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NEWS U CAN USE
August 07, 2020
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The Week that was…
3
rd
Aug to 7
th
Aug
2
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Indian Economy
• The Monetary Policy Committee (MPC) in its monetary policy review kept key policy repo
rate unchanged at 4.00%. The reverse repo rate thus remained unchanged at 3.35% and
the marginal standing facility rate and the bank rate also stood unchanged at 4.25%. All
members of the MPC voted for a status quo. The MPC also decided to continue with its
accommodative stance on its monetary policy as long as it is necessary to revive the
growth and mitigate the impact of the COVID-19 pandemic on the domestic economy
while ensuring that retail inflation remains within its medium-term target.
• Results of a private survey showed that the seasonally adjusted IHS Markit India
Manufacturing PMI fell from 47.2 in Jun 2020 to 46.0 in Jul 2020. This depicted a sharp
deterioration in business conditions across the Indian manufacturing sector. The decline
can be attributed to a contraction in output at a slightly faster pace than that of Jun 2020
as some businesses remained closed due to extension of lockdowns. Manufacturing firms
responded by reducing production levels and bringing down staff numbers.
• Results of a private survey showed that the IHS Markit India Services Business Activity
Index stood at 34.2 in Jul 2020 as compared to 33.7 in Jun 2020. The domestic service
sector remained restricted due to the COVID-19 pandemic which led to weak demand
conditions and temporary suspension of company operations resulting in substantial drop
in activity and new business. The Composite PMI Output Index which considers both the
manufacturing sector and the services sector fell to 37.2 in Jul 2020 from 37.8 in Jun 2020
that can be attributed to a significant drop in new orders.
3
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4
Domestic Equity Market Indices
Indices 07-Aug-20 1 Week Return YTD Return
S&P BSE Sensex
38,040.57 1.15% -7.79%
Nifty 50
11,214.05 1.27% -7.84%
S&P BSE Mid-Cap
14,218.87 3.34% -5.00%
S&P BSE Small-Cap
13,668.69 4.97% -0.22%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
03-Aug-20 979 877 1.12
04-Aug-20 1222 641 1.91
05-Aug-20 1192 677 1.76
06-Aug-20 1132 744 1.52
07-Aug-20 1196 663 1.80
Source: NSE
• Indian equity markets ended the week
on a positive note. For a major part of
the week, the MPC policy meet
remained on the investors’ radar and
they keenly awaited the outcome of
the highly anticipated meeting, which
was scheduled on Aug 6. The central
bank did not disappoint the investors
by announcing a host of stimulus
measures aimed at reviving the already
battered economy.
• Among the global cues, the upbeat U.S.
manufacturing data for Jul instilled
confidence among the market
participants.
• Gains largely remained restricted as
COVID-19 infection cases in the country
continued to increase by leaps and
bounds.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.37 30.72 30.47 -460.67
P/B
2.84 3.16 2.28 2.13
Dividend Yield
1.02 1.47 1.10 1.09
Source: BSE, NSE Va
lue as on Aug 07, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
17,100.01 3.70% 4.70%
S&P BSE Bankex
24,696.24 0.39% -3.65%
S&P BSE CD
22,070.09 2.75% 3.85%
S&P BSE CG
12,975.05 1.89% -2.85%
S&P BSE FMCG
11,674.58 2.00% 3.57%
S&P BSE HC
18,760.84 2.60% 15.24%
S&P BSE IT
18,161.65 -0.49% 13.57%
S&P BSE Metal
8,439.37 7.84% 15.45%
S&P BSE Oil & Gas
13,281.55 0.81% 3.36%
Source:
Refinitiv *Value as on Aug 07, 2020
• On the BSE sectoral front, S&P BSE Metal was
the top gainer up 7.84%, followed by S&P BSE
Auto and S&P BSE Consumer Durables, which
rose 3.70% and 2.75%, respectively.
• In the metal sector space, the domestic steel
markets have started showing signs of
recovery after being hit hard by the COVID-19
pandemic and subsequent lockdowns.
• Auto sector rose as sales by automobile
companies recovered in Jul after a subdued
couple of months as COVID-19 triggered a
nation-wide lockdown.
Indian Derivatives Market Review
• Nifty Aug 2020 Futures stood at 11,226.20, a premium of 12.15 points above the spot
closing of 11,214.05. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 96.82 lakh crore as against Rs. 93.44 lakh crore for the week to Jul 31.
• The Put-Call ratio stood at 0.89 compared with the previous session’s close of 0.91.
• The Nifty Put-Call ratio stood at 1.60 compared with the previous session’s close of 1.31.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.44 3.48 3.47 5.03
91 Day T-Bill
3.30 3.31 3.20 5.11
05.22% 2025, (5 Yr GOI)
5.09 4.99 4.99 --
05.79% 2030, (10 YrGOI)
5.89 5.84 5.79 --
Source: Refinitiv Value as on Aug 07, 2020
• Bond yields rose for the fourth
consecutive week after the Monetary
Policy Committee (MPC) left key policy
rates unchanged and there were no
hints of any unconventional measures
by the Reserve Bank of India (RBI).
Market was expecting unconventional
steps like open market bond
purchases or special OMOs, which was
not discussed, thus dampening
sentiment.
• Yield on the present 10-year
benchmark paper (5.79% GS 2030)
rose 5 bps to close at 5.89% compared
to previous close of 5.84%.
• Yield on the upcoming new 10-year
benchmark paper (5.77% GS 2030)
increased 7 bps to close at 5.84%
compared to the previous closing of
5.77%.
Domestic Debt Market
5.80
5.85
5.90
3-Aug 4-Aug 5-Aug 6-Aug 7-Aug
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.48 5.14 166
3 Year 4.88 6.04 115
5 Year 5.17 6.55 138
10 Year 5.97 7.27 129
Source: Refinitiv Value as on
Aug 07, 2020
• Yields on gilt securities increased across
the maturities in the range of 3 bps to 43
bps barring 1-year paper which fell 22 bps.
• Corporate bond yields increased across
the maturities in the range of 3 bps to 28
bps barring 1-year paper which fell 12 bps.
• Difference in spread between AAA
corporate bond and gilt expanded across
the maturities in the range of 2 bps to 10
bps barring 3, 7 and 10-year paper which
contracted in the range of 2 bps to 16 bps
barring 4-year paper which closed steady.
Domestic Debt Market (Spread Analysis)
-26
-5
16
2.80
5.00
7.20
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 07-Aug-20 31-Jul-20
Yield in %
Change in bps
Source: Refinitiv
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8
• The Reserve Bank of India (RBI) announced an additional special liquidity facility of Rs. 5,000
crore each for the National Housing Bank (NHB) and the National Bank for Agriculture and
Rural Development (NABARD) at the policy repo rate of 4%. In case of NHB, the move is
expected to help the housing sector from liquidity disruption and improve the flow of
finance to the sector through housing finance companies. The special liquidity facility given
to NABARD is expected to ease the stress to some extent for smaller non-bank finance
companies (NBFCs) and micro-finance institutions in obtaining access to liquidity.
• RBI has provided an optional automated sweep-in and sweep-out (ASISO) facility in its e-
Kuber system. The objective of the move is to provide greater flexibility to banks for
managing their day end cash reserve ratio (CRR) balances.
• RBI has set up an expert committee that will suggest steps to the central bank as to how to
deal with COVID-19 related stress assets. The central bank decided to provide a window
under the Prudential Framework to enable the lenders to implement a resolution plan in
order to mitigate the stress arising due to the COVID-19 pandemic.
• RBI after considering the impact of the COVID-19 pandemic on the domestic economy has
decided to increase the permissible loan to value ratio (LTV) for loans against pledge of gold
ornaments and jewellery for non-agricultural purposes from 75% to 90%. The relaxation will
be available till Mar 31, 2021.
Regulatory Updates in India
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9
• A restructuring framework is presently in place for Micro, Small and Medium Enterprises
(MSMEs) that were in default but ‘standard’ as on Jan 1, 2020. RBI has now permitted
lending institutions to restructure the debt under the existing framework for those MSME
borrowers who are facing stress on account of COVID-19 pandemic, provided the
borrower’s account was classified as standard with the lender as on Mar 1, 2020.
• RBI took steps that will make it easier for banks to invest in debt mutual funds. RBI
reduced the risk capital that banks need to set aside when investing in debt mutual funds
and exchange-traded funds (ETFs). The move is expected to improve liquidity in these
funds. Presently, when banks invests directly in a debt instrument the risk capital that
banks need to set aside is comparatively lower and is based on the nature and credit
rating of the debt instruments, whereas an investment in a debt mutual fund is treated at
par with an equity fund and subsequently the risk capital that banks need to set aside is
comparatively higher. RBI has harmonized the two different methods of debt investment
and decided to apply a general market risk charge of 9% for investing in a debt mutual
fund after it took note of the risk of sudden redemption in debt mutual funds.
• RBI assigned priority sector lending (PSL) status to India’s startup sector. The move is
expected to help India’s start up sector get better access to bank credit for working capital
support.
Regulatory Updates in India (contd..)
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• According to the Labor Department report, U.S. nonfarm payroll surged by 1.8 million jobs
in Jul 2020, slower than the surge of 4.8 million jobs in the prior month. Rise was seen amid
a sharp increase in employment in the retail sector, which added 258,300 jobs. The
unemployment rate fell to 10.2% in Jul 2020 from 11.1% in Jun 2020.
• The Institute for Supply Management report (ISM) showed U.S. non-
manufacturing/services index rose to 58.1 in Jul 2020 from 57.1 in Jun 2020. Surprising rise
was partially due to a notable acceleration in the pace of growth in new orders.
• Final data from IHS Markit showed, U.K. manufacturing PMI touched 16-month high to 53.3
(flash estimate of 53.6) in Jul 2020 from 50.1 in Jun 2020. Output growth reached 32-
month high due to further loosening of the lockdown conditions in place due to the
coronavirus disease.
• According to data from IHS Markit, eurozone’s final composite Purchasing Managers' Index
(PMI) rose to 54.9 in Jul 2020 from 48.5 in Jun 2020. The services PMI advanced to 54.7 in
Jul from 48.3 in Jun.
• Data from the General Administration of Customs showed, China’s exports increased 7.2%
YoY in Jul 2020 led by demand for medical supplies, electronics and automobiles. On the
other hand, imports fell 1.4% YoY. Thus, trade surplus rose to $62.33 billion in Jul 2020
from $46.42 billion surplus in Jun 2020.
10
Global News/Economy
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11
Global Indices
Indices
07-Aug-20
1-Week
Return
YTD
Return
Russell 3000 1,697.91 2.30% 19.06%
Nasdaq 100 11,139.39 2.14% 27.55%
FTSE 100 6,032.18 2.28% -20.02%
DAX Index 12,617.75 2.47% -4.76%
Nikkei Average 22,329.94 2.86% -5.61%
Straits Times 2,545.51 0.62% -21.02%
Source: Refinitiv Value as on Aug 07, 2020
U.S.
• U.S. markets traded higher after official
survey showed bigger than expected
acceleration in the pace of growth in
U.S. manufacturing activity in Jul.
• Buying interest found additional
support from the comments of Senate
Majority Leader regarding his support
for the coronavirus relief bill agreement
between Democrats and the White
House, despite certain differences.
Europe
• European markets went up after final data from IHS Markit showed that euro area
manufacturing sector returned to growth in Jul for the first time in a year-and-a-half,
which eased worries about economic recovery.
Asia
• Asian markets rose tracking bigger than expected acceleration in the pace of growth in
U.S. manufacturing activity in Jul and upbeat factory activity data of China. Investors also
remained optimistic that the U.S. lawmakers will eventually reach an agreement on a new
coronavirus relief bill.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury rose
2 bps to close at 0.56% compared to the
previous close of 0.54%. Yields on the
10-year U.S. Treasury rose for the first
time in five weeks.
• U.S. Treasury prices fell during the week
under review after U.S. manufacturing
activity rose in Jul 2020 on the back of
an increase in new orders. Losses were
extended after the U.S. Treasury
Department said it would borrow more
in the third quarter of 2020 than
previously anticipated.
• The safe haven appeal of U.S. Treasuries
further declined after U.S. nonfarm
payroll employment data for Jul 2020
came better than market expectations
and hopes of agreement among U.S.
policymakers on a second major
coronavirus stimulus bill.
Global Debt (U.S.)
0.50
0.54
0.58
3-Aug 4-Aug 5-Aug 6-Aug 7-Aug
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)
44.54 43.74
Gold ($/Oz)
2,034.62 1,974.69
Gold (Rs/10 gm)
55,922 53,615
Silver ($/Oz)
28.29 24.37
Silver (Rs/Kg)
73,755 63,877
Source: Refinitiv *Value as on Aug 07, 2020
Gold
• Gold prices surpassed $2000 per ounce
level during the week as persisting
concerns over the impact of the COVID-19
pandemic on the U.S. economy boosted
the safe haven appeal of the bullion.
Brent Crude
• Brent crude prices rose after data from the
Energy Information Administration showed
that U.S. crude inventories fell 7.4 million
barrels in the week ending July 31.
However, persisting concerns over COVID-
19 pandemic capped the gains.
Baltic Dry Index
• Baltic Dry Index rose due to improved
capesize and panamax activities.
Commodities Market
9
12
15
7-Jul-20 23-Jul-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
16.09%
1.83%
3.04%
7-Aug-20
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
74.96 74.77
Pound Sterling
98.39 98.17
EURO
88.78 88.87
100 Yen
71.01 71.64
Source: Refinitiv Figures in INR , *Value as on Aug 07, 2020
Rupee
• The rupee weakened against the greenback
due to escalating tensions between U.S.
and China. However, corporate dollar
inflows restricted further losses.
Euro
• The euro rose against the greenback as the
latter remained under pressure due to lack
of agreement among U.S. lawmakers on
further fiscal stimulus.
Pound
• The pound weakened against the
greenback after U.S. nonfarm payroll
employment data for Jul 2020 came better
than market expectations.
Yen
• The yen weakened against the greenback
following better than expected U.S.
nonfarm payroll employment data for Jul.
Currencies Markets
9.90
10.25
10.60
7-Jul-20 23-Jul-20
USD GBP Euro JPY
Source: Refinitiv
Currency Prices ( in terms of
INR)
Rebased to 10
Currency Movement
-0.10%
-0.88%
0.25%
0.22%
7-Aug-20
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15
The Week that was…
3
rd
Aug to 7
th
Aug
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16
The Week that was (Aug 03 – Aug 07)
Date Events
Present
Value
Previous
Value
Monday,
Aug 03, 2020
• Japan GDP Growth Annualized Final (Q1) -2.2% -7.2%
• India Markit Manufacturing PMI (Jul) 46.0 47.2
• China Caixin Manufacturing PMI (Jul) 52.8 51.2
• U.S. Markit Manufacturing PMI Final (Jul) 50.9 49.8
• U.S. ISM Manufacturing PMI (Jul) 54.2 52.6
• Eurozone Markit Manufacturing PMI Final (Jul) 51.8 47.4
• U.K. Markit/CIPS Manufacturing PMI Final (Jul) 53.3 50.1
Tuesday,
Aug 04, 2020
• U.S. Factory Orders MoM (Jun) 6.2% 7.7%
Wednesday,
Aug 05, 2020
• China Caixin Composite PMI (Jul) 54.5 55.7
• India Markit Services PMI (Jul) 34.2 33.7
• Eurozone Markit Composite PMI Final (Jul) 54.9 48.5
• Eurozone Retail Sales YoY (Jun) 1.3% -3.1%
• U.S. ISM Non-Manufacturing PMI (Jul) 67.2 66.0
Thursday,
Aug 06, 2020
• Bank of England Interest Rate Decision 0.1% 0.1%
• Reserve Bank of India Interest Rate Decision 4.0% 4.0%
• U.S. Initial Jobless Claims (Aug 01) 1186K 1435K
Friday,
Aug 07, 2020
• Japan Household Spending YoY (Jun) -1.2% -16.2%
• China Balance of Trade (Jul) $62.33B $46.42B
• U.S. Non-Farm Payrolls (Jul) 1763K 4800K
• U.S. Unemployment Rate (Jul) 10.2% 11.1%
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17
The Week Ahead
10
th
Aug to 14
th
Aug
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18
Day Event
Monday,
Aug 10, 2020
• China Consumer Price Index (YoY) (Jul)
• China Producer Price Index (YoY) (Jul)
• U.K. BRC Like-For-Like Retail Sales (YoY) (Jul)
Tuesday,
Aug 11, 2020
• Eurozone ZEW Survey – Economic Sentiment (Aug)
• U.S. Producer Price Index (YoY) (Jul)
• India Index of Industrial Production (Jun 2020)
Wednesday,
Aug 12, 2020
• India CPI Inflation (Jul 2020)
• U.K. Industrial Production (MoM) (Jun)
• U.K. Gross Domestic Product (YoY) (Q2) P
• Eurozone Industrial Production w.d.a. (YoY) (Jun)
Thursday,
Aug 13, 2020
• Germany Consumer Price Index (YoY) (Jul)
• U.S. Initial Jobless Claims (Aug 7)
Friday,
Aug 14, 2020
• India WPI Inflation (Jul 2020)
• China Industrial Production (YoY) (Jul)
• Eurozone Gross Domestic Product s.a. (YoY) (Q2) P
• U.S. Retail Sales (MoM) (Jul)
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
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