index was the highest at 1.39 percent, followed by Nifty Midcap 50 index(1.29percent) and Nifty Media index (1.27 percent) (Exhibit 3).
Exhibit 3: Performance of Indices at BSE and NSE during December 2016 (Percent)
BSE NSE
Index
Change over
Previous quarter
Volatility Index Change
over Previous quarter
Volatility
1 2 3 4 5 6S&P BSE Sensex -0.10 0.78 Nifty 50 -0.47 0.82S&P BSE 100 -1.10 0.83 Nifty Next 50 -3.58 1.04S&P BSE 200 -1.32 0.84 Nifty 100 -0.99 0.84S&P BSE 500 -1.42 0.84 Nifty 200 -1.19 0.86S&P BSE Large Cap -0.77 0.82 Nifty 500 -1.36 0.85S&P BSE Small Cap -2.30 0.92 Nifty Midcap
50 -2.34 1.29S&P BSE Consumer Durables -0.37 1.14 Nifty Midcap
100 -3.73 1.06S&P BSE Capital Goods -2.71 0.77 Nifty Small
100 -1.03 1.05S&P BSE Bankex -2.66 0.95 Nifty Bank -2.42 0.91S&P BSE Teck 1.61 0.78 Nifty IT 3.09 0.85S&P BSE FMCG 0.74 1.04 Nifty FMCG 1.30 1.17S&P BSE Metal -5.22 1.49 Nifty Pharma -7.34 1.14S&P BSE PSU -2.39 0.98 Nifty PSU
Bank -6.21 1.39S&P BSE Power -2.03 0.86 Nifty Media -0.83 1.27S&P BSE Healthcare -6.40 1.02 Nifty MNC -1.01 1.02
Source: BSE and NSE
IV. Trends in Depository Accounts
The total number of investor accounts was 152.5 lakh at NSDL and 118.0 lakh at CDSL at the end of December2016. In December 2016, the number of investor accounts at NSDL and CDSL increased by 0.4 percent and 1.0 percent, respectively, over the previous month. A comparison with December 2015 showed there was an increase in the number of investor accounts to the extent of 6.7 percent at NSDL and 13.3 percent at CDSL (Table 58).
V. Trends in Derivatives Segment
A. Equity Derivatives
India is one of the most vibrant markets for exchange traded equity derivatives in the world. The trading volumes in the equity derivatives market was19.0 times that of the equity cash segment in December 2016. The monthly total turnover in equity derivatives market at NSE decreased by 14.5 percent to `79,24,589crore in December2016 from `92,64,480 crore in November2016 (Figure 4). The index options segment has been the clear leader in the product-wise turnover of the futures and options segment at NSE. In December2016, the turnover in the index options category was 80.6 percent of the total turnover in the F&O segment of the NSE. During December 2016, index futures, index options,stock futures and stock optionsregistered decline in turnover compared to the previous month.The open interest in value terms in the equity derivative segment of NSE increased by 5.3 percent to `2,40,726crore as on December 31, 2016 from `2,28,533 crore as on November 30, 2016.
Figure 4: Trends of Equity Derivatives Segment at NSE (`crore)
Jan
-16
Feb
-16
Mar
-16
Apr
-16
May
-16
Jun
-16
Jul-
16
Au
g-16
Sep
-16
Oct
-16
Nov
-16
Dec
-1650,000
1,00,000
1,50,000
2,00,000
2,50,000
3,00,000
3,50,000
4,00,000
4,50,000
5,00,000
0
10,00,000
20,00,000
30,00,000
40,00,000
50,00,000
60,00,000
70,00,000
80,00,000
90,00,000
1,00,00,000
2,91
,451
3,12
,988
2,99
,037
2,99
,737
2,89
,824
3,05
,311
3,34
,886
3,60
,172 4,
33,5
39
4,09
,294
4,41
,166
3,60
,209
Average daily Turnover Monthly Turnover
Ave
rage
dai
ly T
urn
over
Mon
thly
Tu
rnov
er
The monthly total turnover in equity derivative segment of BSE decreased by 83.0 percent to `9crore in December2016 from`53 crore in November 2016. The entire turnover was accounted for bystock futures. The open interest in value terms in equity derivatives segment of BSE increased by 48.1 percent to `1.2crore as on December 31, 2016 from `0.8crore as on November 30, 2016.
In December 2016, NSE had almost 100.0 percent share in total equity derivatives turnover as well as open interest (in value terms) in India. (Exhibit 4).
Exhibit 4: Trends in Equity Derivatives Market
Particular
NSE BSE
Nov-16 Dec-16Percentage Change
Over Month
Nov-16
Dec-16
Percentage Change Over
Month
1 2 3 4 5 6 7A. Turnover (`crore) (i) Index Futures 4,38,925 3,38,543 -22.9 38 0 -99.6 (ii) Options on Index Put 33,55,819 29,89,680 -10.9 0 0 NA Call 39,61,691 33,95,122 -14.3 0 0 NA (iii) Stock Futures 9,45,535 7,81,055 -17.4 15 9 -40.6(iv) Options on Stock Put 1,84,704 1,47,317 -20.2 0 0 NA Call 3,77,807 2,72,871 -27.8 0 0 NA
Total 92,64,480
79,24,589 -14.5 53 9 -83.0
B. No. of Contracts (i) Index Futures 66,02,274 51,99,107 -21.3 554 2 -99.6 (ii) Options on Index
Put 4,99,37,562
4,56,96,616 -8.5 0 0 NA
Call 5,66,45,730
5,00,88,087 -11.6 0 0 NA
(iii) Stock Futures 1,44,35,919
1,22,69,473 -15.0 194 115 -40.7
(iv) Options on Stock Put 27,44,671 22,58,375 -17.7 0 0 NA Call 33,15,699 39,35,353 18.7 0 0 NA
Total 13,36,81,855
11,94,47,011 -10.6 748 117 -84.4
C. Open Interest in terms of Value ( `crore) (i) Index Futures 17,638 18,711 6.1 0 0 NA (ii) Options on
Index Put 67,499 69,548 3.0 0 0 NA Call 62,259 64,645 3.8 0 0 NA (iii) Stock Futures 67,141 66,437 -1.0 1 1 48.1(iv) Options on Stock Put 5,494 8,125 47.9 0 0 NA Call 8,503 13,260 55.9 0 0 NA Total 2,28,533 2,40,726 5.3 1 1 48.1D. Open Interest in terms of No of Contracts (i) Index Futures 2,75,992 2,95,421 7.0 0 0 NA (ii) Options on Index Put 10,51,047 8,92,132 -15.1 0 0 NA Call 9,74,201 8,50,463 -12.7 0 0 NA (iii) Stock Futures 10,82,844 11,02,412 1.8 11 16 45.5(iv) Options on Stock Put 84,447 60,655 -28.2 0 0 NA Call 1,32,457 91,486 -30.9 0 0 NA
Total 36,00,988
32,92,569 -8.6 11 16 45.5
B. VIX Futures at NSE
NSE introduced futures contracts on India VIX in the Futures & Options segment of NSE w.e.f. February 26, 2014. India VIX is India’s first volatility index which is a key measure of market expectations of near-term. The contract symbol is INDIAVIX and 3 weekly futures contracts were made available for trading. The contracts shall expire on every Tuesday. The tick size is 0.25 and lot size is 550.
India VIX closed at 15.5 for December2016, lower than 16.9 registered for November 2016(Figure 5). During December 2016 also, there was no trade in VIX futures contract, like in November 2016. The open interest in India VIX contracts was zero at the end of December 2016.
Figure 5: Trends in VIX futures at NSE
Jan-
16
Feb-
16
Mar
-16
Apr-
16
May
-16
Jun-
16
Jul-1
6
Aug-
16
Sep-
16
Oct
-16
Nov
-16
Dec
-16
0.000
5.000
10.000
15.000
20.000
25.000
VIX Index
VIX Index
VIX
C. Currency Derivatives at NSE, MSEI and BSE
During December 2016, the monthly turnover of currency derivatives at NSE decreased by 20.8 percent to `4,38,729crore from `5,54,009 crorein November 2016. The turnover of currency derivatives at BSE decreased by 15.1 percent to `2,56,606crore in December 2016 from `3,02,327 crorein November 2016. At MSEI, the monthly turnover of currency derivatives decreased by 40.2percent to `19,999crore in December 2016 from `33,466crorein November 2016. (Figure 6andTables 37, 38 and 39)
Figure 6: Trends of Currency Derivatives at NSE, MSEI and BSE (`crore)
Jan
-16
Feb-1
6
Mar-
16
Apr-
16
May-
16
Jun
-16
Jul-
16
Au
g-1
6
Sep-1
6
Oct
-16
Nov-
16
Dec-
160
50,0001,00,0001,50,0002,00,0002,50,0003,00,0003,50,0004,00,0004,50,0005,00,0005,50,0006,00,000
NSE MSEI BSE
D. Interest Rate Derivatives at NSE, BSE and MSEI
During December 2016, the monthly turnover of interest rate futures at NSE increased by 9.5 percent to `35,695crore from `32,610crorein November 2016. The turnover of interest rate futures at BSE increased by 0.1 percent to `11,793crore in December2016 from `11,781 crorein November 2016. At MSEI, there was no turnover of interest rate futures in December 2016, like in November 2016(Figure 7and Table 47).
Figure 7: Trends of Interest Rate Derivatives at NSE, BSE and MSEI (`crore)
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
Nov
-16
Dec
-160
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
BSE NSE
VI. Commodities Futures Markets
A. Market Trends
At the end of December 2016, the composite index MCXCOMDEX decreased by 0.20 percent and Dhaanya Index of NCDEX decreased by 3.60 percent over the closing values of previous month. On December 30, 2016, MCXCOMDEX and Dhaanya closed at 3309.50 and 3140.08, respectively (Figure 8). MCXCOMDEX recorded an intraday high of 3384.10 on December 05, 2016 while 3256.88 on December 22, 2016 was its lowest intra-day level during the month. NCDEX Dhaanya recoded an intra-day high of 3288.05 on December 02, 2016 and an intra-day low of 3095.82 on December 23, 2016. The component indices of MCXCOMDEX, namely, MCX Metal, decreased by 5.50 percent, whereas MCX Energy and MCX Agri. increased by 7.99 percent and 3.16 percent respectively. (Details in Table 61 to 69).
Figure 8: Movement of Commodity Futures Market Indices
31-Mar-1
5
1-May-1
5
1-Jun-1
5
1-Jul-1
5
1-Aug-1
5
1-Sep-1
5
1-Oct-
15
1-Nov-1
5
1-Dec-1
5
1-Jan-1
6
1-Feb-1
6
1-Mar-1
6
1-Apr-1
6
1-May-1
6
1-Jun-1
6
1-Jul-1
6
1-Aug-1
6
1-Sep-1
6
1-Oct-
16
1-Nov-1
6
1-Dec-1
62400
2600
2800
3000
3200
3400
3600
MCXCOMDEX Index Dhaanya Index
Daily volatility during December 2016 for the indices of MCXCOMDEX and NCDEX Dhaanya was recorded at 0.69 percent and 0.59 percent, respectively. Among the component indices of MCXCOMDEX, MCX Energy recorded highest volatility of 1.48 percent, followed by MCX Metal (0.69 percent) and MCX Agri. (0.57 percent). The daily volatility and return over the previous months of commodity futures market indices is shown in the Exhibit 5 below:
Exhibit 5: Performance of Indices at MCX and NCDEX during December 2016 (Percent)
MCX NCDEX
IndexChange over Previous month
Daily Volatility
IndexChange over Previous month
Daily Volatility
1 2 3 4 5 6MCXCOMDEX -0.20 0.69 Dhaan
ya -3.60 0.59
MCX Metal -5.50 0.69MCX Energy 7.99 1.48
MCX Agri. 3.16 0.57
Source: MCX and NCDEX
The total turnover at MCX was `3,82,469crore in December 2016, which is a decrease of 30.62 percent over the total turnover of `5,51,238 crore during November 2016. The contribution to the total turnover at MCX from Metal segment was at 36.53 percent followed by Energy segment at 35.44 percent, Bullion segment with 25.72 percent and agricultural commodities had a share of 2.31 percent.
The total turnover at NCDEX has decreased from `31,645 crore in November 2016 to `22,140 crore in December 2016, a decline of 30.0 percent. Since June 2016, the entire turnover at NCDEX is contributed by the agricultural commodities segment only.
The total turnover at NMCE has decreased from `2,442 crore in November 2016 to `2,425 crore in December 2016, a decrease of 0.7 percent. The entire turnover at NMCE is also contributed by the agricultural commodities segment only.
The total turnover in agricultural commodities at all the three national exchanges stood at `33,416 crore while that of the non - agricultural commodities stood at `3,73,619crore. The total turnover of agricultural commodities was the highest at NCDEX (`22,140 crore) followed by MCX (`8,850 crore) and NMCE (`2,425 crore) (Figure 9). Presently, the non-agricultural commodities of Bullion, Metals and Energy segments are traded only at MCX. (Figure 10). Details in Table 63, 64, & 65.
Among the regional exchanges, Rajkot Commodity Exchange Ltd. (RCX) were contracts of only castor seed are permitted, recorded a nil turnover during December 2016 as against a total turnover of `29.58 crore during November, 2016. The Chamber of Commerce (CoC), Hapur with only trading in Mustard Seed contracts, recorded a total turnover of `1.54 crore during December, 2016 as against total turnover of `189.59 crore during November 2016.
Figure 9: Turnover of Agricultural Commodities Futures at National Exchanges (`crore)
Figure 10: Turnover of Non-Agricultural Commodities Futures at Exchanges (`crore)
Apr-
15
May
-15
Jun-1
5
Jul-1
5
Aug-
15
Sep-1
5
Oct
-15
Nov-
15
Dec
-15
Jan-1
6
Feb-1
6
Mar
-16
Apr-
16
May
-16
Jun-1
6
Jul-1
6
Aug-
16
Sep-1
6
Oct
-16
Nov-
16
Dec
-16 -
20,000
40,000
60,000
80,000
100,000
120,000
-
10,000
20,000
30,000
40,000
50,000
60,000
NCDEX MCX NMCE
NC
DE
X
MC
X a
nd
NM
CE
Apr-15
May
-15
Jun-1
5
Jul-1
5
Aug-15
Sep-1
5
Oct-15
Nov-15
Dec-1
5
Jan-1
6
Feb-1
6
Mar
-16
Apr-16
May
-16
Jun-1
6
Jul-1
6
Aug-16
Sep-1
6
Oct-16
Nov-16
Dec-1
6 -
100,000
200,000
300,000
400,000
500,000
600,000
700,000
0
1000
2000
3000
4000
5000
6000
7000
MCX NCDEX
MC
X N C D E X
Exhibit 6: Periodic Variation (M-o-M and Y-o-Y) in futures closing prices for
near month contracts of commodities traded at MCX and NCDEX
Commodities traded at MCX
Variation in prices as on December 30, 2016
(percent)Commodities traded
at NCDEX
Variation in prices as on December 30, 2016
(percent)
M-o-M Y-o- Y M-o-M Y-o- YGold -3.3% 10.1% Guar seed 10 MT -2.6% -2.3%Gold Mini -2.6% 11.0% Guar Gum -1.4% -3.7%Gold Petal -6.4% 12.9% Soybean -2.8% -18.9%Gold Guinea -3.0% 15.0% Turmeric -6.8% -30.7%Silver -2.6% 17.3% Sugar 8.6% 16.5%Silver Mini -2.6% 17.3% Rape/Mustard seed -10.1% 1.7%Silver Micro -2.6% 17.3% Soy Oil -0.9% 16.1%Nickel -9.6% 18.4% Maize Kharif -0.9% -4.9%Nickel Mini -9.7% 18.4% Cotton seed oil cake 2.7% -3.7%Copper -4.8% 19.4% Cotton 29mm 0.5% 16.7%Copper Mini -4.8% 19.4% Wheat -7.0% 12.5%Lead -15.4% 12.4% Jeera -3.0% 23.6%Lead Mini -15.4% 12.4% Coriander -7.4% 2.2%Crude Oil 8.1% 46.4% Barley 0.3% 31.4%Crude Brent 18.7% 57.4%Natural Gas 9.8% 61.6%Zinc -5.8% 63.0%Zinc Mini -5.8% 62.8% Aluminium -0.9% 16.5% Aluminium Mini -1.0% 16.5% Cotton -0.5% 15.6% CPO 5.0% 45.1% Mentha Oil 7.9% 14.7% Cardamom 0.4% 79.3%
At the end of December 2016, M-o-M returns among the near month contracts of non-agricultural commodities, except Crude Oil, Brent Crude and Natural Gas other commodities have recorded a negative trend. Brent Crude with 18.7 percent was the top gainers followed by Natural Gas (9.8 percent) and Crude Oil (8.1 percent). While higher M-o-M decline in futures prices was recorded in contracts of Lead and Lead Mini (-15.4 percent each), followed by Nickel Mini (-9.7 percent), Nickel (-9.6 percent), Gold Petal (-6.4 percent), Zinc and Zinc Mini (-5.8 percent each), Copper and Copper Mini (both -4.8 percent each), Gold (3.3 percent), Gold Guinea (3.0 percent), Gold (2.6 percent), Silver, Silver Mini and Silver Micro (2.6 percent each) and Aluminium and Aluminium Mini (2.7 percent each).
Among the agricultural commodities, the M-o-M upward movement in prices is observed in the near month contracts of Sugar (8.6 percent) followed by Mentha Oil (7.9 percent), Crude Palm Oil (5.0 percent) and Cottonseed Oilcake (2.7 percent), Cotton 29 mm (0.5 percent), Cardamom (0.4 percent) and Barley (0.3 percent). While prices declined the most in contracts of Rape/Mustard seed (-10.1 percent), followed by Coriander (-7.4 percent), Wheat (-7.0 percent), Turmeric (-6.8 percent), Jeera (-3.0 percent), Soybean (-2.8 percent), Guar Gum 10 MT (-2.6 percent), Guar Gum (-1.4 percent), Maize Kharif and Refined Soy Oil (-0.9 percent each).
On Y-o-Y basis, futures prices of all the non-agricultural commodities closed with positive returns. Among these, Zinc and Zinc Mini contracts with 63.0 percent and 62.8 percent were top gainers, followed Natural Gas (61.6 percent each), Brent Crude (57.4 percent), Crude Oil (46.4 percent), both Copper and Copper Mini (19.4 percent each), both Nickel and Nickel Mini (18.4 percent each), Silver (17.3 percent), both Aluminium and Aluminium Mini (16.5 percent each), Gold (10.1 percent to 15.0) percent). Among agricultural commodities, Y-o-Y price of Cardamom recorded highest increase of 79.3 percent, followed by Crude Palm Oil (45.1 percent), Barley (31.4 percent), Jeera (23.6 percent), Cotton 29 mm (16.7 percent), Ref. Soy Oil (16.1 percent), Sugar (16.5 percent), Cotton (15.6 percent) and Mentha Oil (14.7 percent).
All India Rabi Crop SituationAccording to the press release dated January 13, 2017 by Ministry of Agriculture, the total area sown under Rabi crops as on 13th January, 2017 stands at 616.21 lakh hectares as compared to 581.95 lakh hectare in the corresponding period last year. This is an increase of 5.89 percent over the previous year.
The area sown so far and that sown during last year this time, in respect of commodities having futures contracts on exchanges is as follows:
Crop Name NormalRabi Area
Area Sown Reported
Difference of 2016-17Over 2015-16
% change for 2016-17 over 2015-16
2016-17
2015-16
Wheat 304.05 309.60 289.07 20.53 7.10Maize 15.62 14.72 13.46 1.26 9.37Barley 6.87 8.10 7.29 0.81 11.12Rape/Mustard seed 63.20 69.86 62.87 6.99 11.13Total Rabi (including other crops)
638.37 616.21 581.95 34.26 5.89
Note : All figures are tentative and eye estimated by the States. Source : Crop Division, Ministry of Agriculture.
With respect to commodities traded on exchanges, all the crops of wheat, maize, barley and Rape/Mustard seed have recorded higher sowing as compared to the last year. The sowing area of Rape/mustard seed has increased by 11.13 percent over the previous year, followed by Barley (11.12 percent, Maize (9.37 percent) and Wheat 7.10 percent. Considering the Normal area, sowing area under Barley has increased by 17.9 percent, followed by Rape/Mustard Seed (10.54 percent) and Wheat (1.83 percent). However, area sown under maize rabi is 5.76 percent less than the normal area.
VII. Trading in Corporate Debt Market
During December 2016, 1,984 trades with a traded value of `31,071crore was reported on BSE compared to 1,932 trades with a traded value of `25,784 crorereported in November 2016. At NSE, 5,364 trades were reported in December 2016 with a traded value of `1,09,145crore compared to 5,062 trades with value of `1,12,682 crorein November 2016(Figure 11 and Table 13).
Figure 11: Trends in Reported Turnover of Corporate Bonds (`crore)
Jan
-16
Feb
-16
Mar
-16
Apr
-16
May
-16
Jun
-16
Jul-
16
Au
g-16
Sep
-16
Oct
-16
Nov
-16
Dec
-16
13,
323
14,
543
17,
906
14,
842
17,
335
18,
541
16,
187
19,
400
25,
687
24,
135
25,
784
31,
071
51,
820
67,
599 89,
837
66,
679
65,
225
78,
408
92,
599
90,
213 1
17,7
81
110
,765
112
,682
109
,145
BSE NSE
VIII. Trends in Institutional Investment
A. Trends in Investment by Mutual Funds
The total net investment in the secondary market by mutual funds was `32,575crore in December 2016 compared to `26,414 crore in November 2016. They made net purchases of `9,179crore in equity in December2016 compared to net purchases of `13,775 crore in equity in November 2016. In the debt segment, mutual funds were net purchasers to the tune of `23,396crore in December 2016 as against net purchases of `12,639 croremade by them in November 2016 (Figure 12).
As on December 31, 2016, there were a total of 2,256 mutual fund schemes of which income/debt oriented schemes were 1,658 (73.5 percent), growth/equity oriented schemes were 476 (21.1 percent), exchange traded funds with 63 schemes (2.8 percent), balanced schemes were 30 (1.3 percent) and fund of funds investing overseas schemes were 29 (1.3 percent). (Tables 55 & 56).
Figure 12: Trends in Mutual Funds Investment (`crore)
Jan-16 Feb-16
Mar-16
Apr-16 May-16
Jun-16 Jul-16 Aug-16
Sep-16
Oct-16 Nov-16
Dec-16
7,32
8
5,94
6
10,1
98 576
7,14
9
86 34
2,71
7
3,84
1 9,12
9
13,7
75
9,17
95,16
8 28,6
86
82,3
42
35,5
23
2,31
7
44,0
54
19,6
53
4,09
3
53,3
47
24,6
37
12,6
39
23,3
96
12,4
96 34,6
32
72,1
44
34,9
47
4,83
2
43,9
68
19,6
19
6,81
0
57,1
88
33,7
66
26,4
14
32,5
75
Equity Debt Total
B. Trends in Investment by the Foreign Portfolio Investors (FPIs)
In December 2016, the FPIs remained net sellers in the Indian securities market to the tune of `27,111crore. There were net outflows from equity segment to the tune of `8,176crore while debt segment witnessed a net outflow of `18,935crore(Figure 13).
The assets of the FPIs in India, as reported by the custodians, at the end of December 2016 stands at `23,48,007crore, out of which the value of offshore derivative instruments (including ODIs on derivatives) is `1,57,306 crore, constituting 6.7 percent of the total assets under custody of FPIs. (Tables 49, 50 & 51)
Figure 13: Trends in FPIs Investment (`crore)
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16 Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
-11,1
26
-5,5
21
21,1
43
8,4
16
2,5
43
3,7
13
12,6
12
9,0
71
10,4
43
-4,3
06
-18,2
44
-8,1
76
2,3
13
-8,1
95
-1,4
76
6,4
18
-4,4
09
-6,2
20
6,8
45
-2,6
25
9,7
89
-6,0
00
-21,1
52
-18,9
35
-8,8
14
-13,7
16
19,6
67
14,8
34
-1,8
66
-2,5
07
19,4
57
6,4
46 2
0,2
33
-10,3
06
-39,3
96
-27,1
11
Equity Debt Total
IX. Trends in Portfolio Management Services
Total assets under management (AUM) of portfolio management services (PMS) industry has increased by 1.0 percent to `11,73,915crore in December 2016 from`11,62,243 crore in November 2016. As on December 30, 2016, AUM of discretionary PMS constitute 78.2 percent of the total AUM of PMS followed by advisory PMS (15.7 percent) and non-discretionary PMS (5.9 percent).
In terms of number of clients, discretionary services category leads with total of 65,745 clients, out of 72,77 clients in PMS industry, followed by non-discretionary category with 4,695 clients and advisory category with 2,037 clients. (Table 57)
X. Trends in Substantial Acquisition of Shares and Takeovers
In December 2016, twoopen offers with offer value of `120crore were made to the shareholders as against four open offers with offer value of `119 crorein November 2016 (Figure 14).
Figure 14: Details of Offers Opened under the SEBI (SAST) Regulations (`crore)
MONTHLY REVIEW OF GLOBAL FINANCIAL MARKETS1
1. Introduction:1.1. International stocks
generated positive returns in December as investor sentiments were optimistic following the results of US presidential elections, rising growth trends witnessed across Europe and fading pessimism regarding the consequences of Brexit. Much expected interest rate hike by the US Federal Reserve also reinvigorated markets.
1.2. Emerging markets stocks advanced marginally in December as investors’ risk appetite was seen in play unlike previous month’s sell off. Although, US Federal Reserve’s interest rate hike eroded some of the investors’ buying confidence. On a quarterly level, emerging market stocks underperformed, recording negative returns due to uncertainty over US trade and foreign policy on one hand and the prospect of a tighter US dollar liquidity on the other.
1Prepared by the Department of Economic and Policy Analysis-I of SEBI based on latest available data/information. Views expressed in the review are not of SEBI.
Snapshots
United States:The US economy recorded a real GDP growth rate of 3.5 percent (Y-o-Y) (in annualised terms) in Q3 2016 compared to a growth rate of 1.4 percent in Q2 2016. Consumer prices in the US increased by 2.1 percent (Y-o-Y) in December 2016. The unemployment rate rose to 4.7 percent in December 2016, compared to 4.6 percent during the previous month.
United Kingdom The British real GDP growth rate rose by 2.2 percent (Y-o-Y) in Q3 2016, up from 2.0 percent recorded in Q2 2016. CPI inflation stood at 1.6 percent in December 2016 compared to 1.2 percent in previous month. The unemployment rate remained unchanged at 4.8 percent in November 2016, same as that in October.
Japan:The Japanese real GDP growth rate stood at 0.5 percent (Y-o-Y) in Q3 2016, as compared to 0.2 percent recorded during the previous quarter. Consumer prices declined by 0.4 percent (Y-o-Y) while Unemployment rate stood at 3.1 percent, up from 3.0 percent in the previous month.
Euro Zone (EA19):The real GDP growth rate in Euro zone remained stagnant at 1.6 percent (Y-o-Y) in Q3 2016. Consumer prices in Euro Area rose by 1.1 percent Y-o-Y, as compared to the prices in previous month. Unemployment rate in the EA19 declined to 9.6 percent in Q3 2016 as compared to the previous quarter.
BRIC Nations: Real GDP of Brazil contracted by 2.9 percent (Y-o-Y) in
Q3 2016, compared to 3.6 percent contraction in Q2 2016. CPI inflation rose by 6.3 percent in December, down from 7.0 percent in the previous month. Brazil's unemployment rate reached to record high of 11.9 percent at the end of October 2016.
Russian GDP contracted by 0.4 percent (Y-o-Y) in Q3 2016, faring better than 0.6 percent contraction in the previous quarter. CPI inflation increased by 5.6 percent in December. Unemployment rate stood at 5.4 percent in at the end of November.
India’s real GDP grew by 7.3 percent (Y-o-Y) in Q3 2016 following 7.1 percent expansion in the previous period. Consumer prices inflation moved down to 3.4 percent (Y-o-Y) in December 2016, as compared to 3.6 percent in
1.3. US equities posted positive gains, most of those gains coming early in December. Postelection, investor sentiments were high as tax cuts and increase in infrastructure in expected from the incoming administration.
1.4. European equities advanced following the European central bank’s announcement of scaling back its bond buying. The ECB early in the month stated its intent of extending its stimulus buying program until at least till the end of 2017, but thereafter reducing the rate of bond purchase from € 80 billion per month to € 60 billion per month. Furthermore, European equities also benefitted from supportive economic measures that indicated stronger employment, steady retail growth and rising inflation, especially in UK.
1.5. Indian market stocks declined as the economic fallout from the government’s decision to demonetise 500 and 1000 notes continued to weigh on investor sentiments. On the other hand, strengthening of US dollar induced outflow of FII funds in the month of November which continued for December as well. Following demonetisation, RBI lowered its forecast for gross value added for the current fiscal year. The Central bank also kept its benchmark interest rate unchanged at a six year low, citing the volatility prevailing in global financial markets. The Asian Development Bank (ADB) was the first multilateral agency to reduce India’s growth forecast from previously estimated 7.4 percent to 7 percent for the current fiscal 2016-17. The International Monetary Fund (IMF) also lowered India’s growth forecast for the year from 7.6 percent to 6.6 percent, a deduction of full percentage point. IMF attributed this cut to the temporary negative consumption shock and demand contraction in the economy due to the cash shortages as well as payment disruptions associated with the government’s currency note withdrawal. As such, a lower growth forecast triggered concerns of India losing its tag of fastest growing major economy to China in 2016-17.
1.6. During the December quarter, global bond market movements were largely triggered by political factors. Apart from the conclusion of US presidential election, the upcoming elections in Europe were also seen as potential determinants in influencing the global bond market. Government bond yields rose in Q4, while the 10-year US treasury yield advanced from 1.6 percent to 2.4 percent in the December quarter thereby strengthening the US dollar. Emerging market debts also rose despite funds outflow and uncertainty surrounding trade policies from the incoming administration.
1.7. The latest IMF projections in the World Economic Outlook forecasted advanced economies to be growing at 1.6 percent in 2016 and at 1.9 percent in 2017, while the growth in Emerging Market and Developing Economies is forecasted at 4.1 percent and 4.5 percent for 2016 and 2017 respectively. The overall World Output is projected at 3.1 percent in 2016 and 3.4 percent in 2017. The forecasted figures rest on the assumption of a changing policy mix under the incoming administration in US and its global implications. IMF projections also reflect a gradual normalization of
conditions in a number of major economies which are currently weighed down by macroeconomic strains.
2. Major Recent Developments Across the Globe2.1. IMF revises India’s growth forecast to 6.6 percent from 7.6
percent
2.1.1.The International Monetary Fund (IMF) in its latest release (January 2017) cut India's economic growth estimate for 2016-17 to 6.6 percent from its earlier projection of 7.6 percent due to the impact of the government's move to scrap some high value currency notes in early November.
2.1.2. IMF expects the economy to recover and grow by 7.2 percent in 2017-18, still slower than the previous estimate of 7.6 percent. In 2018-19, it expects the Indian economy to grow by 7.7 percent.
2.1.3.Several multilateral agencies, RBI and economists have cut India's growth estimates after the demonetisation drive. The World Bank, too, recently, revised its earlier projection of 7.6 percent GDP growth in FY17 to 7 percent.
2.1.4. IMF also raised China's GDP growth estimate for 2016-17 to 6.7 percent from the earlier 6.5 percent.
2.2. India takes over Britain to become world's 5th largest economy
2.2.1.With its fast economic growth in over two decades and a half, India in December 2016, taken over the United Kingdom as the fifth largest economy in the world.
2.2.2.The surpass largely caused by the nearly 20 percent decline in the value of the pound over the last 12 months, consequently UK’s 2016 GDP of GBP 1.87 trillion converts to $2.29 trillion at exchange rate of approximately GBP 0.81 per $1, whereas India’s GDP of INR 153 trillion converts to $2.30 trillion at exchange rate of ~INR 66.6 per $1.
2.2.3.Furthermore, this gap is expected to widen as India grows at 6 to 8 percent p.a. compared to UK’s growth of 1 to 2 percent p.a. until 2020 and further.
The World Economy:
2.3. Global growth: IMF forecasted that global output growth is estimated at about 3.1 percent (at an annualized rate) for the third quarter of 2016 and 3.4 percent for 2017, broadly unchanged relative to the first two quarters of the year. This stable average growth rate, however, masks divergent developments in different country groups. There has been a stronger-than-expected pickup in growth in advanced economies, due mostly to a reduced drag from inventories and some recovery in manufacturing output. Forward-looking indicators such as purchasing managers’ indices have remained strong in the fourth quarter in most areas.
As per World Bank’s latest report, stagnant global trade, subdued investment, and heightened policy uncertainty marked another difficult year for the world economy. Global growth in 2016 is estimated at a post-crisis low of 2.3 percent and is projected to rise to 2.7 percent in 2017.
2.4. Growth in Advanced Economies: According to IMF projections, among advanced economies, activity rebounded strongly in the United States after a weak first half of 2016, and the economy is approaching full employment. Output remains below potential in a number of other advanced economies, notably in the euro area. Preliminary third-quarter growth figures were somewhat stronger than previously forecast in some economies, such as Spain and the United Kingdom, where domestic demand held up better than expected in the aftermath of the Brexit vote. Historical growth revisions indicate that Japan’s growth rate in 2016 and in preceding years was stronger than previously estimated.
According to World Bank, advanced economies continue to be afflicted by weak growth and low inflation, amid rising uncertainty about future policy direction. After slowing to 1.6 percent in 2016, growth is projected to recover somewhat in 2017-19, although the range of possible outcomes has significantly widened after the elections in the United States and the United Kingdom’s decision to leave the European Union.
2.5. Growth in Developing Countries: IMF projects that the picture for emerging market and developing economies (EMDEs) remains much more diverse. The growth rate in China was a bit stronger than expected, supported by continued policy stimulus. But activity was weaker than expected in some Latin American countries currently in recession, such as Argentina and Brazil, as well as in Turkey, which faced a sharp contraction in tourism revenues. Activity in Russia was slightly better than expected, in part reflecting firmer oil prices.
According to World Bank, EMDEs grew by an estimated 3.4 percent in 2016, slightly below June projections. Among commodity exporters, output expanded an estimated 0.3 percent, as some improvement in Brazil and Russia and a modest increase in commodity prices was offset by further weakness in other exporters. In commodity importers, growth in 2016 is estimated at 5.6 percent, reflecting resilient domestic demand and generally accommodative macroeconomic policies. EMDE growth is projected to pick up to 4.2 percent in 2017 and to an average of 4.7 percent in 2018-19, mainly on a recovery in commodity exporters supported by a gradual increase in commodity prices.
2.6. Growth in India: According to IMF’s recent forecast, India’s GDP will continue to expand at the fastest pace among major economies, with growth forecast at 6.6 percent in 2016-17. Large terms-of-trade
gains, positive policy actions, structural reforms including the introduction of an important tax reform, formalization of the inflation-targeting framework and improved confidence are expected to support consumer demand and investment. However on the backdrop of demonetisation the growth rate was revised down by 1 percent, due to its impact on consumption.
The World Bank estimated that the Indian growth is decelerated to a still robust 7 percent, with continued tailwinds from low oil prices and solid agricultural output partly offset by challenges associated with the withdrawal of a large volume of currency in circulation and subsequent replacement with new notes.
Exhibit 1: Overview of the World Economic Outlook Projections: January 2016 2
Year over Year
Estimates Projections Difference from October 2016 WEO Projections1
2015 2016 2017 2018 2017 2018World Output 3.20 3.10 3.40 3.60 0.00 0.00Advanced Economies 2.10 1.60 1.90 2.00 0.10 0.20United States 2.60 1.60 2.30 2.50 0.10 0.40Euro Area 2.00 1.70 1.60 1.60 0.10 0.00
Germany 1.50 1.70 1.50 1.50 0.10 0.10France 1.30 1.30 1.30 1.60 0.00 0.00Italy 0.70 0.90 0.70 0.80 -0.20 -0.30Spain 3.20 3.20 2.30 2.10 0.10 0.20
Japan2 1.20 0.90 0.80 0.50 0.20 0.00United Kingdom 2.20 2.00 1.50 1.40 0.40 -0.30Canada 0.90 1.30 1.90 2.00 0.00 0.10Other Advanced Economies 3 2.00 1.90 2.20 2.40 -0.10 0.00Emerging Market and Developing Economies 4.10 4.10 4.50 4.80 -0.10 0.00
Emerging and Developing Asia 6.70 6.30 6.40 6.30 0.10 0.00ASEAN-5 5 4.80 4.80 4.90 5.20 -0.20 0.00
Emerging and Developing Europe 3.70 2.90 3.10 3.20 0.00 0.00BRICS Nations
Brazil -3.80 -3.50 0.20 1.50 -0.30 0.00Russia -3.70 -0.60 1.10 1.20 0.00 0.00India 4 7.60 6.60 7.20 7.70 -0.40 0.00China 6.90 6.70 6.50 6.00 0.30 0.00
South Africa 1.30 0.30 0.80 1.60 0.00 0.00
Note: Real effective exchange rates are assumed to remain constant at the levels prevailing during November 4-December 2, 2016. Economies are listed on the basis of economic size. The aggregated quarterly data are seasonally adjusted.1Difference based on rounded figures for both the current and October 2016 World Economic Outlook forecasts.2Japan's historical national accounts figures reflect a comprehensive revision by the national authorities, released in December 2016. The main revisions are the switch from the System of National Accounts 1993 to the System of National Accounts 2008 and the updating of the benchmark year from 2005 to 2011.3Excludes the G7 (Canada, France, Germany, Italy, Japan, United Kingdom, United States) and euro area countries. 4For India, data and forecasts are presented on a fiscal year basis and GDP from 2011 onward is based on GDP at market prices with FY2011/12 as a base year.5 Indonesia, Malaysia, Philippines, Thailand, VietnamSource: IMF2The projections given are as per the latest available publication of World Economic Outlook by IMF
Exhibit 2: Major Macroeconomic Indicators Country /
RegionQuarterly Growth Real GDP Annual CPI
InflationUnemployment
Rate
Benchmark Interest
Rate YOY QOQ
Dev
elop
ed C
ount
ries United States 1.5 Q3 2.9 Q3 2.1 Dec-16 4.7 Dec-16 0.75
United Kingdom 2.3 Q3 0.5 Q3 1.6 Dec-16 4.8 Nov-16 0.25
Germany 1.5 Q3 0.2 Q3 1.7 Dec-16 6.0 Dec-16 -0.4France 1.1 Q3 0.2 Q3 0.6 Dec-16 9.9 Sep-16 -0.4Eurozone 1.6 Q3 0.3 Q3 1.1 Dec-16 9.8 Nov-16 -0.4Japan 0.9 Q3 0.5 Q3 -0.4 Nov-16 3.1 Nov-16 -0.1Hong Kong 1.9 Q3 0.6 Q3 1.2 Nov-16 3.3 Dec-16 1.0
BR
ICS Brazil -3.8 Q2 -0.5 Q2 6.2 Dec-16 11.9 Nov-16 13.0
Russia -0.4 Q3 -0.6 Q3 5.4 Dec-16 5.4 Nov-16 10.0India 7.1 Q2 1.4 Q2 3.4 Dec-16 NA Nov-16 6.25China 6.7 Q3 1.8 Q3 2.1 Dec-16 4.0 Sep-16 4.35
Oth
er
Em
s South Korea 2.7 Q3 0.7 Q3 1.3 Nov-16 3.2 Dec-16 1.25
Indonesia 5.0 Q3 3.2 Q3 3.6 Nov-16 5.6 Sep-16 4.75Turkey 3.0 Q2 -7.0 Q2 7.0 Nov-16 11.8 Oct-16 8.0
Source: Bloomberg
Chart 1: Year-on-Year Real GDP growth rates of major countries/ region (percent)
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
-12
-7
-2
3
8
13
USA UK Eurozone Japan Hong Kong Brazil Russia IndiaChina
Source: Bloomberg
Chart 2: Year-on-Year Consumer Price Inflation (percent)
Apr-13
Jun-1
3
Aug-13
Oct-13
Dec-1
3
Feb-1
4
Apr-14
Jun-1
4
Aug-14
Oct-14
Dec-1
4
Feb-1
5
Apr-15
Jun-1
5
Aug-15
Oct-15
Dec-1
5
Feb-1
6
Apr-16
Jun-1
6
Aug-16
Oct-16
Dec-1
6-2
0
2
4
6
8
10
12
14
16
18
USA UK Eurozone Japan Hong KongBrazil Russia India China
Source: Bloomberg
United States:2.4. Real gross domestic product (GDP) growth rate was at 3.5 percent (Q-o-
Q) (in annualised terms) for the third quarter of 2016, according to the
“third” estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased by 1.4 percent.
1. Chart 1A: USA GDP growth rate (Q-o-Q) Annualised
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
-2
-1
0
1
2
3
4
5
6
3.5
1.40.80.9
22.6
22.3
5
4
-1.2
4
3.1
2.5. The increase in real GDP in the third quarter primarily reflected positive contributions from PCE, exports, private inventory investment, non-residential fixed investment, and federal government spending that were partly offset by negative contributions from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
2.6. Real Annual GDP increased by 2.6 percent (Y-o-Y) in 2015, 20 basis points above the previous year. The World Bank has revised its GDP growth estimate from 1.9 percent to 1.6 percent for 2016. IMF kept its GDP growth projections at 1.6 percent for 2016 in recent release and for 2017 revised it from 2.2 percent to 2.3 percent.
2.7. The seasonally adjusted final Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 54.3 in December against 54.1 in November, the best reading recorded from March 2015, indicating the strongest improvement in business conditions, driven by stronger inventory building in December, which offsets comparatively weaker increases in output and new orders. The seasonally adjusted Markit U.S. Services Business Activity Index registered 53.9 in December against 54.6 in November. As per data released by the Bureau of Labor Statistics, the consumer prices in USA went up by 2.1 percent (Y-o-Y) in December 2016. On a monthly basis it went up by 0.3 percent. Unemployment rate in the US reached 4.7 percent in the December, 10 basis points up from previous month
Observations: Real GDP increased 3.5 percent (annual rate) in the third quarter of 2016, an upward revision of 0.3 percentage point from the second estimate, following an increase of 1.4 percent in the second quarter of 2016. The largest contributor to the upward revision to non-residential fixed investment was an upward revision to intellectual property based offerings, which showed an updated R&D expense data from financial reports of various companies and latest available data from the Census quarterly services survey (QSS). The upward revision to consumer spending was primarily due to services and reflected upward revisions to spending by non for profit
institutions and to financial services. The revisions were largely the results incorporation of newly available QSS data.
United Kingdom:2.8. The British economy is estimated to have grown at 2.20 percent (Y-o-Y) in
the Q3 of 2016, 20 basis points up from the previous quarter. It is highest growth rate after the second quarter of the 2015. Largely fuelled by net distribution, hotels and restaurants. On a quarter-on-quarter basis, the economy expanded by 0.6 percent, same as of previous quarter.
2.9. During 2015, UK's economy grew 2.2 percent (Y-o-Y), down from 3.1 percent in 2014. The World Bank had revised downwards GDP growth rate from 2.4 percent to 2.0 for 2016, in its June report and kept it same in January 2017 release as well. IMF has revised growth rate projections to 2.0 percent for 2016 and 1.5 percent for 2017 from 1.8 percent and 1.1 percent respectively.
2.10. Manufacturing PMI posted 56.1 in December. The seasonally adjusted Markit/CIPS Purchasing Managers’ Index (PMI) was observed well above from 53.6 in November and reached a high of 30 months. The UK Services PMI remained well above 50 at 56.2 in December, above from 55.2 in November, taking it to 17 month high. The CPI Inflation in the UK stood at 1.6 percent (Y-o-Y) in December 2016, against the 1.2 percent of the previous month.
2.11. Bank of England’s Monetary Policy Committee (MPC) at its meeting in December 2016, set monetary policy to meet the 2 percent inflation target, and in a way that helps to sustain growth and employment. The MPC in its November meeting decided to keep the official Bank Rate at 0.25 percent and further decided to continue with the programme of £60 billion of UK government bond purchases to take the total stock of these purchases to £435 billion, financed by the issuance of central bank reserves. As per the latest available data, the unemployment rate of the economically active population in UK remained at 4.8 percent in November, same as in the previous month.
Observations: Household spending grew at a quarterly rate of 0.7 percent in the third quarter of 2016, but during the period household incomes adjusted for inflation fell 0.6 percent - the biggest drop after early 2014. The savings ratio was observed to at its lowest in eight years. Business investment is expected to be disappointing, with the Office for National Statistics more than halving its estimate for investment growth in the third quarter of 2016 to 0.4 percent.
Japan:2.12. The Japanese economy grew 0.5 percent (Q-o-Q) in the third quarter of
2016, following a 0.2 percent expansion in the previous quarter. It was the third consecutive quarter of growth, boosted by exports, government
spending and private residential investment while household consumption stalled. In Y-o-Y terms, Japanese economy grew by 0.9 percent (Y-o-Y) during Q3 of 2016 compared to 0.6 percent (Y-o-Y) in Q2 of 2016. Despite massive fiscal and monetary policy stimulus, its slow implementation and the absence of decisive structural reforms are curtailing Japan’s ability to boost economic growth.
2.13. The World Bank and IMF revised up its estimate for Japanese growth, for 2016 and 2017 to 0.9 percent and 0.8 percent, respectively but the growth remains constrained by the low growth potential implied by a shrinking and aging labour force and heightened policy uncertainty in major trading partners. In September 2016, the Bank of Japan changed its policy focus from a quantitative target for government bond purchases to a more flexible approach aimed at stabilizing long-term interest rates around zero.
2.14. Japan's manufacturing PMI posted 52.4 in December, down from 51.3 in November, signalling a slowing improvement in manufacturing conditions in Japan. Service sector activity increases, amid stronger demand conditions. Service Sector PMI posted 52.9 in December up from 51.8 in November 2016 signalling an expansion in output at Japanese service providers.
2.15. The Japanese equity market ended the month higher in local currency terms, buoyed by a weakening of the yen against the US dollar post the US election. Consumer prices in Japan remained same in November 2016, at -0.4 percent.
2.16. Exports from Japan jumped 5.4 percent year-on-year to JPY 6679 billion in December of 2016, beating market expectations of a 1.2 percent increase. It is the first annual rise in fifteen months amid improving global demand and a surge in sales to China.
2.17. Bank of Japan left its deposit rate on excess money parked with central bank unchanged at -0.1 percent. The seasonally adjusted unemployment rate in Japan stood at 3.1 percent in November of 2016, up from 3.0 percent in October 2016.
Observations: The economy defied the strength of the yen and global headwinds in Q3, managing to expand a robust 2.2 percent from the previous quarter in seasonally adjusted annualized terms (SAAR), which represented the fastest acceleration since Q1 2015.Exports from Japan jumped by 5.4 percent year-on-year in December 2016.The manufacturing PMI increased marginally in December 2016. CPI inflation stood constant at -0.4 percent in November. Interest rate was cut below 0 percent in January while unemployment rate stood at 3.1 percent during November 2016.
Euro Area (EA19):
2.18. The Eurozone or the Euro area is a monetary union of 19 of the 28 European Union (EU) member states which have adopted the euro as their common currency. The Eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain.
2.19. The real GDP growth in the Euro area remained stagnant at 1.6 percent in the Q3 of 2016 (Y-o-Y). In Q-o-Q terms, the Euro Area economy growth rate also remained stable at 0.3 percent (Q-o-Q) in Q3 of 2016 as compared to the previous quarter. Among the largest economies in the Euro area, the GDP growth of Germany and Spain slowed down to 0.2 percent and 0.7 percent as compared to 0.4 percent and 0.8 percent respectively in Q2. In contrast, economic growth accelerated in France and Italy to 0.2 percent and 0.3 percent as compared to -0.1 percent and 0.0 percent respectively.
2.20. According to latest World Bank estimates, Euro Area growth slowed from 2 percent in 2015 to 1.6 percent in 2016, as both domestic demand and exports lost momentum. IMF has projected GDP growth rate of 1.7 percent and 1.6 percent for 2016 and 2017 respectively.
2.21. The Markit Eurozone Manufacturing PMI rose to a 34-month high of 54.9 in December, up from 53.7 in November and unchanged from the earlier flash estimate while Markit Euro Area Services PMI decreased slightly to 53.1 in December from 54.1 in November.
2.22. Eurozone annual inflation increased to 1.1 percent year-on-year in December 2016 gaining 0.5 percent over the previous month. The highest annual rates were recorded in Estonia (2.4 percent), Belgium (2.2 percent), the Czech Republic and Latvia (both 2.1 percent) while the lowest annual rates were registered in Bulgaria (-0.5 percent) and Romania (-0.1 percent).
2.23. The seasonally-adjusted unemployment rate in the Eurozone remains stable at 9.6 percent in December of 2016 from a downwardly revised 9.8 percent in November. This is the lowest figure since June 2011. Among the Member States, the lowest unemployment rates were recorded in the Czech Republic (3.5 percent) and Germany (3.9 percent); while the highest unemployment rates were observed in Greece (23.0 percent in October 2016) and Spain (18.4 percent).
2.24. The European Central bank decided to keep the main interest rates unchanged and showed the willingness to ease the policy if needed. The refinancing rate, the marginal lending rate and the deposit facility rate were kept steady at 0 percent, 0.25 percent and - 0.40 percent respectively. Policymakers confirmed the monthly asset purchases will run at the current monthly pace of €80 billion until March, and from April, they are intended to continue at a monthly pace of €60 billion until the end of the year.
Observations: The Eurozone’s modest recovery continued in the third quarter, undisturbed by the Brexit vote. The Eurozone economy increased a seasonally-adjusted 0.3 percent in Q3 from the previous quarter, which matched Q2’s reading. Domestic demand likely remained in the driver’s seat as an improving labor market, low inflation and expansionary monetary policy support economic activity. Despite further monetary policy accommodation, headline inflation remains close to zero, and long-term inflation expectations are still below the European Central Bank’s policy target.
Brazil:2.25. The Brazilian GDP Annual Growth Rate contracted by 2.9 percent Y-o-Y
in the Q3 of 2016, following a downwardly 3.6 percent decrease in the previous period and better than market expectations of a 3.2 percent drop. It is the 10th straight quarter of contraction for the country, which is being dragged by week internal demand and a slowdown in exports.
2.26. Consumer prices in Brazil rose by 6.3 percent Y-o-Y in December 2016, down from a 7.0 percent in the previous month and below market consensus of a 6.34 percent. It was the lowest inflation rate since April 2014. The central bank of Brazil left the benchmark SELIC rate unchanged at 13.75 percent during December 2016. Policymakers said inflation has been lower expected and within the 4.5 percent to 6.5 percent target for 2016. Unemployment Rate in Brazil rose to a record high of 11.9 percent in November 2016.
China:2.27. The Chinese economy expanded by 6.8 percent in the December quarter
of 2016, compared to a 6.7 percent growth figure in the previous three quarters, surpassing market expectations of a 6.7 percent predicted growth. This growth was supported by strong consumer spending, higher government expenditure and a robust bank lending. Although the growth remained lower compared to the previous year’s 6.9 percent, it was well within the government’s target range of 6.5 to 7 percent, consumption and investment growth subsided.
2.28. Consumer prices in China increased by 2.1 percent Y-o-Y during December 2016, compared to a 2.3 percent rise in November while market expected a 2.3 percent gain. For the whole year of 2016, inflation was at 2 percent, below government target at of around 3 percent. On a monthly basis, consumer prices rose 0.2 percent, following a 0.1 percent rise in a month earlier. It was the second straight month of increase but below market consensus of a 0.3 percent gain. The People's Bank of China has its benchmark one-year lending rate remains at 4.35 percent since its last cut in October, 2015. Unemployment rate in China fell slightly to 4.04 percent in the third quarter of 2016 from 4.05 percent in the June quarter.
Russia:2.29. Russian GDP contracted by 0.4 percent year-on-year in the Q3 2016,
following 0.6 percent fall in the previous period, and in line with preliminary estimates. It was the smallest contraction in seven quarters, driven by lower drop in construction, public administration, transport and accelerated growth for mining and quarrying and agriculture. Russia remained stuck in recession, led by low oil prices, and sanctions over Ukraine that closed access to capital markets.
2.30. Consumer prices in Russia increased by 5.4 percent Y-o-Y in December 2016, following a 5.8 percent growth in the previous month and in line with preliminary estimates. It was the lowest inflation rate since June 2012. The Central Bank of Russia kept its benchmark one-week repo rate unchanged at 10 percent in December also, as widely expected, but signaled the possibility of further cuts in the first half of 2017. The unemployment rate in Russia declined to 5.3 percent in December of 2016 from 5.4 percent in November and below market expectations of 5.4 percent.
3. Review of Global Financial Markets: 3.1. International equities posted positive returns in December 2016, largely
driven by reinvigorated investor sentiments following results US presidential elections, fairly rising growth trends across Eurozone and fading pessimism regarding consequences of Brexit. A well anticipated interest hike by US Federal Reserve also contributed to strengthening of markets. On the other hand, emerging markets stocks recorded marginal increase as investors’ risk appetite returned, contrasting the selloff behaviour seen in November. However, investor sentiments were affected following Federal Reserve’s first interest rate hike of 2016. The strengthening of dollar and increase in appeal of US assets overshadowed prospects of emerging markets. The MSCI Emerging Markets index underperformed as it recorded a negative return on account of uncertainty over US trade and foreign policy along with a tighter dollar liquidity.
3.2. US equities recorded considerable gains and touched record highs during December, but slightly retreated as the year ended. Anticipating favourable changes in fiscal and trade policies under the incoming administration, the investor’ confidence remained quite high. European equities advanced on backdrop of the central bank’s announcement of scaling back Purchase of bonds. Other contributing factors being supportive economic measures indicating stronger employment, robust retail growth and increasing inflation. UK equities performed well owing to increased global inflation expectations and waning of fears about the negative implications of Brexit. Japanese stocks recorded positive gains even as a weak Yen continued to affect dollar based investors in the country. Indian stocks marginally declined as the country witnessed a consumption shock following the government’s surprising move in
November to demonetise high value notes. Brazilian stocks rose even though the country is mired in corruption scandals and has yet to come out of recession. Russian stocks rallied on account of a stronger currency, easing inflation and rising oil prices. South African stocks advanced even as the economy was reeling under the combined effect of low commodity prices, severe drought and feeble export demand.
3.3. MSCI World Index, which is a leading indicator for tracking the overall performance of stock markets in developed markets witnessed an increase of 2.3 percent. Further, the MSCI Emerging Market Index registered a slight decrease of -0.1 percent during December 2016. (Chart 3).
Chart 3: Movement in MSCI World and Emerging Market Index
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Bond Markets:
3.4. The Merrill Lynch Eurozone Government bond index >5 years posted a gain of 0.98 percent in December. The total return for 2016 was a +4.9 percent which reflects the reduction in long term interest rates that occurred over the course of the year. Markets were stable into year-end after the events of the Italian senate reform referendum as well as changes in monetary policy from the ECB & Federal Reserve.
3.5. The ECB extended the asset purchase program by 9 months but at a lower rate of €60bn a month. Alongside the changes to European monetary policy, the Federal Reserve raised its key benchmark interest rate by 25bps, 12 months after the initial rise. Markets are expecting a further 2-3 rate hikes in the US during 2017. The 10-year Treasury note’s yield finished the month at 2.44 percent at the end of December, as compared to 2.38 percent than the last month.
3.6. U.K. 10-year gilt yields descended to 1.24 percent from 1.42 percent in the previous month. The 10 year German bond yields declined from 0.28 percent to 0.21 percent at the end of December.
3.7. The real focus for global markets will be whether Trump can deliver on the fiscal stimulus and whether growth and inflation can accelerate from here. The 10 year government bond yield of China has increased to 3.06 percent while the yield of India rose to 6.52 percent. The Russian bond yield declined significantly to 8.24 percent in December 2016.
Chart4: Movement in 10 year bond yield of major countries
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Source: Bloomberg
Currency Market:3.8. During December 2016 (by comparing the closing prices of the last
trading days of the November and December), the U.S. dollar (USD) slightly gained against 4 out of 7 currencies evaluated against it (i.e. INR, YEN, GBP, EURO, Real, Yuan and Ruble). The currencies which gained
against dollar are Ruble, Real and INR, which gained 4.48, 4.08 and 0.85 percent respectively against it. Out of the currencies which lost in a single month, Yen lost most; 2.20 percent followed by GBP; 1.30 percent, Euro 0.64 percent and Yuan 0.63 percent.
3.9. US Dollar Index, an index representing the strength of dollar against basket of other major currencies, observed to be 102.2 on close of December 2016, it gained 0.70 percent against the basket of major currencies during December 2016, and was 2.61 percent above of the close of last trading day the 2015.
3.10. In December 2016; there were four currencies which depreciated, as mentioned previously; the currencies which appreciated were Ruble, Real and INR against their respective close of the November 2016. Comparing the last year’s closing prices of currencies with the closing price of December, GBP lost 19.45, Yuan; 6.87, Euro; 3.09 and INR; 2.76 percent respectively. Real and Ruble were the highest appreciating currencies with growth of 17.83 and 15.58 percent respectively followed by Yen 2.98 percent.
3.11. Since the beginning of January 2013 till December 2016 (closing prices of the last trading days of December 2012 and December 2016 were compared), Brazilian Real and Russian Ruble have depreciated by 58.76 and 100.34 percent respectively against USD. Both of these currencies appreciated in the December 2016 significantly and thus could decrease the gap from their November 2016 depreciation reading of 65.51 percent and 109.73 percent, respectively against Dollar. During the same period, INR & Yen depreciated by 24.07 percent and 34.66 percent, respectively against USD. Euro depreciated by 24.93 percent against USD while GBP depreciated by 30.74 percent against USD. Chinese Yuan has depreciated least among the group, by 11.21 percent against USD compared to beginning of the January 2013.
Chart 5: Movement of major currencies against US Dollar ($)
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INR YEN GBP EURO Real Yuan RubleSource: Bloomberg
Trend in Market Indices:3.12. Major stock indices all over the world exhibited a fairly positive trend
during December 2016. Amongst the developed markets Germany’s Dax witnessed an increase of 7.9 percent, followed by CAC 40 of France, increasing by 6.2 percent and UK’s FTSE rising by 5.3 percent during December 2016. On the contrary, a fall was registered by Hang Seng of Hong Kong, declining by 3.5 percent followed by Singapore’s STI retreating by 0.9 percent during the period under review
3.13. As regards the emerging market indices, Pakistan’s Karachi 30 witnessed a healthy increase of 13.3 percent, closely followed by Russian Traded of Russia which increased by 12.8 percent and Egypt’s Hermes rising by 7.2 percent during the period under consideration. On the contrary, a fall was registered by Shanghai SE Composite IX of China declining by -4.5 percent followed by Brazil’s Bovespa that declined by -2.7 percent and Stock Market Select of Chile which declined by -1.33 percent during the same period.
Chart 6: Trend in Major Developed Market IndicesJa
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Chart 7: Trend in Market Indices of BRICS Nations
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Market Capitalisation:3.14. Market capitalisation of major countries in the world, at the end of
December 2016, is given in table A6 and is illustrated in Chart 8. The market capitalisation of all the major countries increased significantly during December 2016 except Hong Kong and Singapore.
3.15. Among major developed markets, the market capitalisation of Germany, France, UK and USA increased significantly by 6.5 percent, 5.1 percent, 3.4 percent and 1.4 percent respectively during December 2016. The
market capitalisation of Hong Kong and Singapore decreased by 3.1 percent and 0.9 percent respectively at the end of December 2016.
3.16. As regards the emerging markets, the market capitalisation trend showed positive trend except for India and China. The market capitalisation of India decreased marginally by 0.7 percent to USD 1.5 trillion while market capitalisation of China is decreased by 4.5 percent USD 6.4 trillion. The market capitalisation of Russia increased significantly by 11 percent while South Africa’s market capitalisation increased by 4.9 percent. Market capitalisation of Colombia soared up by 7.7 percent. Brazil showed marginal growth in their market capitalisation and increased by 1.5 percent at the end of December.
Chart 8: Trend in Market Capitalisation of Major Exchanges (US$ Trillion)
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Derivatives Market: 3.17. Among the major stock exchanges covered in the review (Table A4 &
A5), during December 2016, the monthly notional turnover of index futures in CME Group was the highest at USD 5159 billion followed by EUREX (USD 2044 billion), Japan Exchange Group (USD 1176 billion) and ICE Futures US (USD 753 billion). In case of Index options, Korea Exchange recorded the monthly turnover of USD 2023 billion followed by CME Group (USD 1912 billion) and EUREX (USD 1136 billion). Chicago Board Options Exchange recorded highest number of contracts traded in Index option category, with 36.5 million contracts traded in December 2016, followed by EUREX (32.8 million contracts), Korea Exchange (19.1 million contracts) and CME Group (13.5 million contracts).
3.18. In case of Stock Options, BM&FBOVESPA recorded highest volume (43.2 million contracts) in terms of contracts traded on the major world exchanges followed by Nasdaq - US (39.8 million contracts), Chicago Board Options Exchange (29.3 million contracts), NYSE (26.5 million
contracts) and EUREX (14.7 million contracts). In case of Stock Futures, Moscow Exchange remains the number one exchange in terms of number of contracts traded with monthly volume of 18.5 million contracts, followed by Korea Exchange (13.1 million contracts), EUREX (6.1 million contracts) and Thailand Futures Exchange (2.9 million contracts).
4. Review of Indian Economy4.1. The Ministry of Statistics and Programme Implementation released
quarterly estimates of GDP for Q2 of 2016-17. As per the estimates, quarterly GVA (Gross Value Added) at basic price for Q2 of 2016-17 has shown a growth rate of 7.1 percent (Y-o-Y). Agriculture sector's GVA at basic price has been estimated at 3.3 percent in Q2 of 2016-17 as against 2.0 percent in Q2 of 2015-16. Quarterly GVA at basic prices for Q2 of 2016-17 from manufacturing sector grew by 7.1 percent as compared to growth of 9.2 percent in Q2 of 2015-16. For the financial, real estate and professional services sector, quarterly GVA at basic prices for Q2 2016-17 grew by 8.2 percent as compared to growth of 11.9 percent in Q2 2015-16.
4.2. GDP in Q2 of 2016-17 has shown a growth rate of 7.3 percent (Y-o-Y). The International Monetary Fund has marginally trimmed India's economic growth forecasts to 6.6 percent and 7.2 percent for 2016 and 2017 respectively.
4.3. The Nikkei India Manufacturing PMI (Purchasing Managers’ Index) stood at 49.6 in December compared to 52.3 in November, the latest reading which showed the indices going below the crucial threshold of 50.0, was indicative of a marginal contraction in the health of the sector. The Services Business Activity Index noted a contraction to 46.8 in December, from 46.7 in November, first time since June 2015 pointing to stronger contraction in output.
Exhibit 3: Quarterly Estimates of GVA (Y-o-Y) (at 2011-12 prices)
Items2014-
152015-
16 2015-16 2016-17(1st
RE) (PE) Q1 Q2 Q3 Q4 Q1 Q2
1. Agriculture & allied activities -0.2 1.2 2.6 2 -1 2.3 1.8 3.3
2. Industry Mining & Quarrying 10.8 7.4 8.5 5 7.1 8.6 -0.4 1.5
Manufacturing 5.5 9.3 7.3 9.2 11.5 9.3 9.1 7.1
Electricity, Gas, Water Supply & Other Utility Services
8 6.6 4 7.5 5.6 9.3 9.43.5
3. Services Construction 4.4 3.9 5.6 0.8 4.6 4.5 1.5 3.5
Trade, Hotel, Transport, Communication and services related to broadcasting
9.8 9.0 10.0 6.7 9.2 9.9 8.1 7.1
Financial, Real Estate & Professional Services 10.6 10.3 9.3 11.9 10.
5 9.1 9.4 8.2
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10.7 6.6 5.9 6.9 7.2 6.4 12.312.5
Gross Value Added at Basic Price 7.1 7.2 7.2 7.3 6.
9 7.4 7.3 7.1
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RE- Revised Estimates; PE- Provisional EstimatesSource: CSO
Index of Industrial Production4.4. India’s General Index of Industrial Production (IIP) grew by 5.7 percent in
November 2016, against 1.9 percent growth recorded in October 2016 (both over the corresponding period in the previous year), with manufacturing increased by 5.5 percent as compared to its 2.4 percent contraction in October. Electricity grew at 8.9 percent in November as compared to 1.1 percent in October. Mining grew by 3.9 percent in November, compared to a contraction of 1.1 percent in October. During April-November 2016-17, the IIP grew 0.4 percent, against 3.8 percent growth recorded in April-November 2015-16.
Inflation4.5. India's CPI inflation slowed further to 3.41 percent in December, as
compared to 3.63 percent in November 2016. Food prices (as measured by CFPI) showed a rise of 1.37 percent in December as compared to 2.03 percent in November, helping in keeping the retail inflation below the RBI target (5 percent by March 2017). Annual inflation as measured by wholesale price index (WPI) has increased slightly to 3.39 percent, from 3.15 percent in the previous month, driven mainly by decrease in primary articles. The Repo rate currently stands at 6.25 percent.
Chart 9: Inflation as measured by WPI and CPI (in percent)
April May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
-6
-4
-2
0
2
4
6
8
0.34 0.791.62
3.55 3.74 3.57 3.39 3.15 3.39
5.39 5.76 5.77 6.075.05
4.39 4.23.63 3.41
-2.68 -2.36-2.13
-4
-5.06 -4.59
-3.81
-1.99 -0.73 -0.9 -0.9 -0.85
4.87 5.01 5.4
3.69 3.74
4.41 5 5.41
5.61 5.69 5.18 4.83
WPI and CPI Inflation Comparisons
WPI Inflation in 2016-17 CPI Inflation in 2016-17WPI Inflation in 2015-16 CPI Inflation in 2015-16
Source: CSO, RBI, Office of Economic Advisor
Trade – Exports and Imports4.6. India’s exports continued to exhibit signs of revival in December too,
being valued at USD 23.88 billion, which was 5.72 percent higher (in dollar terms) than the December 2015 level of USD 22.59 billion. It was 19.34 percent above than the November 2016 level of USD 20.01 billion. Imports increased by nearly 3.73 percent from USD 33.02 billion in November to 34.25 billion in December, but only 0.46 percent higher than December 2015 levels of USD 34.10 billion, increasing the merchandise trade deficit to USD 76.59 billion in during April-December 2016-17. Taking merchandise and services together, overall trade deficit for April- December 2016-17 was estimated at USD 33.74 billion, which is 36.78 percent lower than the deficit of USD 53.37 billion during April-December 2015-16.
Foreign Exchange Reserves4.7. Since the end of March 2016, forex reserves have increased by about USD
120.6 million. The reserves were recorded at USD 360.30 billion as on December 30, 2016. (Exhibit 4)
Exhibit 4: Foreign Exchange Reserves (USD billion)Dec 30,
2016Nov 25,
2016Oct 28,
2016Sep 30,
2016Total Reserves 360.30 365.3 367.2 371.9Foreign Currency Assets 336.58 341.1 341.9 347.0
Gold 19.98 20.5 21.4 21.4SDRs 1.43 1.4 1.5 1.5Reserve Position in the IMF 2.30 2.3 2.3 2.4
Source: RBI
5. Annex Tables:Table A1: Trend in major International Indices
Country Index As onMarch*,2015
As on March*,2016
As on November,2016
As onDecember*, 2016
1 2 3 4 5 6Australia All Ordinaries 5861.92 5151.79 5502.381 5719.1
France CAC 40 5033.64 4385.06 4578.34 4862.31
Germany Dax 11966.17 9965.51 10640.3 11481.06
Hong Kong HSI Hang Seng 24900.89 20776.70 22789.77 22000.56
Japan NIKKEI Nikkei 225 19206.99 16758.67 18308.48 19114.37
Singapore STI Straits Times 3447.01 2840.90 2905.17 2880.76
UK FTSE 100 6773.04 6174.90 6783.79 7142.83
USA DOW
JONES
Dow Jones Industrial
Average17776.12 17685.09 19123.58 19762.6
USA NASDAQ
CompositeNasdaq Composite 4900.89 4869.85 5323.68 5383.12
India (BSE) Sensex 27957.49 25341.86 26652.81 26626.46
India (NSE) Nifty 50 8491.00 7738.40 8224.5 8185.8
Brazil Bovespa 51150.16 50055.27 61906.36 60227.29
Chile Stock Market Select 3916.92 3937.49 4207.24 4151.39
China Shanghai SE Composite IX 3747.90 3003.92 3250.035 3103.637
Colombia IGBC General 9998.85 9871.50 9572.26 10106.25
Egypt Hermes 828.83 687.28 1015.898 1088.982
Hungary Budapest Stock Exchange 19689.16 26451.02 30014.04 32003.05
Indonesia Jakatra Composite 5518.68 4845.37 5148.91 5296.711
MalaysiaFTSE Bursa Malaysia
KLCI1830.78 1717.58 1619.12 1641.73
Mexico Bolsa 43724.78 45881.08 45315.96 45642.9
Pakistan Karachi 30 19232.27 19167.47 22826.63 25851.71
Russia Russian Traded 1222.80 1203.27 1407.91 1587.52
South Africa FTSE/JSE Africa All Share 52181.95 52250.28 50209.43 50653.54
Taiwan Taiwan Taiex 9586.44 8744.83 9240.71 9253.5
Thailand Stock Exchange of Thai 1505.94 1407.70 1510.24 1542.94
Turkey ISE National 100 80846.03 83268.04 73995.2 78138.66
*Indices are as on last trading day of the month,Source: Bloomberg
Table A2: Volatility and P/E Ratio of Major International Indices
Country IndexVolatility (percent) P/E Ratio Nov-16 Dec-16 Nov-16 Dec-16
1 2 3 4 5 6Developed Markets Australia All Ordinaries 1.0 0.6 16.4 16.9France CAC 40 0.8 0.6 14.7 15.5Germany Dax 0.8 0.7 13.2 14.3Hong Kong HSI Hang Seng 1.0 0.8 12.7 12.1Japan NIKKEI Nikkei 225 2.1 0.7 NA NASingapore STI Straits Times 0.7 0.5 14.0 13.9UK FTSE 100 0.8 0.6 16.4 16.9USA DOW JONES Dow Jones Industrial Average 0.6 0.5 17.5 18.1USA NASDAQ Composite Nasdaq Composite 0.9 0.7 22.2 22.3
Emerging Markets India (BSE) S&P Sensex 1.0 0.8 19.1 19.3India (NSE) Nifty 50 1.2 0.8 19.7 19.8Argentina IndiceBolsa General 2.1 1.5 NA 21.4Brazil Bovespa 2.0 1.5 16.1 15.5Chile Stock Market Select 0.9 0.7 15.6 15.2China Shanghai SE Composite IX 0.6 0.8 15.4 14.9Colombia IGBC General 1.0 0.6 NA NAEgypt Hermes 2.0 1.3 13.9 15.1Hungary Budapest Stock Exchange 0.6 0.6 11.7 11.7Indonesia Jakatra Composite 1.3 0.9 17.0 17.5Malaysia FTSE Bursa Malaysia KLCI 0.5 0.3 16.3 16.4Mexico Bolsa 1.5 0.9 20.0 20.8Pakistan Karachi 30 1.0 0.7 10.0 11.7Russia Russian Traded 1.5 1.5 7.0 7.5South Korea Kospi Index 0.9 0.6 12.0 12.0South Africa FTSE/JSE Africa All Share 1.0 1.1 15.5 15.6Taiwan Taiwan Taiex 1.1 0.6 14.1 14.1Thailand Stock Exchange of Thai 0.7 0.5 15.7 16.0Turkey ISE National 100 1.1 0.9 8.8 9.3
NA.: Not AvailableSource: Bloomberg,
Table A3: Investment Flows – New capital Raised by Shares and Bonds in the Major Exchanges
Stock Exchange
Nov-16 Dec-16Bonds(USD
Million)
Equity(USD
Million)
Total(USD
Million)
Bonds(USD
Million)
Equity(USD
Million)
Total(USD
Million)Australian Securities Exchange NA 2,624 2,624 NA 4,232 4,232BME Spanish Exchanges NA 1,196 1,196 NA 1,629 1,629Bolsa de Comercio de Buenos Aires 2,821 0 2,821 1,281 7 1,288Borsa Istanbul 5,708 168 5,877 3,409 0 3,409Euronext NA 3,588 3,588 NA 7,762 7,762Hong Kong Exchanges and Clearing 12,586 5,160 17,745 8,835 7,902 16,737Irish Stock Exchange 796 40 836 531 6 537Japan Exchange Group Inc. 1,958 603 2,561 NA NA 0Johannesburg Stock Exchange 2,469 673 3,141 1,405 583 1,988Korea Exchange 36,767 2,991 39,759 24,828 312 25,140London SE Group NA NA 0 NA NA 0Moscow Exchange 12,831 498 13,329 30,106 252 30,359Nasdaq - US NA 341 341 NA 426 426Nasdaq Nordic Exchanges 8,581 0 8,581 1,634 0 1,634NYSE NA 13,495 13,495 NA 7,010 7,010Oslo Bors 6,001 286 6,287 4,823 643 5,466Shanghai Stock Exchange NA 6,756 6,756 NA NA 0Shenzhen Stock Exchange 3,126 10,700 13,827 6,985 16,293 23,278Singapore Exchange 5,945 202 6,147 37,176 224 37,400SIX Swiss Exchange 6,265 0 6,265 3,700 0 3,700Tel-Aviv Stock Exchange 2,051 4 2,056 2,284 262 2,546TMX Group 4 5,317 5,322 375 4,232 4,607Warsaw Stock Exchange NA 86 86 NA 19 19
NA: Not Available
Source: World Federation of Exchanges
Table A4: Monthly Turnover in Derivatives (Stock options and Stock futures) in major Stock Exchanges
Exchange
Dec-16Stock options Stock futures
Number ofcontracts traded
Notionalturnover
(USD Million)
Number ofcontracts traded
Notionalturnover
(USD Million)
Americas BM&FBOVESPA 4,31,67,826 36,087 0 0Bolsa de Comercio de Buenos Aires 17,32,892 0 0 0Chicago Board Options Exchange 2,92,85,916 NA NA NANasdaq - US 3,98,24,798 NA NA NANYSE 2,65,42,250 5,102 NA NA Asia - Pacific Australian Securities Exchange 73,83,481 13,376 13,23,513 1,271Hong Kong Exchanges and Clearing 59,41,206 13,642 15,170 53Japan Exchange Group 57,903 NA NA NAKorea Exchange 10,68,672 NA 1,30,84,440 8,778TAIFEX 15,153 40 8,71,784 4,351Thailand Futures Exchange NA NA 29,02,432 NA Europe - Africa - Middle East Athens Derivatives Exchange 658 1 19,57,318 153BME Spanish Exchanges 37,95,831 2,971 15,83,806 1,060Borsa Istanbul 2,74,684 41 9,50,911 100EUREX 1,47,44,005 61,085 60,50,094 22,045Euronext 48,36,862 13,232 33,943 97Johannesburg Stock Exchange 5,69,161 15 25,55,707 1,710Moscow Exchange 5,52,825 154 1,85,25,143 5,289Nasdaq Nordic Exchanges 19,69,442 2,898 2,15,713 187Oslo Bors 9,06,365 138 5,01,385 225Tehran Stock Exchange 2,88,020 1 0 0Tel-Aviv Stock Exchange 76,860 373 NA NA NA: Not AvailableSource: World Federation of Exchanges
Table A5: Monthly Turnover in Derivatives (Index options and Index futures) in major Stock Exchanges
Exchange
Dec-16Stock index options Stock index futures
Number of contracts
traded
Notionalturnover
(USD Million)
Number of contracts
traded
Notionalturnover
(USD Million)
Americas BM&FBOVESPA 15,77,636 14,274 1,80,55,152 91,250Chicago Board Options Exchange 3,65,21,815 NA NA NACME Group 1,35,42,955 19,11,910 4,59,97,298 51,58,620ICE Futures US 12,443 1,696 83,92,838 7,53,196MexDer 2,437 51 1,46,834 2,723Nasdaq - US 2,14,868 NA NA NA Asia - Pacific Australian Securities Exchange 9,13,834 38,685 15,86,531 1,58,308Hong Kong Exchanges and Clearing 25,29,761 2,09,491 57,20,261 4,78,179Japan Exchange Group 26,19,276 NA 2,49,37,998 11,75,800Korea Exchange 1,90,83,669 20,22,680 24,77,986 2,70,160Singapore Exchange 3,33,200 NA 1,11,04,894 NATAIFEX 1,17,12,718 1,71,137 41,88,128 1,69,908Thailand Futures Exchange 35,273 NA 20,84,095 NA Europe - Africa - Middle East Athens Derivatives Exchange 5,784 21 53,466 193BME Spanish Exchanges 3,91,842 3,827 6,70,565 51,728Borsa Istanbul 27,841 68 38,26,102 9,431EUREX 3,27,90,257 11,36,210 4,84,07,952 20,44,260Euronext 9,41,946 46,989 33,65,749 2,04,156Johannesburg Stock Exchange 7,21,742 532 30,98,217 61,091Moscow Exchange 36,32,427 7,891 1,72,27,804 37,048Nasdaq Nordic Exchanges 5,35,767 8,929 37,39,521 51,823Oslo Bors 79,951 36 2,42,501 109Tel-Aviv Stock Exchange 26,87,258 NA NA NAWarsaw Stock Exchange 34,886 161 5,74,167 5,294 NA: Not AvailableSource: World Federation of Exchanges
Table A6: Market Capitalisation of major Stock Exchanges (US$ Million)
Stock Exchange Oct-16 Nov-16 Dec-16
M-o-M change( percent)
1 2 3 4 5
Developed Markets Australia 11,51,390 11,48,448 11,67,845 1.7
France 19,09,353 18,53,720 19,48,718 5.1
Germany 18,38,403 17,55,357 18,69,123 6.5
Hong Kong 40,96,819 41,44,659 40,14,839 (3.1)
Japan 52,17,618 49,97,126 50,84,266 1.7
Singapore 4,77,434 4,68,285 4,63,889 (0.9)
UK 29,84,512 29,94,859 30,96,470 3.4
USA 2,37,99,593 2,48,44,563 2,52,04,455 1.4
Emerging Markets
India 17,07,126 15,74,672 15,64,174 (0.7)
Argentina 66,888 75,359 63,168 (16.2)
Brazil 7,88,726 7,00,408 7,10,650 1.5
Chile 2,22,166 2,13,718 2,07,719 (2.8)
China 65,76,145 67,91,571 64,86,903 (4.5)
Colombia 1,02,171 96,135 1,03,573 7.7
Egypt 50,001 33,621 35,071 4.3
Hungary 21,753 20,963 22,539 7.5
Indonesia 4,49,278 4,07,231 4,22,403 3.7
Malaysia 3,88,420 3,52,029 3,54,000 0.6
Mexico 3,52,460 3,08,558 3,09,403 0.3
Pakistan 81,696 87,224 96,512 10.6
Russia 5,15,373 5,33,320 5,91,945 11.0
South Korea 12,54,831 12,08,864 12,13,916 0.4
South Africa 4,27,999 4,01,946 4,21,651 4.9
Taiwan 9,87,497 9,67,779 9,51,330 (1.7)
Thailand 4,05,576 4,02,916 4,12,014 2.3
Turkey 1,86,116 1,59,646 1,66,339 4.2
M-o-M: Month on Month.Source: Bloomberg
Sources:
1. OECD database2. Bureau of Economic Analysis (US)3. Bureau of Labor Statistics (US)4. The Conference Board (US)5. The Federal Reserve System (US) 6. Institute for Supply Management (US)7. Office for National Statistics (UK)8. Bank of England (UK)9. The Cabinet Office (Japan)10. Statistics Bureau, Director-General for Policy Planning
(Statistical Standards) (Japan)11. Bank of Japan12. Eurostat (EA18 and EU27)13. European Central Bank (EA18)14. InstitutoBrasileiro de Geografia e Estatística (Brazilian
Institute of Geography and Statistics)15. Banco Central do Brasil (Central Bank of Brazil)16. Federal State Statistics Service (Russian Federation)17. The Central Bank of the Russian Federation18. The Central Statistical Office (India)19. Office of the Economic Adviser to the Government of India20. The Reserve Bank of India21. National Bureau of Statistics of China 22. Peoples Bank of China23. Markit Financial Information Services24. World Federation of Exchanges25. Bloomberg26. The Bombay Stock Exchange 27. The National Stock Exchange28. The Bank of Korea29. Bank Indonesia30. Central Bank of The Republic of Turkey31. IMF32. World Bank
HIGHLIGHTS OF DEVELOPMENTS IN INTERNATIONAL SECURITIES MARKET
1. Chinese Traders Charged With Trading on Hacked Nonpublic Information Stolen From Law Firms27th December, 2016: The Securities and ExchangeCommission (SEC) chargedthree Chinese traders withfraudulently trading on hacked nonpublic market-movinginformation stolen from two prominent New York-based law firms, racking up almost $3million in illegal profits. TheSEC also is seeking an assetfreeze that prevents the tradersfrom cashing in on their illicitgains. The enforcement actionmarks the first time the SEChas charged hacking into a lawfirm’s computer network.Source: https://www.sec.gov/news/pressrelease/2016-280.html
2. SEC Awards $3.5 Million to Whistleblower5h December, 2016: The Securities and ExchangeCommission today announcedthat a whistleblower has beenawarded approximately $3.5million for coming forward withinformation that led to an SECenforcement action. The SEC’s whistleblower program hasnow awarded approximately$135 million to 36
whistleblowers since issuing its first award in 2012. SECenforcement actions fromwhistleblower tips haveresulted in more than $874million in financial remedies. By law, the SEC protects theconfidentiality ofwhistleblowers and does notdisclose information that mightdirectly or indirectly reveal awhistleblower’s identity.Source: https://www.sec.gov/news/pressrelease/2016-255.html
3. IOSCO stresses importance of implementation and disclosurerelated to new accounting standards 15th December 2016:The Board of the InternationalOrganization of SecuritiesCommissions (IOSCO)published today a Statement onImplementation of NewAccounting Standards related to revenue, financialinstruments, and leases. The three new InternationalFinancial Reporting (IFRS)Standards, issued by the International AccountingStandards Board, are expectedto significantly affect the financial statements of many issuers globally, given the breadth of their applicability.
