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Sensex Ends Volatile Week on a High
Fri, 13 Apr Closing

After opening the day in green, share markets in India witnessed volatile trading activity throughout the day and ended the day on a positive note. Sectoral indices traded on a mixed note, with stocks in the metal sector and stocks in the pharma sector, leading the gains.

At the closing bell, the BSE Sensex stood higher by 92 points (up 0.3%) and the NSE Nifty closed up by 22 points (up 0.2%). The BSE Mid Cap index ended the day up 0.5%, while the BSE Small Cap index ended the day up by 0.3%.

The rupee was trading at Rs 64.95 against the US$ in the afternoon session. Oil prices were trading at US$ 67.42 at the time of writing.

Global financial markets this week closely followed the U.S.-China trade war ebb and flow. However, US and Asian shares witnessed positive activity after Chinese President Xi Jinping eased escalating tensions in the US-China trade war.

The Chinese president promised to open the country's economy further and lower import tariffs on products including cars, which is seen address the concerns of US President Donald Trump as the two countries edged towards an all-out trade war.

Xi also said China would raise the foreign ownership limit in the automobile sector as soon as possible and push previously announced measures to open the financial sector.

Without mentioning Trump's concern over the huge trade deficit, Xi said China does not seek trade surplus and have a genuine desire to increase imports and achieve greater balance of international payments under the current account.

In addition, US stocks remained propped up after President Donald Trump clarified his position on a possible missile attack in Syria, while bank shares rose ahead of earnings.

Asian stock markets finished mixed. As of the most recent closing prices, the Hang Seng was up by 0.1% and the Shanghai Composite was down by 0.7%. The Nikkei 225 was up by 0.6%. Meanwhile, European markets, were trading on a positive note. The FTSE 100 was up by 0.1%, The DAX, was up by 0.8% while the CAC 40 was up by 0.4%. Whereas, the US benchmark, Dow was trading up by 1.2%.

In the news from commodity markets. The commodity witnessed its biggest weekly advance in more than eight months on speculation that tensions in the Middle East may lead to supply disruptions, reinforcing a buy call on commodities by Goldman Sachs Group Inc.

Crude oil recorded new-highs of 2018 this week as the risk of conflict in Syria, as well as ongoing tensions between Saudi Arabia and Iranian-backed rebels in Yemen, raised concerns over supply security in the energy-rich region.

While OPEC said its output last month fell to the lowest in a year, with worldwide inventories set to decline significantly later this year, the International Energy Agency (IEA) sees a second wave of shale revolution in the US.

How this pans out remains to be seen. We will keep you updated on all the developments from this space.

Note that crude oil prices have been witnessing a rising trend of late.

However, this is not good news from India's perspective.

Back home inflation seems to be on a downward trajectory, however rising crude prices could be a threat.

As per the data released by the government, retail inflation cooled to a five-month low of 4.28% in March following a decline in food prices including vegetables. The inflation based on Consumer Price Index (CPI) was 4.44% in February.

The inflation remained above the Reserve Bank of India's (RBI) medium-term target, supporting views that monetary policy is likely to remain unchanged at the next review in early June.

The RBI, which has kept rates steady since a cut of 25 basis points in August last year, is widely expected to maintain rates at their current level in the next review due on 6 June.

Moving on to news from stocks in the banking sector. HDFC Bank share price is in focus today after the bank said it will raise Rs 500 billion through bonds in FY19 to fund business expansion.

The funds will be raised by issuing Perpetual Debt Instruments (part of Additional Tier I capital), Tier II Capital Bonds and Long-Term Bonds (Financing of infrastructure and affordable housing) up to a total of Rs 500 billion in next 12 months through private placement mode, and the decision will be taken in a board meeting on 21 April 2018.

With the current development, HDFC Bank is set to join the ever-growing list of Indian companies opting to raise funds via bond issues.

HDFC Bank share price ended the day up by 0.2%.

Increasing Bond Issues by Indian Companies

Indian companies raised a record US$ 46.5 in debt and equity in 2017, the highest amount in the last decade.

The stock markets reached dizzying heights in 2017 thanks to strong foreign inflows. But it is the bond market that has witnessed a strong revival. Foreign debt raised by Indian companies surged ten-folds to US$ 41 billion in 2017. This is the highest ever infusion of foreign funds in the domestic debt markets in the last 15 years. At US$ 23 billion, foreign investments in government securities and corporate paper took the cake. This was followed by dollar denominated bonds that attracted around US$ 16 billion of foreign investments whereas funds of US$ 2 billion were mopped up by masala bonds. Masala Bonds are rupee-denominated borrowings by Indian entities in the overseas markets.

Interesting to note that the Indian debt market was in the spotlight even before Moody's sovereign rating upgrade in November last year. The upgrade has further pushed down the borrowing costs for Indian companies resulting in narrowing down of the credit spreads. Recently, Power Finance Corporation raised US$ 400 billion of debt through 10-year dollar bonds priced at just 157.5 basis points above the US treasury. Factors such as economic stability, abundant global liquidity and diversification needs of investors have stoked demand for Indian bonds in the overseas markets.

Moving on to news from stocks in the automobile space. Ashok Leyland share price was in focus today as the company bagged a major contract.

The commercial vehicles major won another critical order from the Ministry of Defence (MOD), for 10x10 vehicles to carry Smerch Rockets.

The contract is for supplying Ashok Leyland's High Mobility 10x10 vehicles (HMV 10x10). This order will end a long search by the Indian Army, who have been looking for HMV 10x10s to carry the Smerch Rockets.

The MOD's initial order is worth Rs 1 billion.

Ashok Leyland, which is the MOD's largest mobility and logistics supplier won 12 of the 15 tenders we participated in last year, and the current order would pave way for further opportunities in providing mobility platforms for other missile carriers, missile launchers, modular bridges and other critical loads.

Ashok Leyland share price ended the day up by 3.1%

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