The World This Week – 23rd March 2020 to 27th March 2020

Indian Equity Market

·        Indian markets continued to close in red for the sixth consecutive week. BSE Sensex and Nifty 50 fell ~0.3% and ~1%, respectively, however theØ losses were trimmed by the stimulus measures announced by the Reserve bank of India in the form of repo rate cut repo rate by 75 basis points (bps) to 4.4% and economic stimulus measure announced by the Finance Minister Nirmala Sitharaman in the form of 1.7 lakh crore relief package for the poor and migrant workers in the country to fight the economic fallout from the coronavirus pandemic.  

·        Going forward, the growth in number of COVID-19 cases among other factors such as the movement of rupees, crude oil prices, foreignØ currency inflows and outflows will continue to determine the forward-looking market pattern.

·        We expect the trading range for Nifty between 7800 -9000 in the near term.

Indian Debt Market

·        Government bond prices ended higher last week. The yield of the 10 year benchmark 6.45% 2029 paper settled at 6.14% on March 27asØ against 6.26% on March 20.  

·        RBI’s Monetary Policy Committee decided  to cut the repo rate by 75 basis points (bps) to 4.4% ,reverse repo-rate by 90 bps to 4% and cashØ reserve ratio (CRR) by 100 bps to 3%, gave gilts a boost in the last week.  

·        The Central bank purchased dated securities for a total notified Rs 30,000 crore supporting the bond prices.

·        The Central bank also announced the auction of 77 day and 84 day cash management bills for a total notified Rs 80,000 crore

Domestic News

·        Finance Minister Nirmala Sitharaman announced a Rs 1.7 lakh crore relief package- PM Gareeb Kalyan, for the poor and migrant workers in theØ country to combat the challenges posed by the coronavirus(Covid-19) pandemic amid 21 days lockdown.  

·        RBI allowed lending institutions and banks a 3-month moratorium, and allowed them to defer interest on all loans and working capitalØ repayments.  

·        RBI reduced the cash reserve ratio (CRR) of all banks by 100 basis points to 3.0% of net demand and time liabilities (NDTL) with effect from theØ reporting fortnight beginning March 28, 2020,for a period of one year ending on March 26, 2021.  

·        RBI also decided to reduce the requirement of minimum daily CRR balance maintenance from 90% to 80% effective from the first day of theØ reporting fortnight beginning March 28, 2020,one-time dispensation available up to June 26, 2020.  

·        RBI allowed lending institutions and banks a 3-month moratorium, and allowed them to defer interest on all loans and working capital repayment

International News  

·        US equities surged in the last week mainly boosted by a $2 trillion rescue package to support the US economy that is affected by Covid-19Ø outbreak. Dow Jones, NASDAQ recorded a growth of ~17% and ~13% on WoW basis.  

·        US Fed announces the purchase of an unlimited amount of Treasuries and securities tied to residential and commercial real estate toØ  prevent a credit crunch. It also announced new lending programs worth $300 billion to support the financial markets.Ø  

·        Britain’s FTSE surged 12% as Bank of England announced a quantitative easing of 645 billion pounds to combat the economic impact ofØ

·        Coronavirus followed by the series of stimulus measures taken up by the central banks and governments across the world.  UK consumer prices advanced 1.7% in February, slower than the 1.8% gain in January; producer prices were 0.4% on the year to February 2020,Ø down from 1.0% in January 2020.  

·        Other European equities, too, advanced on optimism over the US stimulus package. France’s CAC 40 and Germany’s Dax rose about 12% each.

·        Asian equities ended in positive territory. Japan’s Nikkei index rallied 17% on tracking gains in US equities.

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Punjab investors prefer to invest in equity: Karvy wealth

Individual investors in Punjab have placed their trust in equity the most, Karvy Private Wealth said on Wednesday.

"Individual investors in Punjab have opted for a higher allocation to equity products in their mutual fund portfolio at 68.11 percent, as compared to the national average of 64 percent," the wealth management arm of Karvy Group said in a statement while quoting its India wealth report 2019.

Chandigarh, Ludhiana, Amritsar and Jalandhar have all recorded a higher equity share in total assets under management than the national average, the statement said.

"Keeping in mind the volatility in the markets, term deposits continue to remain a safe bet for investors. The Overall growth rate in deposits is close to the national growth rate. Amongst the cities in Punjab, Chandigarh recorded the highest year on year growth at 12.12 percent, followed by Amritsar at 11.39 percent," it further said.

Karvy Private Wealth CEO Abhijit Bhave said direct equity continues to hold the fort in terms of investment preference in India. This shows the belief of investors in the Indian equity markets notwithstanding the volatility it has been through.

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THE WORLD THIS WEEK 27th March – 3rd April 2020

Indian Equity Summary-

·         Global and domestic equity markets remained tepid on the back of rising concerns about the rapid spread of Covid-19. Indian benchmarkØ indices extended losses for the seventh consecutive week as the BSE Sensex and Nifty 50 fell 7.46% and 6.66% respectively .Investor sentiments were also dented by the downgrading of India's growth forecast by Fitch ratings for the current fiscal to a 30-year low of 2 per cent, from 5.1 per cent projected earlier. Sector indices like Oil & Gas, Healthcare and FMCG were the only gainers amongst all the other major sectoral indices. 

·         On the positive side a rise in coal, cement and electricity production, India's eight infrastructure industries expanded at an 11-month high inØ February, while the Met had forecasted that the southwest monsoon is likely to get a boost this year, as the El Nino, which sometimes disrupts the rainfall, is unlikely this year. We expect the trading range for Nifty between 7800 -9000 in the near term.

Indian Debt Market- 

·         Government bond prices ended weaker, Yield of the 10 year benchmark 6.45% 2029 paper settled at 6.31% on April 3 as against 6.14% onØ March27 

·         Bonds prices fell sharply on concerns about a heavy government borrowing amid a nationwide lockdown diminishing the trading activity inØ the domestic financial markets. 

·         Reserve Bank of India (RBI) announced the third targeted long-term repo operation (TLTRO) for Rs 25,000 crore to be conducted on April 7.Ø 

·         The Centre notified that it would borrow a total Rs 4,88,000 crore via issuance of dated securities over the April to September 2020.Ø 

·         We expect the 10 year benchmark yield to trade between 6.15-6.40% in near term with a downward bias.

Domestic News

·         The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell to 51.8 in March as against 54.5 in February.Ø 

·         India’s eight infrastructure sectors grew at an 11-month high of 5.5% on year in February compared with 1.4% in January.Ø 

·         The World Bank approved a $1 billion emergency financing for India to tackle the Covid-19 pandemic.Ø  SØ&P Global Ratings cut its forecast on India’s economic growth to 3.5% for fiscal 2021 from 5.2% earlier. 

·         India’s fiscal deficit for April 2019 to February 2020 touched 135.2% of the revised target of 3.8% of GDP for the fiscal.Ø 

·         Goods and Services Tax collections for March came in at Rs 97,597 crore, lower than Rs 1.05 lakh crore collected in February.Ø 

·         The Government of India recorded a shortfall in its direct tax collections of Rs 1.75 lakh crore as compared with the revised estimates and hasØ collected Rs 9.98 lakh crore as direct taxes during fiscal 2020. 

·         The Union government plans to borrow Rs 4.88 lakh crore, 62.6 percent of its total borrowing, during the first half of the current fiscal.

International News 

·         US Institute of Supply Management (ISM) manufacturing index dipped to 49.1 in March after edging down to 50.1 in February.Ø 

·         Jobless claims of around 6.65 million were filed in US in the week ended March 28, being more than double the claims filed in the prior weekØ i.e .3.31 million as per the US Labor Department, around 

·         UK IHS Markit manufacturing PMI fell to 47.8 in March, down from 51.7 in February .As a result of weak production activity, Britain’s FTSE fellØ by 0.6%. 

·         UK economic growth expanded 1.1% annually in fourth quarter of calendar 2019 compared with 1.3% growth in the third quarter.Ø 

·         UK GfK consumer confidence saw the sharpest plunge and fell to -7 in March as compared to -9 in February amid Coronavirus lockdown.

·         China’s official manufacturing PMI rose to 52 in March from 35.7 in February while non-manufacturing PMI jumped to 52.3 in March fromØ 29.6 in February. 

·         China Caixin manufacturing PMI rose to 50.1 in March from 40.3 in February.

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The World This Week - 3rd April 2020 to 9th April 2020

Indian Equity Summary- 

·       Domestic equity markets gained during a truncated trading week and closed in the green after 7 weekly losses in a row. Benchmark indices,Ø Sensex closed at Rs 31159, surging by 12.93% and Nifty closed up by 12.72% at 9111 on WoW basis. Sentiments were also lifted by positive FPI/FII inflows of RS 2462 Crore recorded in the week ending 9th April as compared to outflows of Rs 10,131 in the previous week. Sectorally, massive rally was witnessed in Auto sector while other top gaining sectors include banking, healthcare, metals and consumer durable . 

·         Further, global cues also impacted the market as the major oil producers agreed on their biggest-ever cut in oil production.

·         Going forward, the growth in number of COVID-19 cases among other factors such as the movement of rupees, crude oil prices, foreignØ currency inflows and outflows will continue to determine the forward-looking market pattern. We expect the trading range for Nifty between 7600 -9000 in the near term.

Indian Debt Market- 

·         Government bond prices ended lower. Yield of the 10 year benchmark 6.45% 2029 paper settled at 6.49% on April 9 as against 6.31% on April 9.

·         Concerns about the mounting fiscal deficit of India and also heavy borrowing plan of Government amid nationwide lockdown continues to pull the bond prices down. 

·         States raised a total notified Rs 37,500 crore via sale of dated securities in the state development bond auction.

·         The RBI conducted a 3-year targeted long term repo auction for a notified Rs 25,000 crore on the last trading day of the week, receiving bidsamounting to ~Rs 1.13 lakh crore. Further , RBI announced the auction of state development bonds for a total of Rs 13,128 crore on April 13. 

·         We expect the 10 year benchmark yield to trade between 6.25-6.50% in near term.

Domestic News

·         India Services PMI declined to 49.3 in March 2020 from February’s 85-month high of 57.5, and below market expectations of 52.5.

·         India’s Industrial Production Growth accelerated to 4.5% year-on-year in February 2020, from 2.1% in the previous month.

·         The Finance ministry has released about Rs 34,000 crore in two phases to states as compensation for their revenue loss in the goods and servicesØ tax (GST) regime in order to provide further relief to states amid the extended lockdown due to coronavirus outbreak.

·         The government has disbursed the first installment of Rs 15,841 crore to 7.92 crore farmers under the PM-KISAN scheme.

·         World Bank sees FY21 India growth at 1.5-2.8%; slowest since economic reforms three decades back while Asian Development Bank (ADB) expected India’ growth to slow down to 4% in the current fiscal owing to weak global demand.

·         India’s Fiscal deficit stood at 5.07% of GDP in February and is likely to increase in March.

·         Asian Development Bank has assured India $2.2 billion in its fight against the Covid-19 pandemic.

International News 

·         US Broader indices, Dow Jones and Nasdaq gained by~11% and `10% respectively on hopes of additional fiscal stimulus by the government toØ combat the rampant spreading of Covid-19 

·         US non-farm payrolls plunged by 701,000 jobs in March after jumping by an upwardly revised 275,000 jobs in February

·         US Institute of Supply Management (ISM) non-manufacturing index fell to 52.5 in March from 57.3 in February. 

·         UK services PMI posted 34.5 in March, down sharply from 53.2 in February, while the composite PMI was at 36.0 in March, down sharply fromØ 53.0 in February.

·         Japan’s core machinery orders, which is regarded as an indicator of near term capital spending, rose 2.3% in February on a M-o-M basis.

·         Japan Current Conditions Index of the Economy Watchers' Survey decreased to 14.2 in March from 27.4 in FebruaryØ 

·         Japan’s outlook index that signals future activity fell for the second straight month to 18.8 in March from 24.6 in the previous month.

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