morning market update - IDBI Bank

MORNING MARKET UPDATE 22 Mar 2018 11:00

CURRENCY UPDATE

Rates (Ask) USD/INR EUR/USD GBP/USD EUR/INR GBP/INR AUD/USD USD/JPY USD/CHF USD/CAD

65.1175 1.2353 1.4158 80.4430 92.1970 0.7751 105.87 0.9485 1.2898

USDINR Forwards (Ask) MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB

2.00 31.50 58.00 78.00 99.00 119.50 138.00 159.50 179.00 198.50 217.50 235.50

1M 2M 3M 6M 1Y

EURO -0.4094 -0.3957 -0.3893 -0.3319 -0.2527

RUPEE -The Indian rupee was higher at 65.09/65.10, against 65.2050/65.2150 to a dollar at its previous close, on broad greenback weakness after the Fed maintained its outlook of three rate hikes this year. MAJOR CURRENCIES- The dollar struggled against its peers on Thursday after the Federal Reserve indicated it was more likely to raise interest rate three times in 2018 instead of the four that some currency bulls had hoped for. The Fed raised rates by 25 basis points to 1.75 percent on Wednesday and signalled two more hikes for 2018, highlighting its growing confidence that tax cuts and government spending will boost the economy and inflation and spur more aggressive future tightening. The dollar index against a basket of six major currencies was 0.3 percent lower at 89.528, after dropping as much as 0.7 percent overnight.The dollar was down 0.3 percent at 105.700 yen after slipping about 0.5 percent the previous day. The euro added 0.2 percent to $1.2363 following a gain of 0.8 percent overnight. OTHERS - The Australian dollar slipped from early highs on Thursday as renewed worries of a global trade war gripped investors ahead of a U.S. tariff announcement on Chinese imports, while the New Zealand dollar held on to overnight gains. These concerns sent the Australian dollar down 0.3 percent to $0.7743 in afternoon trade from as high as $0.7793 earlier in the day. The Aussie and its New Zealand cousin rallied overnight after the U.S. Federal Reserve wrong-footed hawks by maintaining its future rate projection, or 'dot plot' at three hikes this year against bets of four increases.

Technical Strategy EUR/USD - EUR/USD is currently trading at 1.2358. The pair is currently trading above the support level of 1.2332. The RSI is suggesting upward movementc for the pair. For the day, the pair is expected to take support at 1.2332 and the resistance at 1.2375 level. USD/INR - USD/INR is currently trading at 65.11. The pair is currently trading below the resistance level of 65.3182. The RSI is suggesting downward movment for the pair. For the day the pair may take support at 64.8609 and take resistance at 65.3182 level.

LIBOR USD 1.8613 1.9753 2.2711 2.4342 2.6764

Market Commentary

JPY -0.0742 -0.0588 -0.0498 0.0130 0.1072

USD IRS (Ask) 1Y 2Y 5Y 10Y

2.4380 2.6300 2.8340 2.9130

MIFOR (Mid) / OIS (Mid) MIFOR 1Y 2Y 5Y 10Y

6.475 6.955 7.05

OIS 6.48 6.52 6.86 6.95 Source: Thomson Reuters, IDBI Bank Ltd.

Source: Thomson Reuters, IDBI Bank Ltd.

INTERNATIONAL MARKETS Equities, Commodities and Bonds

Equity Markets (% Change)

SENSEX Nifty Dow Jones Nasdaq FTSE CAC DAX Hang Seng Nikkei

33263.71 10190.05 24682.31 7345.28 7038.97 5239.74 12309.15 31238.07 21760.04

0.38 0.34 -0.18 -0.26 -0.32 -0.24 0.01 -0.56 -0.08

Crude/Bullion

STOCKS(US & Europe) U.S. stocks ended slightly lower on Wednesday, with major indexes giving up gains in choppy trade after the Federal Reserve raised U.S. interest rates, while a strong gain in the energy space helped limit losses.The Fed raised interest rates and forecast at least two more hikes for 2018, signaling growing confidence that U.S. tax cuts and government spending will boost the economy and inflation and lead to more aggressive future tightening. The Dow Jones Industrial Average fell 44.96 points, or 0.18 percent, to end at 24,682.31, the S&P 500 lost 5.01 points, or 0.18 percent, to 2,711.93 and the Nasdaq Composite dropped 19.02 points, or 0.26 percent, to 7,345.29 STOCKS(Asia) The U.S. dollar slipped on Thursday after the Federal Reserve did not signal a faster pace of rate hikes this year while worries about a coming announcement on tariffs from U.S. President Donald Trump dented Asian shares.MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent, erasing earlier gains of up to 0.7 pct, which were led by South Korea and Taiwan hitting six-week highs. Japan's Nikkei gained 0.4 percent.

(In $)

Crude Oil(WTI)

Gold Silver

65.28 1329.06 16.527

FII/MF Cash

(In cr `) 1,068.17 1,601.92 8,799.57 97,659.76 0

FII Cash Flow MF Cash Flow FII CY 2018 MF CY 2018

Money Rates CALL Rate O/N Mibor LAF (cr `) 91 - T Bill 1y G Sec 5y G Sec 10y G sec

6.05 6.05 12428.00 6.15 6.685 7.374 7.587

INBMK 4Y 7Y 10Y

GOLD Gold prices inched lower on Thursday as investors took profits after the yellow metal hit a two-week high in the previous session on a weaker dollar after the U.S. Federal Reserve disappointed investors expecting more hawkish comments on interest rate rises. The Fed raised interest rates on Wednesday and forecast at least two more hikes in 2018, contrary to three more increases most market watchers expected. Spot gold was down 0.1 percent to $1,329.91 per ounce at 0341 GMT. Prices climbed 1.6 percent in on Wednesday, its biggest one day percentage gain since May 17, 2017. U.S. gold futures for April delivery rose 0.67 percent to $1,330.20 per ounce. BONDS (U.S.) U.S. Treasury yields were slightly lower on Wednesday after the Federal Reserve raised interest rates and forecast two more hikes for 2018, fewer than the three that many market participants had expected.Two-year note yields , which are highly sensitive to interest rate policy, jumped as high as 2.366 percent, the highest since September 2008, before falling back to 2.308 percent. Benchmark 10-year note yields increased to 2.936 percent, the highest since March

Indian Money Market 7.333 7.658 7.582

US Treasury 3Y 5Y 7Y 10Y

OIL Oil prices were firm on Thursday, buoyed by a surprise decline in U.S. crude inventories as well as ongoing supply cuts led by OPEC, although a relentless rise in U.S. oil output threatens to undermine efforts to tighten the market.U.S. West Texas Intermediate (WTI) crude future were at $65.20 a barrel, up 3 cents from their previous settlement. Brent crude futures were at $69.44 per barrel, down 3 cents from their last close.

2.4597 2.6724 2.8047 2.8739

CALL- India's one-day cash rate was at 6.00%/6.05%, against 5.90%/5.95% at the previous close. BONDS- The benchmark 10-year bond was at 97.12 rupees, yielding 7.59%, against 97.18 rupees and a 7.58% yield at the previous close, following the Federal Reserve’s rate hike overnight. However, sentiment remained upbeat amid expectations that New Delhi may take measures to ease next FY supply burden. IRS- The one-year and the benchmark five-year swap rates were unchanged at 6.46% and 6.82%, respectively.

ECONOMIC INDICATORS Economic data/Indicators ACTUAL 3.00% 2.80% 5.60%

USD Existing Home Sales (MoM) (FEB) GBP Average Weekly Earnings (3M/YoY) (JAN) AUD Unemployment Rate (FEB)

EXPECTED

PREVIOUS

0.40% 2.60% 5.50%

-3.20% 2.70% 5.50%

Records sales of previously owned homes in the United States . This report provides a fairly accurate assessment of housing market conditions, and because of the sensitivity of the housing market to business cycle twists, it can be an important indicator of overall conditions at times when housing is particularly important to the economy. While used home sales are not counted in GDP, they do affect the United States economy. Sellers of used homes often use capital gains from property sales on consumption that stimulate the economy. Higher levels of consumer spending may also increase inflationary pressures, even as they help grow the economy. The existing home sales report is not as timely as other housing indicators like New Home Sales or Building Permits. By the time the Existing Home Sales are recorded, market conditions may have changed. The headline is the total value of properties sold

Upcoming Economic Data/Events ACTUAL GBP Bank of England Bank Rate (MAR 22) USD House Price Index (MoM) (JAN)

EXPECTED

PREVIOUS

0.50% 0.40%

0.50% 0.30%

Currency Futures & Options Instrument* Futures Options Futures Options Futures Options Futures Options Chandan Mishra

Underlying USDINR USDINR GBPINR GBPINR EURINR EURINR JPYINR JPYINR Total

Volume 3,97,716 6,37,270 22,309 190 20,210 1,520 9,308 136 10,88,659

Value (in cr) 2,593.11 4,154.91 204.23 1.75 162.82 12.22 57.13 0.82 7,186.99

OI 30,02,355 24,70,288 1,19,730 2,279 1,79,727 18,920 48,156 8,817 58,50,272

No. of trades 10,909 9,494 2,529 13 2,244 75 1,146 5 26,415

Volume 2,82,469 13,042 15,871 6,804

Value (in cr) 1,838.19 104.86 144.52 41.64

OI 19,92,797 86,702 50,366 31,269

No. of trades 7,601 1,471 1,631 817

[email protected]

91-22-66263525

Contract* USDINR 260318 EURINR 260318 GBPINR 260318 JPYINR 260318

LTP 65.1250 80.4525 92.16 61.52

Disclaimer : This report/ material has been prepared by IDBI Bank Limited (“IDBI Bank”) and is only meant for the recipient for use as intended and not for circulation. This

Disclaimer : This report/ material has been prepared by IDBI Bank Limited (“IDBI Bank”) and is only meant for the recipient for use as intended and not for circulation. This document and its contents are strictly confidential and may not be retransmitted, distributed, published, reproduced (in whole or in part) by any medium or in any form, or disclosed or made available by recipients to any other person. The information contained herein is collected from public domain or sources believed to be reliable and IDBI Bank has not independently verified it. While reasonable care has been taken to ensure that the information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of the research, it cannot be guaranteed, warranted or represented that it is accurate or complete and it should not be relied upon. This report/material has been prepared solely for informational purposes and does not constitute or form part of, and should not be construed as, an offer to sell, or as an invitation or inducement to make, or a solicitation of, any offer to purchase or subscribe for any securities investment products or other financial product or service, or an official confirmation of any transaction. No part of this report/material should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. It is clarified that the information contained herein is preliminary, limited in nature and subject to verification, completion and amendment. No representation or warranty, express or implied, is given or made by any person in relation to the fairness, accuracy, completeness or reliability of the information or any opinions contained herein and no reliance whatsoever should be placed on such information or opinions. This report/material, should not be regarded by recipients as a substitute for the exercise of their own judgment and assessment. Any opinions expressed in this material are subject to change without notice and neither IDBI Bank nor any other person is under any obligation to update or keep current the information contained herein. Neither IDBI Bank, nor its advisors nor any of their respective affiliates, agents, directors, partners and employees shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this report/material or its contents or otherwise arising in connection with this report/material. This report/material contains certain tables and other statistical information and analyses (the “Statistical Information”). Numerous assumptions were used in preparing the Statistical Information, which may or may not be reflected herein. As such, no assurance can be given as to the Statistical Information’s accuracy, appropriateness or completeness in any particular context; nor as to whether the Statistical Information and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Statistical Information should not be construed as either projections or predictions or as legal, tax, financial or accounting advice. This report/material may contain statements about future events and expectations that are forward-looking statements. Any statement in this report/material that is not a statement of historical fact is a forward-looking statement that is based on various assumptions and involves unknown risks and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The recipient may have to make its own independent investigation and appraisal of the the market condition and environment and no reliance may be placed upon the information herein for such purposes. Recipients should consult with their own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that they deem it necessary, and make their own investment, hedging and trading decisions based upon their own investigation and judgment and advice from such advisers as they deem necessary and not upon any view expressed in this material. Nothing in this document constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. By reviewing this material you acknowledge and agree to be bound by the foregoing.