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NEWS U CAN USE
Apr 17, 2020
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The Week that was…
13
th
Apr to 17
th
Apr
2
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Indian Economy
• The International Monetary Fund (IMF) projected the growth of the Indian economy to
sharply fall to 1.9% in FY21 from its earlier projection of 5.8%. However, IMF expects the
Indian economy to sharply rebound and grow at 7.4% in FY22. The growth rate is expected
to come down due to severe disruption in the economic activities bought about by the
COVID-19 pandemic. IMF also warned that the global economy will plunge into recession
which might be the worst recession than the great depression or the global financial crisis
a decade ago. IMF projected the global growth to shrink 3.0% in 2020.
• Government data showed that the consumer price index (CPI) based inflation or retail
inflation slowed to a four-month low of 5.91% in Mar 2020 from 6.58% in Feb 2020 but
grew compared to the same period of the previous year when retail inflation stood at
2.86%.
• The wholesale price index (WPI) based inflation slowed to 1.00% in Mar 2020 from 2.26%
in the previous month and 3.10% in the same month of the previous year. WPI inflation
slowed as inflation for vegetables fell sharply to 11.90% in Mar 2020 from 29.97% in the
previous month.
• India’s trade deficit narrowed to $9.76 billion in Mar 2020 from $11.00 billion in the same
month of the previous year. Imports over the year fell 28.72% in Mar 2020 while exports
fell 34.57% in the same time period.
3
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4
Domestic Equity Market Indices
Indices
17-Apr-20
1 Week Return
YTD Return
S&P BSE Sensex
31,588.72 1.38% -23.43%
Nifty 50
9,266.75 1.70% -23.85%
S&P BSE Mid
-Cap
11,824.07 3.95% -21.00%
S&P BSE Small
-Cap
10,800.91 4.93% -21.16%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
13-Apr-20 928 917 1.01
15-Apr-20 1213 650 1.87
16-Apr-20 1341 488 2.75
17-Apr-20 1398 446 3.13
Source: NSE
• Indian equity markets managed to end
the week in the green despite lingering
concerns over prolonged lock-down,
which may intensify pressure on India’s
economic growth as well as corporate
earnings. Sensex and Nifty reclaimed
the 31,500 and 9,200- mark
respectively.
• Buying interest found initial support
from expectations that the
government shall work on a fiscal
package to counter the negative
impact of COVID-19.
• Later, Reserve Bank of India (RBI)
announced a host of liquidity-boosting
measures to support the economy
during the coronavirus crisis, which
include slashing reverse repo rate by 25
bps to 3.75%.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
19.16 20.85 22.39 169.43
P/B
2.44 2.64 1.92 1.58
Dividend Yield
1.37 1.64 1.48 1.54
Source: BSE, NSE Va
lue as on Apr 17, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
12,880.52 1.93% -1.71%
S&P BSE Bankex
23,684.47 3.41% -6.36%
S&P BSE CD
20,440.74 -1.98% -5.66%
S&P BSE CG
12,328.84 9.89% -3.35%
S&P BSE FMCG
11,004.05 1.15% 17.82%
S&P BSE HC
14,890.41 2.32% 22.30%
S&P BSE IT
12,720.56 -0.26% 6.96%
S&P BSE Metal
6,573.47 6.65% 4.64%
S&P BSE Oil & Gas
11,222.45 1.21% 10.69%
Source:
Refinitiv *Value as on Apr 17, 2020
• On the BSE sectoral front, majority of the
sectors closed in the green. S&P BSE Capital
Goods was the top gainer, up 9.89%, followed
by S&P BSE Metal and S&P BSE Power, which
rose 6.65% and 4.99%, respectively.
• In the capital goods space, one of the index
heavyweights reported that its heavy
engineering arm has won significant contracts
in Q4 FY 20. The unit secured orders for key
gasification equipment from one of the
Chinese engineering firms against stiff
Chinese competition.
Indian Derivatives Market Review
• Nifty Apr 2020 Futures stood at 9,311.30, a premium of 44.55 points above the spot closing
of 9,266.75. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 44.35 lakh crore as against Rs. 37.16 lakh crore for the week to Apr 10.
• The Put-Call ratio stood at 0.88 compared with the previous session’s close of 0.89.
• The Nifty Put-Call ratio stood at 1.38 compared with the previous session’s close of 1.53.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
4.24 4.34 4.97 5.04
91 Day T
-Bill
3.90 4.25 4.80 5.08
07.32% 2024, (5 Yr GOI)
5.33 5.86 6.06 6.30
06.45% 2029, (10
Yr GOI)
6.35 6.49 6.26 6.50
Source:
Refinitiv Value as on Apr 17, 2020
• Bond yield fell as investors resorted to
value-buying and after the Reserve
Bank of India announced liquidity-
supportive steps.
• The central bank cut its reverse repo
rate by 25 basis points to 3.75%. RBI
will also provide Rs. 50,000 crore
liquidity support through targeted
long-term repo operation (TLTRO) that
will be undertaken in tranches.
• Yield on the 10-year benchmark paper
(6.45% GS 2029) fell 14 bps to close at
6.35% compared with the previous
week’s close of 6.49% after trading in
a range of 6.30% to 6.50%.
Domestic Debt Market
6.26
6.39
6.52
13-Apr 15-Apr 16-Apr 17-Apr
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year
4.21 5.68 147
3 Year
5.05 6.43 138
5 Year
5.56 6.99 143
10 Year
6.45 7.56 111
Source:
Refinitiv Value as on
Apr 17, 2020
• Yields on gilt securities fell across
maturities in the range of 9 bps to 55 bps
barring 2-year paper that rose by 1 bps.
• Corporate bond yields fell across the
maturities in the range of 20 bps to 49
bps.
• Spread between AAA corporate bond and
gilt expanded across maturities in the
range of 4 bps to 18 bps barring 1-, 10-
and 15-year papers that fell in the range of
5 bps to 16 bps and 2-year paper that
stood steady.
Domestic Debt Market (Spread Analysis)
-54
-27
0
3.30
5.40
7.50
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 17-Apr-20 09-Apr-20
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
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8
• The Reserve Bank of India (RBI) lowered the reverse repo rate from 4% to 3.75%. The
objective of the move is to discourage banks from parking their funds in the reverse repo
and instead deploy the surplus funds as loans or investments in the productive sectors of
the economy. The key policy repo rate remains unchanged at 4.40% while the marginal
standing facility rate and the bank rate remain unchanged at 4.65%.
• RBI in order to ease liquidity woes at the institutional levels, reduced the Liquidity Coverage
Ratio (LCR) requirement for scheduled commercial banks from 100% to 80% with
immediate effect. However, the same will be gradually restored back in two phases, - 90%
by Oct 1, 2020 and 100% by Apr 1, 2021. In addition, RBI barred banks from paying any
dividend from their profits for the fiscal ended Mar 31, 2020 as it underlined the importance
of capital conservation in order to provide support to the domestic economy amid the
ongoing COVID-19 pandemic.
• RBI has decided to increase the ways and means advances (WMA) limit of states by 60% over
and above the level as on Mar 31, 2020. This increased limit will be available till Sep 30, 2020.
The objective of the move is to assist states in combating the COVID-19 pandemic and help
them plan their borrowings from the markets.
Regulatory Updates in India
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9
• RBI has decided to provide special refinance facilities for a total amount of Rs. 50,000
crore to National Bank for Agriculture and Rural Development (NABARD), Small Industries
Development Bank of India (SIDBI) and National Housing Bank (NHB). Out of Rs. 50,000
crore, Rs. 25,000 crore will be allocated to NABARD, for refinancing regional rural banks
(RRBs), cooperative banks and micro finance institutions (MFIs). SIDBI will be allotted Rs.
15,000 crore for on-lending/refinancing while the remaining Rs. 10,000 crore will be
allotted to NHB for supporting housing finance companies (HFCs). Advances availed under
the facility will be charged at the key policy repo rate of 4.40% as mandated by RBI.
• RBI announced to conduct targeted long-term repo operations (TLTRO 2.0) for an
aggregate amount of Rs. 50,000 crore in tranches of appropriate sizes of which at least
50% will be targeted towards mid and small sized non-banking finance companies (NBFCs)
and microfinance institutions (MFIs). Out of this 50%, 10% will be invested in securities
issued by MFIs 15% in securities issued by NBFCs with asset size of Rs. 500 crore and below
and another 25% in securities issued by NBFCs with asset size ranging from Rs. 500 crore
to Rs. 5,000 crore. Exposures taken by the bank under this facility will be classified as held
to maturity (HTM) even in excess of 25% of total investment permitted and will not be
taken into consideration for calculating the large corporate exposure.
Regulatory Updates in India (contd..)
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• As per the World Economic Outlook report from International Monetary Fund (IMF), World
Gross domestic product (GDP) is forecasted to fall 3% in 2020. The fall was due to the
lockdowns imposed by countries across the world. However, the global GDP growth is
expected to grow 5.8% next year.
• The U.S. Commerce Department reported that retail sales plunged 8.7% in Mar 2020
compared with a fall of a revised 0.4% (0.5% drop originally reported) in Feb 2020. Large
fall in sales reflect the impact of the coronavirus-induced shutdown. Sharp fall was partially
due to a steep decline in sales by motor vehicle and parts dealers (-25.6%).
• Final data from Eurostat showed, Eurozone inflation slowed to 0.7% YoY (in line with the
preliminary data) in Mar 2020 from 1.2% in Feb 2020 on a 4.5% decline in energy prices.
Core inflation stood at 1%, as initially estimated, slower than 1.2% in Feb 2020.
• Data from the National Bureau of Statistics showed, China’s Gross Domestic Product (GDP)
contracted 6.8% YoY in the Mar quarter of 2020. The fall was bigger than the first decline
since 1992. Activity in China halted after they adopted strict shutdowns and quarantines to
contain the spread of the coronavirus. Industrial output and retail sales plunged 8.4% and
19.0%, respectively in the first quarter of 2020.
• The People's Bank of China lowered the one-year medium-term lending facility rate to
2.95% from 3.15% in an attempt to ease the decline caused by the coronavirus pandemic.
The bank injected CNY 100 billion through the MLF operation.
10
Global News/Economy
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11
Global Indices
Indices
17-Apr-20
1-Week
Return
YTD
Return
Russell 3000
1,358.68 5.07% -4.72%
Nasdaq 100
8,832.41 7.21% 1.14%
FTSE 100
5,786.96 -0.95% -23.27%
DAX Index
10,625.78 0.58% -19.80%
Nikkei Average
19,897.26 2.05% -15.89%
Straits Times
2,614.60 1.68% -18.87%
Source: Refinitiv Value as on Apr 17, 2020
U.S.
• U.S. markets largely remained positive
after a U.S. based bio-technology
company reported that its drug is
showing effectiveness in treating the
coronavirus.
• The President’s announcements on the
guidelines for states on reopening the
country provided additional support.
Europe
• Majority of the European markets witnessed selling pressure as investors’ confidence
remained low after the IMF said the global economy will likely suffer the worst financial
crisis since the Great Depression. However, the downturn was cushioned as increasing
number of European countries have cautiously started to ease restrictive measures on
public life and businesses owing to coronavirus pandemic.
Asia
• Asian markets mostly rose as reports of promising initial data related to a potential
COVID-19 treatment from a U.S. based bio-technology company and U.S. President 's
plans to reopen businesses helped investors shrug off weak economic data from China.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury fell 6
bps to close at 0.66% compared to the
previous week’s close of 0.72%.
• U.S. Treasury prices fell initially during
the week under review on hopes that
the coronavirus outbreak in the U.S. may
be nearing its peak. Market participants
remained optimistic about the outlook
for the coronavirus outbreak and looked
forward to the reopening of the U.S.
economy.
• However, the trend reversed as the
safe-haven appeal of U.S. Treasuries
improved after retail sales in U.S.
plunged 8.7% on a monthly basis in Mar
2020. This was the biggest decline since
the U.S. government started tracking
the series in 1992.
Global Debt (U.S.)
0.56
0.67
0.78
13-Apr 14-Apr 15-Apr 16-Apr 17-Apr
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
16.14 18.71
Gold ($/Oz)
1,684.19 1,688.90
Gold (Rs/10 gm)
40,989 40,989
Silver ($/Oz)
15.13 15.32
Silver (Rs/Kg)
36,871 36,871
Source:
Refinitiv *Value as on Apr 17, 2020
Gold
• Gold prices rose initially on the back of
growing safe haven appeal after the
International Monetary Fund said that
the global economy may contract by
about 3 % in 2020. However, gains
were erased later amid hopes that
COVID-19 pandemic led restrictions will
ease.
Brent Crude
• Brent crude prices fell as persisting
concerns over the COVID-19 pandemic
weighed on the demand outlook of the
commodity. The International Energy
Agency forecasted a 29 million barrel
per day fall in oil demand in Apr 2020.
Baltic Dry Index
• The Baltic Dry Index rose due to
improved capesize and panamax
activities.
Commodities Market
2.00
8.00
14.00
17-Mar-20 2-Apr-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-1.24%
-13.74%
-0.28%
17-Apr-20
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
76.54 76.46
Pound Sterling
95.47 94.54
EURO
83.05 82.92
100 Yen
71.04 70.18
Source:
Refinitiv Figures in INR , *Value as on Apr 17, 2020
Rupee
• The Indian rupee fell against the dollar
following weak Asian currencies.
Euro
• Euro fell against the strong U.S dollar
after weak U.S. economic data increased
fears that damage to the global
economy from the coronavirus outbreak
will be long and protracted.
Pound
• Pound rose against the greenback on
signs that lockdown measures may be
slowing the spread of the coronavirus
but gains were limited after UK
government diminished this expectation.
Yen
• Yen rose against the U.S. dollar as safe
haven appeal improved after poor U.S.
economic data.
Currencies Markets
9.40
10.05
10.70
17-Mar-20 2-Apr-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
17-Apr-20
0.98%
0.11%
1.23%
0.17%
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15
The Week that was…
13
th
Apr to 17
th
Apr
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16
The Week that was (Apr 13 – Apr 17)
Date Events
Present
Value
Previous
Value
Monday,
April 13, 2020
• China New Yuan Loans CNY (MAR)
2850B 905.7b
• India Consumer Price Index Inflation YoY (Mar 2020)
5.91% 6.58%
Tuesday,
April 14, 2020
• India Wholesale Price Index Inflation YoY (Mar 2020)
1.0% 2.3%
Wednesday,
April 15, 2020
• India Trade Deficit (Mar 2020)
$9.76 $9.85
• U.S. Retail Sales Advance (MoM) (Mar)
-8.7% -0.4%
• U.S. Industrial Production (MoM) (Mar)
-5.4% 0.6%
• U.S. NAHB Housing Market Index (Apr)
30.0 72.0
Thursday,
April 16, 2020
• China New Home Prices (MoM) (Mar)
0.1% 0.0%
• German Consumer Price Index (YoY) (Mar F)
1.4% 1.4%
• Eurozone Industrial Production w.d.a. (YoY) (Feb)
-1.9% -1.7%
• U.S. Initial Jobless Claims (Apr 11)
5245k 6606k
Friday,
April 17, 2020
• China Gross Domestic Product (YoY) (1Q)
-6.8% 6.0%
• Japan Industrial Production (YoY) (Feb F)
-5.7% -4.7%
• Japan Tertiary Industry Index (MoM) (Feb)
-0.5% 0.8%
• Eurozone Consumer Price Index (YoY) (Mar F)
0.7% 1.2%
• China Retail Sales (YoY) (Mar)
-15.8% 8.0%
• U.S. Leading Index (Mar)
-6.7% 0.1%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
20
th
Apr to 24
th
Apr
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18
Day Event
Monday,
Apr 20, 2020
•
U.K. Rightmove House Prices (YoY) (Apr)
•
Japan Trade Balance (Mar)
Tuesday,
Apr 21, 2020
•
U.K. ILO Unemployment Rate 3Mths (Feb)
•
Eurozone ZEW Survey (Economic Sentiment) (Apr)
•
German ZEW Survey Expectations (Apr)
•
U.S. Existing Home Sales (MoM) (Mar)
Wednesday,
Apr 22, 2020
•
U.K. Consumer Price Index (YoY) (Mar)
•
U.K. House Price Index (YoY) (Feb)
•
U.S. House Price Index (MoM) (Feb)
•
Eurozone Consumer Confidence (Apr A)
Thursday,
Apr 23, 2020
•
Japan Nikkei Japan PMI Manufacturing (Apr P)
•
U.S. Initial Jobless Claims (Apr 18)
•
U.S. Markit US Composite PMI (Apr P)
•
U.S. New Home Sales (MoM) (Mar)
Friday,
Apr 24, 2020
•
U.K. United Kingdom Sovereign Debt to be rated by S&P
•
Japan National Consumer Price Index (YoY) (Mar)
•
U.S. Durable Goods Orders (Mar P)
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
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