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.

 

The World This Week 18th September 2020 to 25th September 2020

 Indian Equity Summary:

·         The Indian market closed negative during last week. Equity market volatility was high as Nifty and Sensex dropped by 3.95 percent and 3.75Ø percent respectively on a WoW basis as it tracked poor global cues ,in the midst of economic recovery uncertainty due to increasing COVID-19 infections and expiry of the September derivatives contract. Talks are on for another round of fiscal measures by the GOI before the festive season which may give necessary impetuous to the consumption side and may prove positive for the equities market. On the other hand the $2.2 trillion coronavirus package that could be voted on next week in US can give a massive boost to the US economy and the world markets. 

·         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 11800-11,300 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 remained muted as the yield on the 10-year benchmark 5.77% 2030 paper settled at 6.01% on September 25 .Ø 

·         The results of the auctions held by RBI on 25th Sept , was fully subscribed for INR 30,000cr comprising of 5.09% Government Stock, 2022 (INRØ 3000cr), 5.77% Government Stock, 2030 (INR 18000cr), GOI Floating Rate Bond 2033 (INR 4000cr) and 6.80% Government Stock, 2060 (INR 5000cr). 

·         The Centre on September 24 permitted five states to go for additional borrowing of Rs 9,913 crore through Open Market Borrowings (OMBs) toØ meet their expenditure requirements amid falling revenues due to the COVID-19 crisis

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

Domestic News :

·         The Finance Ministry said banks have sanctioned loans of about Rs 1.77 lakh crore to 44.2 lakh business units under the Rs 3 lakh croreØ Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under the slowdown caused by the coronavirus pandemic. 

·         Credit for reform: Centre allows 5 states to borrow Rs 9,913 cr extra. Permission granted on meeting of one-nation-one-ration card reform.Ø 

·         Exchange-traded funds (ETFs) are gaining popularity among retail and high-net-worth individual (HNI) investors. The assets under managementØ (AUM) of ETFs grew annually by 87% and 64% in the past five and 10 years respectively, compared with 18.5% and 14.5% growth in the total AUM of mutual funds. The AUM of ETFs reached a record high of Rs 2.1 lakh crore in August 2020, equivalent to the combined AUM of the largecap and large and midcap categories of equity funds.

International News: 

·         US new home sales jumped by 4.8 percent to an annual rate of 1.011 million in August after skyrocketing by 14.7 percent to an upwardlyØ revised rate of 965,000 in July. 

·         US initial jobless claims inched up to 870,000, an increase of 4,000 from the previous week's revised level of 866,000. The modest increaseØ surprised economists, who had expected jobless claims to drop to 843,000 from the 860,000 originally reported for the previous week. 

·         Indonesia’s economy is set to contract for the first time since the Asian financial crisis more than two decades ago as the country struggles toØ get virus cases under control. Gross domestic product is forecast to decline 0.6% to 1.7% this year 

·         Japan’s all industry activity index rose 1.3 percent month-on-month in July, after a 6.8 percent decline in JuneØ

 

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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 7th September 2020 to 14th September 2020

 

Indian Equity Summary

·         Based on the stellar performance of Reliance shares and IT related stocks, the benchmark indices Nifty / Sensex closed positively ~1.2 per centØ on a WoW basis. The bank's nifty index closed in negative as the Supreme Court ruling on the indecision over interest was acting as an overhang while the RBI gave banks more space to continue extending the moratorium on loans as per the KV Kamath committee resolution framework which allows for the restructuring of corporate and personal loans. 

·         Going forward, global factors like development on the US -China relationship front , IndiaØ & China border issues and domestic factors like the monsoon trajectory and remaining earnings season ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 11000-11,600 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 fell sharply as the yield on the yield of the 10-year benchmark 5.77% 2030 paper settled at 6.04% on September 11Ø compared with 5.93% on September 4. 

·         In the special open market bond operation, the RBI bought gilts worth Rs 10,000 crore and sold treasury bills for the same amount . The firstØ auction was conducted on September 10, 2020. The second auction is scheduled for September 17, 2020. 

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

Domestic News 

·         SEBI published a circular governing the allocation of multi cap funds across companies of different market capitalization. As per the new circular,Ø in order to diversify the underlying investments of Multi Cap Funds across the large, mid and small cap companies, all multi cap funds have to compulsorily allocate minimum 25% of their funds in equity and equity related instruments of large caps, mid caps and small caps respectively. 

·         Industrial production output continues to shrink in double digits; contracts 10.4% in July.Ø 

·         Credit Ratings agency Crisil forecast a deeper contraction of 9% in this financial year, against 5% projected in May, and called for reforms to getØ the economy on a faster recovery path as well as fiscal support to vulnerable households and small businesses hit hard by the Covid-19 pandemic

International News 

·         The European Central Bank (ECB) has left interest rates at their current record-low level as it waits to see the trajectory of theØ Eurozone’s economic recovery. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively . 

·         China consumer price index rose 2.4% in August from a year earlier, compared with a 2.7% rise in July, while producer price indexØ fell 2% year-on-year in August compared with a 2.4% fall in July. 

·         US initial jobless claims came in at 884,000, unchanged from the previous week's revised level. Economists had expected joblessØ claims to drop to 846,000 from the 881,000 originally reported for the previous week.

 

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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 – 28th August 2020 to 4th September 2020

 Indian Equity Summary

·        A sharp increase in the Covid-19 cases, weak macroeconomic results, India / China border tension casted its shadow on the domestic equityØ market with the Sensex / Nifty benchmark closing by ~3% in red on a wow basis, as the two-week positive trend in Indian equities came to halt.  

·        On the macro front , the manufacturing sector is also pointing towards a turnaround as the IHS Markit India Manufacturing PurchasingØ Managers Index (PMI) rises to 52.0 in August from 46.0 in July, while other leading indicators, such as automotive sales, have seen a year-onyear growth, driven by increased demand due to unlocking and to some degree, due to the low base effect.  

·        Going forward, global factors like development on the US -China relationship front , IndiaØ & China border issues and domestic factors like the monsoon trajectory and remaining earnings season ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 10900-11,400 in the near term.

Indian Debt Market-  

·        Post the OMO announcement by the RBI , the Government bond prices rose the yield of the new 10-year benchmark 5.77% 2030 paper settled atØ 5.93% on September 4, compared with 6.14% on August 28.  

·        RBI conducted special OMO (Operation Twist) of Rs 171 billion on 3rd September out of Rs 200 billion notified amount.Ø  

·        The average 10 years SDL cut-off yield stood at 6.46% as compared to 6.65% during last weekØ  

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

Domestic News  

·        India surpassed Brazil to become the second worst-hit in the world by the pandemic with a new record daily rise of 90.8 thousand cases to 4.2Ø million, while Brazil recorded more 14.5 infections to 4.1 million.  

·        India's GDP contracted 23.9% in the April-June quarter of 2020, compared with an expansion of 3.1% in the previous quarter, and a 5.2% growthØ in the year-ago quarter  

·        India's service sector activity level was at the highest in four months in August. The IHS Markit services Purchasing Managers' Index rose to 41.8Ø in August from 34.2 in July. The reading was the highest since March, before the escalation of the global COVID-19 pandemic.

 

International News  

·        The Federal Reserve Chair Jerome Powell reiterated on Friday its pledge to maintain interest rates lower for years to supportØ recovery from the coronavirus crisis and recession.  

·        The yield on the US 10-year Treasury note climbed 9.9bps to 0.720% on Friday, the biggest daily gain since May 18th, after the jobsØ report for August showed the unemployment rate fell to 8.4 percent from 10.2 percent in July and below market consensus of 9.8 percent.  

·        The People's Bank of China (PBoC) continued its money injections and announced a net of CNY 100 billion seven-day reverse reposØ auction at the unchanged rate of 2.2 percent on September 4th 2020. The central bank said the move aims to maintain reasonable and sufficient liquidity. A total of CNY 100 billion of reverse repos matured on September 4th.

 

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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