The World This Week – 7th – 15th Nov 2020.

Indian Equity Summary-

·         Optimism had rubbed its positive impact on the domestic market over the initial performance of Pfizer's Covid vaccine and the outcome of the US presidential election. Nifty and Sensex ended on a WoW basis in green and increased by ~4 percent. The government announced a series of stimulus initiatives, including credit support for stressed sectors, employment creation incentives and multiple measures for construction and housing, as boosters for the Covid hit economy under Aatmanirbhar Bharat 3.0, which boosted the market sentiment.

·         Going forward, with the uncertainty due to US elections moving out of the way volatility will reduce substantially leading to money moving towards the riskier assets; domestic factors like ongoing Q2 corporate earnings season, and FII/DII inflows and USD/INR rates ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 12500-13000 in the near term and trade with a positive bias.

 

Indian Debt Market-

·         The Government bond prices ended flat on a WoW basis. The yield on the 10-year benchmark 5.77% 2030 paper settled at 5.88% on November 13 compared with 5.88% on November 06.

·         Reserve Bank of India announces the auction of three Government of India 91day, 182 day and 364 day Treasury Bills for an aggregate amount of ₹16,000 to be conducted on 19th November,2020.

·         CPI-based retail inflation came in at 77-month high of 7.6% YoY in Oct’20 as against 7.3% a month ago and 4.6% in Oct’19.

·         We expect the 10 year benchmark yield to trade between 5.80-6.05% in near term.

 

 

 

Domestic News

·         India's wholesale prices increased 1.48 percent from a year earlier in October 2020, after a 1.32 percent growth in the previous month. It was the third straight annual increase in prices and the strongest since February, as food prices remained elevated (6.37 percent vs 8.17 percent in September). Also, cost advanced faster for manufactured products (2.12 percent vs 1.61 percent). Meanwhile, those of fuel and power continued to plunge (-10.95 percent vs -9.54 percent).

·         The Cabinet approved Rs 1.45 trillion Production-linked Incentive (PLI) Scheme for ten more sectors to attract investments, boost domestic manufacturing, enable companies to become part of the global Supply Chain and generate employment opportunities.

·         India's economy is likely to have entered a technical recession in the first half of the financial year 2020-21 for the first time in its history. In the monthly bulletin, the Reserve Bank of India said the economy contracted 8.6 percent in the quarter ended September. With the second consecutive fall in gross domestic product, the economy entered a technical recession in the September quarter.

 

International News

·         China's bank lending decreased in October after rising in the previous two months. Banks provided CNY 689.8 billion in new loans in October versus CNY 1.89 billion in September.

·         US consumer price index was unchanged in October after rising by 0.2 percent in September. Economists had expected another 0.2 percent uptick.

·         The dollar index erased most of the earlier losses to trade nearly flat around 92.7 on Monday as investor digest prospects of a working coronavirus vaccine and rising infections in the US. Moderna said its experimental vaccine is more than 94% effective in preventing coronavirus, in another positive sign that a working coronavirus vaccine may be available soon. Moderna joins Pfizer/BioNTech which announced last week a vaccine which is 90% effective.

 

Disclaimer

The information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock Broking Limited) or other Karvy Group companies. The information contained herein is based upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. Karvy Private Wealth is only a distributor of securities and financial market products

 

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The World This Week – 31st Oct – 6th Nov 2020

Indian Equity Summary-

·         On the back of improving the country 's macro scenario and strengthening of the rupee, the domestic stock market rallied in line with returns from major global peers. With the midcap stock also having stellar rise; whopping gains over five percent for the Nifty and more than twelve percent for the Bank Nifty on a weekly basis and a broad-based rally, shows that the market feels that the uncertainty is behind us and in the foreseeable future we are likely to see some powerful rally.

·         Going forward, with the uncertainty due to US elections moving out of the way volatility will reduce substantially leading to money moving towards the riskier assets; domestic factors like ongoing Q2 corporate earnings season, supreme court moratorium decisions and FII/DII inflows and USD/INR rates ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 11900- 12,500 in the near term and trade with a positive bias.

 

Indian Debt Market-

·         The Government bond prices ended flat on a WoW basis. The yield on the 10-year benchmark 5.77% 2030 paper settled at 5.87% on November 06 compared with 5.88% on October 29.

·         The Indian rupee touched an over one-week high of 73.8 against the US dollar, before erasing some gains to trade 74.1 per USD and moving further away from a two-month low hit on Wednesday. Investors dumped the greenback amid expectations of Joe Biden's victory in the US presidential election.

·         Reserve Bank of India announces the auction of Government of India Treasury Bills for INR6000cr.

·         We expect the 10 year benchmark yield to trade between 5.80-6.05% in near term.

 

Domestic News

·         GST collections cross Rs 1 trillion in October for first time in 8 month mop up grows 10% y-o-y at Rs 1.05 trillion, almost equal to levels in February before a nationwide lockdown to contain the coronavirus pandemic.

·         Indian service sector activity ended the seven-month sequence of decline and registered growth in October, supported by improved market conditions amid easing COVID-19 restrictions. At 54.1 in October, up from 49.8 in September, the seasonally adjusted India Services Business Activity Index posted above the 50.0 no-change mark for the first time since February.

·         On the fourth anniversary of demonetisation, Prime Minister Narendra Modi on Sunday said it has helped reduce black money, increase tax compliance and formalisation, and given a boost to transparency.

 

International News

·         US trade deficit narrowed to $63.9 billion in September from a revised $67.0 billion in August. Economists had expected the deficit to narrow to $63.8 billion from the $67.1 billion originally reported for the previous month.

·         Eurozone retail sales declined more-than-expected in September after recovering in August. Retail sales volume fell 2 percent month-on-month in September, in contrast to a 4.2 percent increase in August. Sales were forecast to drop 1 percent.

·         Imports to China rose by 4.7 percent year-on-year to USD 178.74 billion in October 2020, after a 13.2 percent surge a month earlier and less than market estimates of a 9.5 percent increase. This was the second straight month of growth in inbound shipments, as domestic demand recovery from the COVID-19 shocks continued.

·         Moody’s Investors Service lifted on Friday 6 November 2020 Greece’s sovereign credit rating to Ba3 from B1 and confirmed a stable outlook.

 

Disclaimer

The information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock Broking Limited) or other Karvy Group companies. The information contained herein is based upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. Karvy Private Wealth is only a distributor of securities and financial market products.

 

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The World This Week – 23rd October – 30th October 2020.

Indian Equity Summary-

Ø In the past week, Indian Markets encountered highly volatile movements and settled in a negative territory with losses of more than 2 percent week on week, taking cues from global stock market which remained cautious as rising coronavirus virus in America and Europe, the delay in the second US stimulus package has made investors wary of the situation. As the Tug of War between bulls and bears kept the markets shaky on the basis of mixed signals from the global front, Nifty indices saw trade in a wider range from 11550-11950. We expect uncertainty to grip the market in the coming sessions, as well as in the aftermath of the U.S. election.

Ø Going forward, global factors like development on the US elections front, US /China relations , and domestic factors like ongoing Q2 corporate earnings season, supreme court moratorium decisions and FII/DII inflows and USD/INR rates ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 11600-12,200 in the near term. However, the index may resume its bearish bias if it breaches and sustains below 11600-11650 levels in future sessions.

Indian Debt Market

Ø The Government bond prices ended lower on a WoW basis. The yield on the 10-year benchmark 5.77% 2030 paper settled at 5.88% on October 29 compared with 5.84% on October 23.

Ø Reserve Bank of India announces the auction of Government of India Treasury Bills for INR16,000cr on Wednesday, November 04, 2020

Ø The Government of India has announced the Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020) (the ‘Scheme’) on October 23, 2020, which mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest for the period between March 1, 2020 to August 31, 2020 by respective lending institutions.

Ø We expect the 10 year benchmark yield to trade between 5.80-6.05% in near term.

 

Domestic News

Ø India’s eight infrastructure sectors drifted closer to expansionary territory in September as contraction narrowed to 0.8 per cent. The production of eight core sectors had contracted 5.1% in September 2019. The decline in output during the month under review was the lowest since March.

Ø India's fiscal deficit widened to INR 9.139 trillion in April-September 2020-21 from INR 6.515 trillion in the corresponding period of the previous fiscal year. That was equivalent to 114.8 percent of the government’s budget estimate for this financial year, much higher than 92.6 percent a year earlier

Ø The Indian rupee touched 74.5 against the US dollar, the weakest level since August 25th, as rising coronavirus cases across the globe, fresh lockdowns in Europe and uncertainty surrounding the US November election spooked investor appetite for risk assets.

 

International News

Ø France’s economy rebounds 18.2% in the third quarter: Statistics office. Nevertheless, economic output was “sharply lower than it had been before the crisis,” with GDP down by 4.3 percent on a year-on-year basis, the statisticians calculated in preliminary data.

Ø Coronavirus second wave douses hopes of German economic recovery. Analysts from financial information service Factset have predicted a rebound of 7.4 percent in July to September after a plunge of almost 10 percent during the second quarter

Ø British Prime Minister Boris Johnson announced a second national lockdown in England starting Thursday as coronavirus cases surge.

Ø US real Gross Domestic Product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020.In the second quarter, realGDP decreased 31.4 percent. Economists had expected GDPto soar by 31.0 percent

Ø European Central Bank left its key interest rates and massive stimulus unchanged citing a highly uncertain outlook amid a resurgence in the Covid19 pandemic, and hinted at a move in December .when the latest set of macroeconomic projections will be available.

 

Disclaimer

The information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock Broking Limited) or other Karvy Group companies. The information contained herein is based upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. Karvy Private Wealth is only a distributor of securities and financial market products 

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The World This Week 16th October 2020 to 23rd October 2020

 

Indian Equity Summary-

·         The week concluded on a positive note for the domestic equity market while the banking index once again outperformed the benchmark indexØ and concluded the week with the gains of 4%. On the back of strong FII fund inflows and optimistic hints from global markets, Nifty ended ~2 percent higher. The feelings of market participants were strengthened by reports that the government is open to more stimulus steps to support the corona virus-hit economy. The government is planning to boost demand, including spending on infrastructure and a potential package for the hospitality sector with more stimulus measures.  

·         Going forward, global factors like development on the US elections front, US /China relations , and domestic factors like start of the Q2Ø corporate earnings season moratorium decisions and FII/DII inflows and USD/INR rates ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 11700-12,200 in the near term. Markets may consolidate within a wider range, demonstrating clearly that a sideways movement is more probable than an outright reversal.

Indian Debt Market-  

·         The Government bond prices ended higher on a WoW basis. The yield on the 10-year benchmark 5.77% 2030 paper settled at 5.84% on OctoberØ 23 compared with 5.94% on October 16.  

·         CPI inflation for September 2020 rose sharply to a high of 7.34% YoY compared to 6.7% in August 2020, driven by a sharp rise in food inflationØ even while core inflation fell slightly .

·         The central bank had decided to conduct OMOs in SDLs as a "special case" during the current financial year with an aim to improve liquidity andØ facilitate efficient pricing.  

·         We expect the 10 year benchmark yield to trade between 5.70-6.0% in near term.Ø

Domestic News  

·         SEBI allowed exchanges dealing with agri-commodity derivatives to utilise the fund created for farmers and FPOs for reimbursementØ of mandi tax and charges incurred by them on storage and transportation of goods.  

·         The Centre has informed the Supreme Court that the difference in the compound interest and simple interest charged for six monthsØ of moratorium period on eight categories of loans worth up to ₹2 crore will be paid back to borrowers by November 5, 2020.  

·         Franklin Templeton Mutual Fund has said its six shut schemes have received Rs 8,302 crore from maturities, pre-payments andØ coupon payments since closing down in April.  

·         India's power consumption grew 11.45 per cent to 55.37 billion units (BU) in the first half of October this year, mainly driven byØ buoyancy in industrial and commercial activities. his year, mainly driven by buoyancy in industrial and commercial activities. Power consumption in the country was recorded at 49.67 BU during October 1-15 last year

International News  

·         U.S. Weekly Jobless Claims Drop To 787,000, Coming In Well Below Estimates. The Labor Department said initial jobless claims fellØ to 787,000, a decrease of 55,000 from the previous week's revised level of 842,000.  

·         The dollar index ended lower around 92.8 on Friday as investors digest the latest presidential debate and stimulus talks. Joe BidenØ and Donald Trump had the last debate before the presidential election on Thursday and the Democrat continues to lead the polls.  

·         SØ&P Global Ratings changed on Friday 23 October 2020 Italy’s sovereign credit rating outlook to stable from negative and affirmed the debt grade at BBB.  

·         The IHS Markit US Composite PMI increased to 55.5 in October 2020 from 54.3 in the previous month, a flash estimate showed. TheØ reading pointed to the fourth successive expansion in private sector activity and the sharpest since February last year.

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Disclaimer

The information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock Broking Limited) or other Karvy Group companies. The information contained herein is based upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. Karvy Private Wealth is only a distributor of securities and financial market products.

The World This Week 1st October 2020 to 9th October 2020

 

Indian Equity Summary-  

·         A spectacular comeback by the bulls for the second consecutive week as the benchmark Indices Nifty closed in green, +4.6 % on the back ofØ rally in the IT and the BFSI stocks. Expectations of another fiscal stimulus by the GOI ahead of the festive season , flush in global liquidity and with RBI continuing with its pause stance on the interest rate with the accommodative approach lifted the market sentiment.  

·         Going forward, global factors like development on the US elections front, decision on US stimulus package, while domestic factors like start ofØ the Q2 corporate earnings season and CPI/IIP data ,moratorium decisions and FII/DII inflows , inflation trajectory and USD/INR rates ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 11750-12,200 in the near term. Markets may consolidate within a wider range, demonstrating clearly that a sideways movement is more probable than an outright reversal.

Indian Debt Market-                                                                                  

·         Government bond prices ended higher. The yield on the 10-year benchmark 5.77% 2030 paper settled at 5.94% on October 9 compared withØ 6.00% on October 1.  

·         On expected lines, the Reserve Bank of India (RBI) on October 9, maintained a status quo on key lending rates and kept its policy stanceØ 'accommodative’. The Monetary Policy Committee (MPC) of the RBI took a unanimous decision to keep the repo rate unchanged at 4 percent and reverse the repo rate at 3.35 percent. The RBI said inflation will remain elevated in the September print, but ease gradually towards the target over Q3 and Q4.  

·         We expect the 10 year benchmark yield to trade between 5.80-6.00% in near term.Ø

Domestic News  

·         The Reserve Bank of India decided to keep the benchmark interest rate unchanged at 4 percent but maintained an accommodative stance,Ø implying more rate cuts in the future if the need arises to support the economy hit by the COVID-19 crisis. The RBI projected gross domestic product (GDP) contracting by 9.5 per cent in the current financial year amid disruptions caused by coronavirus pandemic which may turn positive in the last quarter (January to March).  

·         Indian government names Shashanka Bhide, Ashima Goyal, Jayanth Varma as new MPC members.Ø

·         India's rupee touched a five-week high of 72.98 per USD, after the Reserve Bank of India left key interest rates unchanged and maintained anØ accommodative monetary policy stance to support the economy hit by the coronavirus crisis.  

·         The Composite PMI Output Index, which measures combined services and manufacturing output, rose from 46.0 in August to 54.6 in SeptemberØ

International News  

·         US services PMI rose inched up 57.8 in September from 56.9 in August, with a reading above 50 indicating growth in the serviceØ sector. Economists had expected the index to edge down to 56.3.

·         Britain's gross domestic product grew by 8.0 percent in the three months to August 2020, recovering from five consecutive periodsØ of contraction but missing market expectations of an 8.2 percent expansion. The services sector grew by 7.1 percent, production by 9.3 percent and construction by 18.5 percent, as lockdown measures continued to ease.  

·         Gold settled 1.9% higher at an over two-week high of $1,929 per ounce on Friday, and posting a second weekly gain of 1.6% helpedØ by a weaker dollar amid renewed optimism over a new US corona virus relief package.  

·         China's service sector registered a strong growth in business activity in September, signaling a further recovery from the coronavirusØ pandemic, survey data from IHS Markit.

 

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Disclaimer

The information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock Broking Limited) or other Karvy Group companies. The information contained herein is based upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. Karvy Private Wealth is only a distributor of securities and financial market products

MUTUAL FUND SNAPSHOT - OCTOBER 2020

 

·         The mutual fund industry witnessed net outflows to the tune of ~52,091 cr in September 2020 as against net outflows of ~INR 14,553 cr in August 2020. The equity category witnessed net outflow of Rs ~1009 cr in September 2020 as against net outflow of Rs ~ INR 4028 cr in the previous month.

·         AUMs of debt, equity and hybrid schemes in August 2020 accounted for 49.9%, 29.5% and 11.0% respectively of the overall AUMs; the balance ~9.6% was contributed by solution oriented and other schemes.

·         AUM of the mutual fund industry declined by 2.3% MoM (INR63,407 Cr) to INR26.86 Lakh Cr in Sept 2020. On QoQ basis, the total AUM of Mutual Fund increased by 5.4% and 9.6% YoY.  

·         Domestic mutual funds were net equity sellers in last 4 months. Mutual Fundsv were net equity sellers to an amount of INR 904.69 Cr in Sept 2020 as against net sellers of INR8,418.73 Cr in Aug 2020.

·         Total AUM in Equity category stood at INR 7.92 lakh cr in September, comparedv to INR 7.98 lakh cr in the previous month.  

·         Within equities, inflows were recorded in categories viz. Largev & Midcap Small cap and focused funds of ~INR 621.5 cr, ~INR 132.9 cr and ~INR 823.5 cr, rest all equity categories witnessed net outflows where multi cap funds were the worst hit by net outflow of ~INR 1143.9 cr.  

·         Net outflows of INR 52,965 cr were witnessed in Income/Debt Orientedv Schemes for the month of September, relative to net outflows of INR 8,943 cr in the previous month.  

·         Liquid funds saw outflows of INR 65,951 cr as compared to outflows of INRv 15,814 cr in the previous month.  

·         Corporate bond Funds saw inflows of INR 716.71 cr in September 2020 as thev traction of investors increase towards quality debt funds with AAA rated portfolios, which is however much lower than inflows of ~INR 1,955 cr in Corporate Bond Funds in the previous month.  

·         SIP inflows in September stood at INR 7,788 cr as against INR 7,792 crv recorded in August 2020.

 

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The World This Week – 25th September 2020 to 2nd October 2020

 Indian Equity Summary -  

· The SØ&P BSE Sensex and Nifty 50 jumped 3.5 percent and 3.3 percent , respectively as the domestic stock market bounced back on the back of a broad-based rally. Robust domestic factory activity and GST collection figures and more government relaxation on Covid-19-related constraints boosted market sentiments, while optimistic global signals, including China's bullish economic data and expectations of fresh US stimulus steps, led to more market buying.  

· The central government, in an affidavit filed in the Supreme Court, has supported waiving compound interest or ‘interest on interest’ for smallØ ticket loans up to Rs 2 crore which may have some negative impact on the banking stocks going forward.  

· Going forward, global factors like development on the US -China relationship front , US elections ,IndiaØ & China border issues while domestic factors like FII/DII inflows , inflation trajectory and USD/INR rates ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 11900-11,200 in the near term. Markets may consolidate within a wider range, demonstrating clearly that a sideways movement is more probable than an outright reversal.

 Indian Debt Market -  

· Government bond prices ended higher. The yield on the 10-year benchmark 5.77% 2030 paper settled at 6.00% on October 1 compared withØ 6.04% on September 25.  

· The sentiment in the fixed income market improved following Governments indication of sticking to its original borrowing plan and would beØ sticking to the Rs 12 lakh crore borrowing figure for the current fiscal and RBI will sell Gsecs for a total notified Rs 4.34 lakh crore over the remaining fiscal.  We expect the 10 year benchmark yield to trade between 5.80-6.05% in near term with a downward basis

Domestic News  -

· India's trade deficit narrowed sharply to USD 2.9 billion in September 2020 from USD 10.9 billion in the same period of the previousØ year, a preliminary estimate showed. Exports jumped 5.3 percent driven by sales of engineering goods, petroleum, pharmaceuticals and readymade garments. Meanwhile, imports slumped 19.6 percent.

· India’s eight key infrastructure industries contracted for the sixth consecutive month at 8.5% on-year in August from 8% in July,Ø indicating that economic recovery has slowed on a sequential basis.

· India's rupee touched the 73 per USD mark for the first time since September 4th, before cutting some of the gains to trade aroundØ 73.4 against the greenback. Investors cheered an upbeat PMI survey that showed India's manufacturing sector grew in September at the fastest pace since January 2012 as the economy recovers from the pandemic shock.

International News  

· US Gross Domestic Product (GDP), the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter,Ø only slightly changed from the 31.7% drop estimated one month ago.  

· UK GDP declined 21.5% on-year in the second quarter of 2020, compared with a 2.1% decline in the first quarterØ  

· China’s official manufacturing Purchasing Managers Index (PMI) came in at 51.5 in September, up from 51.0 in August.Ø  Brent crude futures fell 4.5% to $39.1 a barrel on Friday, the lowest close since June 12th after President Trump tested positive forØ COVID-19, raising worries about the outcome of the US presidential election

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Disclaimer –

The information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock Broking Limited) or other Karvy Group companies. The information contained herein is based upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. Karvy Private Wealth is only a distributor of securities and financial market products.