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NEWS U CAN USE
August 5, 2022
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The Week that was…
1
st
August to 5
th
August
2
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Indian Economy
• The Monetary Policy Committee (MPC) in its bi-monthly monetary policy review raised key
policy repo rate by 50 bps to 5.40%. All the members of the MPC unanimously voted to
raise the key policy repo rate. With this rate hike, the repo rate is now back to pre-
pandemic levels and stand at the highest level since Aug 2019. Thus, MPC has so far raised
the repo rate by 140 bps in this fiscal. This is the third consecutive rate hike by the
Committee since it embarked on a policy tightening spree from May this year. It also
decided to remain focused on withdrawal of accommodation to ensure that retail inflation
remains within the target going forward, while supporting growth.
• The MPC is of the view that easing of global supply bottlenecks is leading to an
improvement in supply outlook. Also, with growth becoming broad based, domestic
economic activity is expected to remain resilient on the back of government’s capex push,
increase in capacity utilisation and large expansion in bank credit. Thus, the MPC decided
to raise the key policy repo rate by 50 bps to ensure that retail inflation comes down
below the Reserve Bank of India’s (RBI) upper tolerance band of 6% by Q4FY23.
• According to S&P Global, India’s Manufacturing Purchasing Managers’ Index rose to 56.4 in
Jul 2022 from 53.9 in May 2022. The manufacturing sector in India expanded at its highest
rate in eight months in Jul as a result of strong increases in output and new orders as
demand increased as a result of decreasing pricing pressure.
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4
Domestic Equity Market Indices
Indices 05-Aug-22 1 Week Return YTD Return
S&P BSE Sensex
58,387.93 1.42% 0.23%
Nifty 50
17,397.50 1.39% 0.25%
S&P BSE Mid-Cap
24,479.05 1.78% -1.97%
S&P BSE Small-Cap
27,605.08 2.03% -6.29%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
01-Aug-22 1,550 630 2.46
02-Aug-22 1,224 913 1.34
03-Aug-22 769 1,359 0.57
04-Aug-22 1,006 1,129 0.89
05-Aug-22 1,191 929 1.28
Source: NSE
• Domestic equity markets extended
their winning run for the third
consecutive week. Markets rose on the
back of continued buying by foreign
institutional investors. A fall in global
crude oil prices also added to the gains
which gave some respite to market
participants regarding the burgeoning
import bill of the country. The
strengthening of the rupee against the
greenback further aided market
sentiment. Robust macroeconomic
data and upbeat corporate earning
numbers for the quarter ended Jun
2022 too contributed to the upside.
• Gains were extended towards the end
of the week after the decision by the
Monetary Policy Committee to raise the
repo rate by 50 bps came in line with
investor expectations.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
22.71 20.86 21.02 34.25
P/B
3.35 4.18 2.86 3.04
Dividend Yield
1.23 1.29 1.24 0.89
Source: BSE, NSE Va
lue as on Aug 5, 2022
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
29,365.58 2.22% 10.14%
S&P BSE Bankex
43,550.81 0.97% 11.97%
S&P BSE CD
40,110.84 1.37% 14.24%
S&P BSE CG
29,698.73 -0.06% 13.17%
S&P BSE FMCG
15,638.95 0.97% 8.35%
S&P BSE HC
23,184.74 1.24% 6.42%
S&P BSE IT
30,386.31 3.05% 7.64%
S&P BSE Metal
18,354.26 0.90% 18.78%
S&P BSE Oil & Gas
19,336.58 1.78% 11.20%
Source: Refinitiv *Value as on Aug 5, 2022
• On the BSE sectoral front, S&P BSE IT and S&P
BSE Teck rose the most by 3.05% followed by
S&P BSE Power and S&P BSE Auto which rose
2.87% and 2.22% respectively. S&P BSE Power
rose after a major company reported stellar
earning numbers for the quarter ended Jun
2022. S&P BSE Auto rose after auto sales
showed positive trends in Jul 2022 indicating
that the global chip headwinds had started to
ease.
Indian Derivatives Market Review
• Nifty Aug 2022 Futures stood at 17,416.15, a premium of 18.65 points above the spot
closing of 17,397.50. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 699.37 lakh crore as against Rs. 580.00 lakh crore for the week to Jul 29.
• The Put-Call ratio stood at 0.91 compared with the previous week’s close at 0.90.
• The Nifty Put-Call ratio stood at 1.05 compared with the previous week’s close of 1.36.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.04 5.00 4.72 3.30
91 Day T-Bill
5.58 5.60 5.12 3.86
05.63% 2026, (5 Yr GOI)
6.86 6.89 7.04 6.05
06.54% 2032, (10 Yr GOI)
7.30 7.32 7.39 6.88
Source: Refinitiv Value as on Aug 5, 2022
• Bond yields fell during most part of the
week following decline in global crude oil
prices, which eased concerns about high
inflationary scenario. However, most of
the gains were restricted after the
Monetary Policy committee increased
key policy repo rate by 50 bps and on
higher-than-expected cut-off yields at
weekly government securities auction
that indicated weak demand.
• Yield on the 10-year benchmark paper
(6.54% GS 2032) fell by 2 bps to close at
7.30% as compared to the previous
week’s close of 7.32%.
• Data from RBI showed that India's
foreign exchange reserves rose to
$573.88 billion for the week ended Jul
29, 2022 from $571.56 billion in the
previous week.
Domestic Debt Market
7.13
7.23
7.33
1-Aug 2-Aug 3-Aug 4-Aug 5-Aug
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 6.40 6.66 26
3 Year 7.00 7.27 27
5 Year 7.14 7.64 50
10 Year 7.43 8.26 83
Source: Refinitiv
Value as on Aug 5
, 2022
• Yields on gilt fell by up to 15 bps across the
maturities, leaving 2, 3 & 11 year papers that rose
22, 13 & 12 bps, respectively. Yield fell the most on
15 year paper.
• Corporate bond yields declined in the range of 2 to
14 bps across the curve, barring 2, 10 & 15 year
papers that rose 3, 5 & 31 bps, respectively. Yield
fell the most on 6 year paper.
• Difference in spread between AAA corporate bond
and gilt contracted in the range of 6 to 19 bps
across the segments, except 1, 10 & 15 year papers
that expanded 2, 7 & 46 bps, respectively.
Domestic Debt Market (Spread Analysis)
-9
-5
0
5.40
6.65
7.90
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 05-Aug-22 29-Jul-22
Yield in %
Change in bps
Source: Refinitiv
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8
• The Reserve Bank of India decided (RBI) to broaden the Internal Ombudsman framework by
incorporating Credit Information Companies (CICs) in order to strengthen grievance
redressal system. The method for resolving customer complaints has been strengthened by
the Reserve Bank-Integrated Ombudsman Scheme (RB-IOS). The amount of time it takes to
resolve a grievance under RB-IOS has significantly decreased.
• RBI has proposed to enable Bharat Bill Payment System (BBPS) to accept cross-border
inward payments. BBPS will soon enable non-resident Indians to pay their families' utility,
educational, and other bills in India.
• The International Monetary Fund (IMF) has recommended that India gradually withdraw its
fiscal and monetary policy stimulus, build export infrastructure, and negotiate free trade
agreements with important trading partners to give exports a sustainable boost. This is in
order to maintain the external sector balance at a comfortable level over the medium term.
• The Centre has proposed revisions to the Energy Conservation Act, 2001 to reach the goals
embracing alternative fuels, industrial energy efficiency, and developing the nation's own
carbon credit market. The National Green Hydrogen Mission and the development of
renewable energy were highlighted in the Energy Conservation (Amendment) Bill, 2022,
which stated that the revisions had been recommended in the context of India's planned
energy transition.
Regulatory Updates in India
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9
• IRDAI has suggested a single cap for general and health insurance companies' costs. Non-
life insurers, particularly private players, should feel relieved as a result of this action.
According to the exposure draft released by the regulator, non-life insurers are not
permitted to use more than 30% of the gross premium written as a company expense in a
given fiscal year.
• IRDAI has improved the capital sources for these instruments, which up until now had
difficulty growing due to a lack of broader institutional support by allowing insurers to
purchase more perpetual bonds from banks and to take part in the public listing of high-
yielding InvITs (Investment Trusts).
• The Finance Minister informed Rajya Sabha that the government is taking action against
questionable digital loan apps, including those that are located abroad and Indian citizens
who assisted in setting them up. She added that the government is consciously pursuing
action against Indian people who assisted in the establishment of these businesses as well
as what are essentially shell corporations through which they are conducting business.
Regulatory Updates in India (contd..)
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• According to the Labor Department, U.S. non-farm payroll employment rose 528,000 jobs
in Jul 2022 after surging by an upwardly revised 398,000 jobs in Jun 2022. The
unemployment rate unexpectedly edged down to 3.5% in Jul from 3.6% in Jun.
• According to the Commerce Department, U.S. trade deficit narrowed to $79.6 billion in Jun
2022 from a revised $84.9 billion in May 2022. The decrease in the size of the trade deficit
came as the value of exports rose 1.7% to $260.8 billion, while the value of imports edged
down 0.3% to $340.8 billion.
• The Bank of England increased its benchmark rate by 50 basis points due to the tight
labour market and more persistent inflationary pressures. The increase in wholesale gas
prices since May, brought on by Russia's restriction of gas supply to Europe, was a major
factor in the central bank raising its inflation outlook.
• According to Eurostat, eurozone retail sales volume fell 1.2% MoM in Jun 2022 as against
0.4% rise in May 2022. On a yearly basis, retail sales fell 3.7% in Jun as against 0.4% rise in
May.
• According to survey results from S&P Global, the Caixin manufacturing Purchasing
Managers' Index fell to 50.4 in Jul 2022 from 51.7 in Jun 2022. China's manufacturing
sector grew in Jul following the relaxation of Covid-19 control measures, but the rate of
expansion slowed.
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Global News/Economy
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11
Global Indices
Indices
5-Aug-22
1-Week
Return
YTD
Return
Russell 3000 1,983.96 1.58% -18.68%
Nasdaq 100 13,207.69 2.01% -19.07%
FTSE 100 7,439.74 0.22% 0.75%
DAX Index 13,573.93 0.67% -14.55%
Nikkei Average 28,175.87 1.35% -2.14%
Straits Times 3,282.88 2.22% 5.10%
Source: Refinitiv *Value as on Aug 5, 2022
U.S.
• U.S. equity markets mostly rose during
the week under review as upbeat
economic data boosted market
sentiments. However, worries over
geopolitical tensions between U.S. and
China, anxiety over slowdown in growth
and concerns that the U.S. Federal
Reserve will continue to tighten its
monetary policy at an aggressive pace.
Europe
• European equity markets rose amid optimism following the latest batch of earnings
updates for the quarter ended Jun 2022. However, concerns over tensions between U.S.
and China and worries that the U.S. Federal Reserve will continue to tighten its monetary
policy at an aggressive pace capped the gains.
Asia
• Asian equity markets mostly rose as a private survey showed that China's service sector
expanded quickly in July which was aided by decreasing COVID-19 concerns. However,
worries over geopolitical tensions between U.S. and China capped the gains.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury rose
20 bps to close at 2.84% as compared to
the previous week’s close of 2.64%.
• U.S. Treasury prices fell supported by
hawkish comments from the U.S. Federal
Reserve officials that suggested more
rate increases are coming in the short
term, as inflation is yet to reach its peak.
• U.S. Treasury prices plunged further after
data showed the U.S. nonfarm payroll
data rose much higher than market
expectation in Jul 2022, which led to
worries that the U.S. Federal Reserve will
continue to tighten its monetary policy at
an aggressive pace.
• However, losses were restricted as a
gloomy outlook from the Bank of England
fueled global recession concerns.
Global Debt (U.S.)
2.50
2.70
2.90
1-Aug 2-Aug 3-Aug 4-Aug 5-Aug
Yield in %
US 10-Year Treasury Yield Movement
Source: Refinitiv
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13
Performance of various commodities
Commodities
Last Closing* 1-Week Ago
Brent Crude($/Barrel)
106.52 117.15
Gold ($/Oz)
1774.15 1765.22
Gold (Rs/10 gm)
51,948 51,301
Silver ($/Oz)
19.88 20.32
Silver (Rs/
Kg) 57,335 57,485
Source: Refinitiv *Value as on Aug 5, 2022
Gold
• Gold prices rose as its safe-haven appeal
improved amid geo-political and economic
uncertainties. However, gains were capped
after U.S. nonfarm payroll data for Jul 2022
came better than expected which led to
concerns that the U.S. Federal Reserve will
continue to stick to its aggressive monetary
policy tightening path.
Brent Crude
• Brent crude oil prices fell as market
participants fretted over the impact of
inflation on economic growth and demand.
However, concern over supply shortages
restricted further losses.
Baltic Dry Index
• The index fell due to sluggish capesize and
panamax activities.
Commodities Market
8.00
9.00
10.00
11.00
5-Jul-22 20-Jul-22 4-Aug-22
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
-2.19%
-9.07%
0.51%
05-Aug-22
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing* 1-Wk Ago
US Dollar
79.12 79.42
Pound Sterling
96.07 96.90
EURO
80.91 81.17
100 Yen
59.33 59.73
Source: Refinitiv Figures in INR , *
Value as on Aug 5, 2022
Rupee
• The Indian rupee was little changed against the
U.S. dollar as gains due to foreign equity inflows
neutralized concerns following a record
domestic trade deficit in Jul 2022.
Euro
• Euro fell against the U.S. dollar after U.S.
nonfarm payroll employment rose more than
expected in Jul 2022.
Pound
• Pound dropped against the U.S. dollar ahead of
the Bank of England policy decision that saw 50
bps rate hike. Losses increased after U.S.
nonfarm payroll employment rose more than
expected in Jul 2022.
Yen
• Yen declined amid high volatility against the
U.S. dollar after U.S. nonfarm payroll
employment rose more than expected in Jul
2022.
Currencies Markets
9.55
9.95
10.35
5-Jul-22 20-Jul-22 4-Aug-22
USD GBP Euro JPY
Source: Refinitiv
Currency Prices ( in terms of
INR)
Rebased to 10
Currency Movement
-0.31%
-0.86%
-0.38%
-0.67%
05-Aug-22
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15
The Week that was…
1
st
Aug to 5
th
Aug
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16
The Week that was (Aug 1 – Aug 5)
Date Events Present Value Previous Value
Monday,
August 01, 2022
• India S&P Global Manufacturing PMI (Jul) 56.4 53.9
• U.S. ISM Manufacturing PMI (Jul) 52.8 53
• Eurozone Unemployment Rate (Jun) 6.60% 6.60%
• Germany Retail Sales (YoY)(Jun) -8.80% 1.10%
Tuesday,
August 02, 2022
• India Balance of Trade Prel (USD) (Jul) -31.02B -26.18B
• U.K. Nationwide Housing Prices (YoY)(Jul) 11% 10.70%
Wednesday,
August 03, 2022
• India S&P Global Services PMI (Jul) 55.5 59.2
• Eurozone Retail Sales (YoY)(Jun) -3.70% 0.40%
• U.S. ISM Services PMI (Jul) 56.7 55.3
• U.S. Factory Orders (MoM)(Jun) 2% 1.80%
• Eurozone S&P Global Composite PMI (Jul) 49.9 49.4
Thursday,
August 04, 2022
• Germany Factory Orders (MoM)(Jun) -0.40% -0.20%
• U.S. Goods and Services Trade Balance(Jun) (USD) -79.6B -84.9B
Friday,
August 05, 2022
• U.S. Nonfarm Payrolls (Jul) 528K 398K
• U.S. Unemployment Rate (Jul) 3.50% 3.60%
• Japan Overall Household Spending (YoY)(Jun) 3.50% -0.50%
• Germany Industrial Production (MoM)(Jun) 0.40% -0.10%
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17
The Week Ahead
8
th
Aug to 12
th
Aug
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18
Day Event
Monday,
August 8, 2022
• Japan Current Account (Jun)
• Eurozone Sentix Investor Confidence (Aug)
Tuesday,
August 9, 2022
• U.S. Nonfarm Productivity(Q2) PREL
• U.S. Unit Labor Costs(Q2) PREL
• U.K. BRC Like-For-Like Retail Sales (YoY)(Jul)
Wednesday,
August 10, 2022
• China Consumer Price Index (YoY)(Jul)
• Germany Harmonized Index of Consumer Prices (YoY)(Jul)
• U.S. Consumer Price Index (YoY)(Jul)
• Japan Producer Price Index (YoY)(Jul)
Thursday,
August 11, 2022
• U.S. Producer Price Index (YoY)(Jul)
• U.S. Initial Jobless Claims(Aug 5)
Friday,
August 12, 2022
• India Industrial Production YoY (Jun)
• India Consumer Price Inflation (Jul)
• U.K. Gross Domestic Product (QoQ)(Q2) PREL
• U.S. Michigan Consumer Sentiment Index(Aug) PREL
• U.K. Industrial Production (MoM)(Jun)
• Eurozone Industrial Production (MoM)(Jun)
The Week Ahead
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The information herein is meant only for general reading purposes and contains all factual and statistical information pertaining to Industry and
markets which have been obtained from independent third party sources and which are deemed to be reliable. The information provided cannot be
considered as guidelines, recommendations or as a professional guide for the readers. It may be noted that since Nippon Life India Asset
Management Limited (NAM India) has not independently verified the accuracy or authenticity of such information or data, or for that matter the
reasonableness of the assumptions upon which such data and information has been processed or arrive data; NAM India does not in any manner
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