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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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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