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

Mutual Fund Snapshot – September 2020

 

·        The mutual fund industry witnessed net outflows of ~INR 14,553 crore in August 2020 as against net inflows of ~ INR 89,812 crore in July 2020.

·        In August 2020, net outflows of ~ INR 4028 crore compared to net outflows of ~ INR 3845 crore in the previous month were seen in the equity category.

·        In August 2020, AUMs of debt, equity and hybrid category accounted for 50.5 percent, 29.0 percent and 11.0 percent of the total AUMs, respectively, and 9.5 percent of the balance was contributed by solution-oriented and other schemes.

·        The AUM of the MF industry increased by 1.4 percent on a MoM basis, and was reported at INR 27.49 Lakh Crore for August 2020 as compared to INR 27.11 lakh Crore in July 2020.

·        Total AUM in Equity category witnessed a rise of 4.3 percent on a MoMv basis, grew to INR 7.98 lakh crore in August, compared to INR 7.65 lakh crore in the previous month on the back of stellar stock market returns.  

·        Within equities, inflows were recorded in categories viz. ELSS, Focusedv Funds & Thematic Funds, of ~INR 29 crore, ~INR 5 crore and ~INR 370 crore, rest all equity categories witnessed net outflows where large cap funds were the worst hit by net outflow of ~INR 1553 crore.  

·        Net outflows of INR 8,943 crore were witnessed in Income/Debtv Oriented Schemes for the month of August, relative to net inflows of INR 86,635 crore in the previous month.  

·        Liquid funds saw outflows of INR 15, 814 crore as compared to inflows ofv INR 14,055 crore in the previous month, may be owing to withdrawal by investors with low-risk appetite.  

·        Corporate bond Funds saw inflows of INR 1,955 crore in August 2020 asv the traction of investors increase towards quality debt funds with AAA rated portfolios, which is however much lower than inflows of ~INR 11,910 crore in Corporate Bond Funds in the previous month.  

·        SIP inflows in August stood at INR 7,792 crore as against INR 7,831 crorev recorded in July 2020.

 

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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 – 14th August 2020 to 21st August 2020

Indian Equity Summary -  

·        The domestic equities outperformed global peers, as the broader (small cap) markets outperformed the benchmark indices for the secondØ week in a row. The Sensex / Nifty benchmark index grew by ~1.5 percent/1.7 percent(wow) whereas the BSE small grew by ~5.5(wow) percent in green on the back of broad based buying, though volatility continued to decrease. Positive global signals in the form of stimulus measures announced by China's central bank and excitement about the GOIs additional spending plans boosted sentiment among investors. A rally in power, realty, metal and consumer durables counters buoyed the market.  

·        Going forward, global factors like development on the US -China relationship front , and domestic factors like the monsoon trajectory andØ 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 -  

·        Government bond prices fell sharply as the yield of the 10-year benchmark 5.79% 2030 paper settled at 6.14% on August 21 compared withØ 5.97% on August 14.  

·        The yield of the new 10-year 5.77% 2030 paper settled at 6.09% on August 21 compared with 5.95% on August 14Ø  

·        Expectations of interest rate cuts from the RBI in the near future faded , as the MPC's minutes revealed concerns about retail inflation, which inØ recent months remained persistently high.

·        We expect the 10 year benchmark yield to trade between 5.90-6.20% in near term.Ø

 

Domestic News -

·        The World Bank said it is likely to project a steeper contraction of India's economy than its previous forecast of 3.2% for the current financial yearØ due to the increasing number of Covid-19 cases and the resultant regional lockdowns .  

·        India’s trade deficit stood at $4.83 billion in July, compared with $0.8 billion surplus in June and a shortfall of $13.43 billion in July 2019. In July,Ø exports stood at $23.64 billion, while imports reached $28.47 billion.  

·        Prime Minister (PM) Narendra Modi said that Rs 100 lakh crore will be spent on the National Infrastructure Pipeline project and also launchedØ the National Digital Health Mission, under which every Indian will get a health ID

International News -

·        US initial jobless claims climbed to 1.106 million, an increase of 135,000 from the previous week's revised level of 971,000Ø  

·        The euro area private sector composite output index fell unexpectedly to 51.6 in August, while the score was expected to remainØ unchanged at 54.9  UK retail sales rose more-than-expected in July driven by non-food store turnover.

·        Retail sales grew 3.6 percent month-on-month inØ July, but slower than the sharp 13.9 percent rise in June and 12.2 percent increase in May. Economists had forecast sales to rise 2 percent.

 

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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 August 2020 to 14th August 2020

Indian Equity Summary- 

·        The domestic equity market benchmark indices ended mildly in red on the back of weak global cues. The small cap and the midcap indices bucked the trend and managed to close in green ~1.5% thus exhibiting an overall strength of the market and broad based buying. The uncertainty surrounding the additional stimulus package and the caution ahead of the weekend meeting between the US and China added to the cautious market sentiment. Upbeat economic data from the US and China, and positive reports from Russia on registering Covid-19 vaccine will act as tailwinds for the markets going forward. 

·        Going forward, global factors like development on the US -China relationship front , 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- 

·        Government bond prices fell as the yield of the 10-year benchmark 5.79% 2030 paper settled at 5.97% on August 14 compared with 5.89% on August 7 , while the yield of the 10-year 5.77% 2030 paper settled at 5.95% on August 14 compared with 5.84% on August 7.

·        India’s industrial production (IIP) contracted 16.6% in June as against 33.9% contraction in May while India’s retail inflation spiked to 6.93% in July on account of higher food prices; retail inflation for June was also revised to 6.23%.

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

 

Domestic News

·        Prime Minister Narendra Modi launched a financing facility of Rs 1 lakh crore under the Agriculture Infrastructure Fund. He also unveiled the Transparent Taxation platform to benefit honest taxpayers. Further, he released Rs 17,000 crore directly into bank accounts of 85 million farmers under the PM Kisan scheme.

·        India’s Consumer price inflation rose unexpectedly to 6.93 percent in July from 6.23 percent in June. Economists had forecast the rate to ease to 6.15 percent. Foodpriceinflationacceleratedto9.62percentfrom8.72percentamonthago.

·        Prime Minister Narendra Modi’s assurance on mass production of COVID-19 vaccines and more infrastructure spending by the government boosted market sentiment.

 

International News 

·        China’s Industrial production grew 4.8 percent on a yearly basis in July, the same rate of growth as seen in June .

·        The US non-farm payrolls jumped by 1.8 million jobs in July after surging by 4.8 million jobs in the previous month; the unemployment rate dropped to 10.2% in July from 11.1% in June.

·        Producer prices in Japan were up 0.6 percent on month in July. That exceeded expectations for an increase of 0.3 percent following the 0.6 percent increase in June.

·        The UK gross domestic product (GDP) contracted by 20.4% sequentially in the second quarter, following a 2.2% drop in the first quarter.

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 July 2020 to 7th August 2020

 Indian Equity Summary-  

·        Reflection of the global volatility was visible in the domestic equity markets .The nifty small cap (+5%) indices outperformed the benchmarkØ indices, Nifty (+1.5%) on WoW basis. The overall market closed with strong market breadth, and lower volatility while the INR marginally weakened. Top gaining sectoral indices includes Bse Metals ,BSE Auto and BSE CD while BSE Bankex and BSE IT were laggards.

·        In the recently conducted MPC meeting RBI maintained status quo on the rates.Ø  

·        Going forward, global factors like development on the US -China relationship front , and domestic factors like the monsoon trajectory andØ 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-  

·        Government bond prices fell marginally as the yield of the 10-year benchmark 5.79% 2030 paper settled at 5.89% on August 7 as against 5.84%Ø on July 31 .  

·        The Reserve Bank of India (RBI) left the key interest rates unchanged and allowed banks to restructure certain loans as part of efforts to reviveØ the economy.  

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

Domestic News  

·        India Manufacturing Purchasing Managers’ Index (PMI) PMI stood at 46 in July, down from 47.2 in June.Ø

·        India posted a trade surplus of $790 million in June, its first in over 18 years, with imports plunging as the coronavirus pandemic depressedØ domestic demand for crude oil, gold and other industrial products, reflecting a slowing economy.  

·        Mutual funds that invest in equity showed a net outflow of 24.80 billion rupees ($331.02 million) in July compared with an inflow of 2.41 billionØ rupees in June, data published on Monday by the Association of Mutual Funds in India (AMFI) showed.

International News  

·        US initial jobless claims tumbled to 1.186 million, a decrease of 249,000 from the previous week's revised level of 1.435 million.Ø

·        Japan first-quarter GDP unchanged at 2.2% annualised contraction after 2nd revision.Ø  

·        Fitch Ratings has affirmed United States' Long-Term Foreign-Currency (LTFC) and Local-Currency (LC) Issuer Default Ratings (IDRs) at 'AAA' andØ revised the Outlooks to Negative from Stable.  

·        SOUTH Korea's manufacturing activity shrank at a much slower pace in July, signalling that a gradual recovery in demand is gaining momentumØ on easing lockdowns, although the resurgence in infections remained a risk.

 

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 – 24th July 2020 to 31st July 2020

Indian Equity Summary-  

·        SØ&P BSE Sensex and Nifty 50 fell by 1.4% and 1% respectively on a WoW basis, and the six-week positive trend in Indian equities came to a pause as negative feelings prevailed among market participants, on the back of rising Covid-19 cases as well as a decline in US GDP at an annualized rate of 32.9% in 2Q 2020. Healthcare and IT were the best-performing sectors, while oil & gas and banks were the worst-performing ones on a weekly basis.  

·        Going forward, global factors like development on the US -China relationship front , and domestic factors like the outcome of the RBI MPCØ meeting ( we expect a pause in Repo rate cut in the August RBI MPC meeting) and the monsoon trajectory ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 10700-11,100 in the near term.

Indian Debt Market-  

·        Government bond prices fell marginally as the yield of the 10-year benchmark 5.79% 2030 paper settled at 5.84% on July 31 as against 5.82% onØ July 24 .

·        India’s fiscal deficit during the first quarter of this fiscal widened to Rs 6.62 lakh crore or 83.2% of the budget estimates, mainly on account of poorØ tax collections due to the lockdown; fiscal deficit during the corresponding period of last year was 61.4% of the budget estimates.  

·        RBI introduced new 5.77% GS 2030 last week.Ø  

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

Domestic News  

·        Deposit growth in the banking system continued to grow at 10.1 percent on a year-on-year basis, even though banks have reduced their depositØ rates sharply in the absence of credit growth and liquidity induced by RBI due to Covid-19.  

·        India’s factory slump deepened in July as renewed lockdown measures to contain surging coronavirus cases weighed on demand and output,Ø raising the chances of a sharper economic contraction, a private business survey showed on Monday.  

·        Indian power plants used the most gas in at least 3-1/2 years in the June quarter, as operators along the west coast snapped up cheap liquefiedØ natural gas (LNG) imports that have become competitive against coal, government data showed.

International News  

·        US real gross domestic product plummeted at a record annual rate of 32.9% in the second quarter of 2020 following a 5% decline in the firstØ quarter  

·        U.S. manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July as orders increased despite a resurgence in new COVID-Ø 19 infections  

·        Tens of millions of people in and around the Philippine capital will go back to a strict lockdown from Tuesday, threatening incomes and hopesØ for reviving a once dynamic economy as authorities take drastic measures to halt surging virus cases.

 

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