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NEWS U CAN USE
August 14, 2020
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The Week that was…
10
th
Aug to 14
th
Aug
2
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Indian Economy
• India's index of industrial production plunged 16.6% YoY in Jun 2020, worse than 1.3%
growth in the corresponding period last year but better than 33.9% contraction in May 2020.
Manufacturing sector fell 17.1% YoY in Jun 2020 compared with 0.3% a year earlier.
Sequential numbers indicated some recovery in the sector that was hit by lockdowns imposed
to curb the spread of coronavirus.
• Government data showed that the consumer price index based inflation rose to 6.93% in Jul
2020 from 6.23% in the previous month. The Consumer Food Price Index also rose to 9.62% in
Jul 2020 from 8.72% in the previous month. Retail inflation thus stood above the upper
tolerance level of 6% set by the Reserve Bank of India for the fourth consecutive month. Also,
out of the last eight months, retail inflation remained above 6% for seven months.
• Government data showed that the wholesale price index (WPI) based inflation contracted
0.58% in Jul 2020 as compared to a contraction of 1.81% in the previous month and a growth
of 1.17% in the same month of the previous year. WPI contracted for the fourth consecutive
month. The WPI Food Index however grew 4.32% in Jul 2020 from 3.05% in the previous
month and 2.73% in the same month of the previous year.
• Government data showed that India’s trade deficit narrowed to $ 4.83 billion in Jul 2020 from
$ 13.43 billion in the same month of the previous year. Exports contracted 10.21% to $ 23.64
billion in Jul 2020 while imports contracted 28.40% to $ 28.47 billion in the same month. Gold
imports increased 4.17% over the month while import of project goods grew 79.90% in the
same period.
3
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4
Domestic Equity Market Indices
Indices
14-Aug-20
1 Week Return
YTD Return
S&P BSE Sensex
37,877.34 -0.43% -8.18%
Nifty 50
11,178.40 -0.32% -8.14%
S&P BSE Mid
-Cap
14,433.58 1.51% -3.57%
S&P BSE Small
-Cap
13,855.18 1.36% 1.14%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
10-Aug-20 1,242 658 1.89
11-Aug-20 1,060 831 1.28
12-Aug-20 1,007 896 1.12
13-Aug-20 1,087 789 1.38
14-Aug-20 701 1,202 0.58
Source: NSE
• Indian equity markets gave up its initial
gains to end the week in the red.
Positive cues were generated from
encouraging quarterly numbers from
major pharma companies and the
government’s new initiative
Atmanirbhar Bharat (Self-Reliant India).
• Additionally, Prime Minister’s statement
on the COVID-19 situation in India
instilled confidence among the investors
to overcome the pandemic situation.
• However, markets reversed the trend
later, weighed down by weak industrial
output data for Jun. Further, retail price
inflation accelerated higher than
expectations in Jul, dashing hopes of
any interest rate cuts for now.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.46 31.09 31.45 -242.93
P/B
2.83 3.15 2.31 2.16
Dividend Yield
1.02 1.47 1.08 1.09
Source: BSE, NSE Va
lue as on Aug 14, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
17,297.68 1.16% 10.45%
S&P BSE Bankex
24,597.83 -0.40% 1.52%
S&P BSE CD
22,180.56 0.50% 7.90%
S&P BSE CG
13,777.80 6.19% 7.70%
S&P BSE FMCG
11,595.24 -0.68% 1.52%
S&P BSE HC
19,114.40 1.88% 14.76%
S&P BSE IT
18,194.73 0.18% 15.59%
S&P BSE Metal
8,742.41 3.59% 17.47%
S&P BSE Oil & Gas
13,189.07 -0.70% 2.82%
Source:
Refinitiv *Value as on Aug 07, 2020
• On the BSE sectoral front, majority of the
indices closed in the green. S&P BSE Capital
Goods is the top gainer, up 6.19%, followed by
S&P BSE Metal which rose 3.59%.
• Capital goods sector rose after one of the
industry majors reported that its construction
arm has secured significant contracts from
prestigious clients for its varied business.
• Meanwhile, S&P BSE Oil & Gas was the major
loser, down 0.70%, followed by S&P BSE FMCG
which slipped 0.68%.
Indian Derivatives Market Review
• Nifty Aug 2020 Futures stood at 11,186.70, a premium of 8.30 points above the spot closing
of 11,178.40. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 88.47 lakh crore as against Rs. 96.82 lakh crore for the week to Aug 7.
• The Put-Call ratio stood at 0.98 compared with the previous session’s close of 0.89.
• The Nifty Put-Call ratio stood at 1.31 compared with the previous session’s close of 1.60.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
3.45 3.44 3.46 5.03
91 Day T
-Bill
3.30 3.30 3.22 5.11
05.22% 2025, (5
Yr GOI)
5.23 5.09 4.87 --
05.79% 2030, (10
YrGOI)
5.97 5.89 5.83 --
Source:
Refinitiv Value as on Aug 14, 2020
• Bond yields rose for the fifth consecutive
week and witnessed the biggest weekly
rise in as many as thirteen weeks. Yields
went up after consumer price index
based inflation or retail inflation
remained above the upper tolerance
level of 6% set by the Reserve Bank of
India (RBI) for the fourth consecutive
month in Jul 2020 which lowered the
possibility of further easing of monetary
policy in the coming months.
• Yield on the present 10-year benchmark
paper (5.79% GS 2030) rose 8 bps to
close at 5.97% compared to the previous
week’s closing of 5.89% after trading in a
range of 5.88% to 5.99%.
• Yield on the upcoming new 10-year
benchmark paper (5.77% GS 2030) rose
11 bps to close at 5.95% compared to the
previous closing of 5.84% after moving in
a range of 5.85% to 5.96%.
Domestic Debt Market
5.84
5.91
5.98
10-Aug 11-Aug 12-Aug 13-Aug 14-Aug
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.71 4.98 127
3 Year 4.94 5.91 97
5 Year 5.30 6.67 137
10 Year 6.05 7.26 121
Source:
Refinitiv
Value as on
Aug 14, 2020
• Yields on gilt securities increased across the
maturities by up to 13 bps barring 1, 13 and
19-year paper which fell by up to 10 bps.
• Corporate bond yields rose across 4 to 9-year
maturities in the range of 2 to 13 bps and
contracted across the remaining maturities in
the range of 6 to 27 bps barring 10-year
paper which closed steady.
• Difference in spread between AAA corporate
bond and gilt contracted across the
maturities in the range of 4 to 30 bps barring
6 and 7-year paper which expanded 4 bps
each while the 5-year paper closed steady.
Domestic Debt Market (Spread Analysis)
-18
0
18
36
2.70
4.80
6.90
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 14-Aug-20 07-Aug-20
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
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8
• Capital market regulator Securities and Exchange Board of India mandated that stock
exchanges shall impose a fine of Rs. 1,000 per day per complaint if the listed entity fails to
redress complaints made by investors within the stipulated time. The depositories under
such a scenario can even freeze the entire shareholding of promoters for non-compliance.
The guidelines will come into effect from Sep 1, 2020.
• The Ministry of Road Transport and Highways through National Highways Authority of India
(NHAI) constructed 1,640 kilometres in the June quarter of 2020, which converts into 18.22
km per day. It indicated that the government used labour optimally to complete work with
minimal hindrance. During this period, government awarded contracts for 1,658 km of
highways.
• According to media reports, the Commerce Department has suggested to the Revenue
Department that some broad benefits be continued under Merchandise Export from India
Scheme (MEIS), planned successor scheme. Earlier government's decided to withdraw the
MEIS scheme in a phased manner.
• The Finance Ministry said Prime Minister will launch a platform- “Transparent Taxation
Honoring the Honest”, which will further carry forward the journey of direct tax reforms.
This year’s union budget announced to unveil a 'taxpayer charter', which is expected to have
statutory status and will empower citizens by ensuring time-bound services by the Income
Tax department.
Regulatory Updates in India
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9
• The Reserve Bank of India has asked large urban cooperative banks to undertake the
system-based asset classification from Jun 30, 2021 to improve efficiency and transparency.
• The government released Rs. 6,195.08 crore to 14 states as the fifth equated monthly
instalment of the post devolution revenue deficit grant. The finance ministry said it would
provide them additional resources to combat the COVID-19 pandemic.
• According to media reports, Insurance Regulatory and Development Authority (IRDAI) has
put the onus of taking steps against medical establishments for deficiency in service on the
insurer. Accordingly, insurance companies can take action against a hospital for demanding
advance from a policy holder who is supposed to get cashless service. Such decision comes
on the backdrop of sharp spike in complaints post COVID-19 outbreak that private hospitals
are demanding huge advance before admission even from patients having cashless medical
insurance.
• According to media reports, insurance companies involved in Pradhan Mantri Fasal Bima
Yojana (PMFBY) have collectively paid 85% claims against the premium collected over the
last three years. According to the government, the difference between premium collected
and claims paid by insurance companies is not the only profit for the companies. The cost of
reinsurance and administrative costs are also borne by insurance companies. It added that
most general insurance companies, except Agriculture Insurance Company of India Ltd (AIC),
undertake different types of businesses/policies. Thus, the overall profit/loss of these
companies arises out of the profit/loss in these different lines of insurance.
Regulatory Updates in India (contd..)
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• According to a report by the Labor Department, U.S. consumer price index rose more than
expected by 0.6% in Jul 2020, matching the increase seen in Jun 2020. The stronger than
expected consumer price growth was partly due to a continued spike in energy prices that
rose 2.5% in Jul 2020 after increasing 5.1% in Jun 2020. Gasoline prices continued to lead
the way higher.
• According to preliminary data by the University of Michigan, U.S. consumer sentiment
index inched up to 72.8 in Aug 2020 from 72.5 in Jul 2020. On the other hand, the current
economic conditions index fell to 82.5 in Aug from 82.8 in the previous month.
• According to the Office for National Statistics, U.K. gross domestic product (GDP)
contracted 20.4% sequentially in the quarter ended Jun 2020 following 2.2% drop in the
quarter ended Mar 2020. During the coronavirus pandemic, the UK economy contracted at
the fastest pace ever in quarter ended Jun 2020, despite signs of recovery taking hold in
Jun following the relaxation of movement restrictions.
• According to Office for National Statistics, U.K. employment declined 220,000 in three
months to Jun 2020 from the previous quarter to 32.92 million. The employment rate fell
0.2% to 76.4% in the quarter ended Jun 2020.
• According to data from the National Bureau of Statistics, China’s consumer price inflation
rose to 2.7% in Jul 2020 from 2.5% in Jun 2020. The rise in inflation came due to higher
food costs as regional flooding disrupted transportation and the fall in factory gate prices
slowed further reflecting the recovery in economic activity.
10
Global News/Economy
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11
Global Indices
Indices
14-Aug-20
1-Week
Return
YTD
Return
Russell 3000
1,703.41 0.32% 19.45%
Nasdaq 100
11,164.45 0.22% 27.84%
FTSE 100
6,090.04 0.96% -19.26%
DAX Index
12,867.00 1.52% -2.88%
Nikkei Average
23,289.36 4.30% -1.55%
Straits Times
2,581.32 1.41% -19.91%
Source:
Refinitiv
Value as on Aug 14, 2020
U.S.
• U.S. markets traded higher with investors
taking initial positive cues from U.S.
President’s approval of a series of executive
orders expanding coronavirus economic
relief to Americans although the Democrats
and White House officials remained at an
impasse over a coronavirus relief bill.
• Gains were restricted after the President,
who has taken the unprecedented action to
circumvent Congress due to the impasse,
claimed "the bill's not going to happen".
Europe
• European markets rose on the back of news about Russia registering the first vaccine
'Sputnik V.' against the coronavirus pandemic, which outweighed concerns about U.S.-
China tensions. Further, data showed factory output in the euro zone grew for the second
straight month in June, although the MoM increase was lower than market expectation.
Asia
• Asian markets also rose during the week, led by positive impact of Russia's announcement
that its coronavirus vaccine has been approved. However, gains were restricted by worries
about a political uncertainty in Washington over coronavirus relief.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury rose 15
bps to close at 0.71% compared to the
previous week’s close of 0.56%.
• U.S. Treasury prices fell during the week
after U.S. Treasury Department conducted
three Treasury auctions which led to record
supply of U.S. debt in the market.
• President of Russia announced that his
country has become the first country in the
world to grant regulatory approval to a
COVID-19 vaccine which improved the
investor risk sentiment to some extent
leading to fall in U.S. Treasury prices.
• U.S. Treasury prices fell further as its safe
haven appeal came down after the U.S.
President said that he was considering
cutting the federal capital gains tax and
lowering income taxes for middle-income
families to help the U.S. economy recover
from the economic fallout of the
coronavirus pandemic.
Global Debt (U.S.)
0.52
0.64
0.76
10-Aug 11-Aug 12-Aug 13-Aug 14-Aug
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($/Barrel)
45.56 44.54
Gold ($/Oz)
1,943.76 2,034.62
Gold (Rs/10 gm)
52,688 55,922
Silver ($/Oz)
26.41 28.29
Silver (Rs/Kg)
67,317 73,755
Source:
Refinitiv *Value as on
Aug 14, 2020
Gold
• Gold prices slipped on profit booking and
as the safe haven appeal softened amid
optimism that U.S. Congress will agree a
massive stimulus deal and expectations of
an ease in tensions between U.S. and
China.
Brent Crude
• Brent crude prices rose after data from the
Energy Information Administration showed
that crude inventories in U.S. fell by 4.5
million barrels for the week ended Aug 7
which was higher than market
expectations.
Baltic Dry Index
• The index rose on the back of improved
capesize and panamax activities.
Commodities Market
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
14-Jul-20 29-Jul-20 13-Aug-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-6.65%
2.29%
-4.47%
14-Aug-20
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
74.77 74.96
Pound Sterling
97.73 98.39
EURO
88.39 88.78
100 Yen
69.99 71.01
Source:
Refinitiv Figures in INR , *Value as on Aug 14, 2020
Rupee
• The rupee rose against the greenback due to
foreign fund inflows related to institutional
placements.
Euro
• The euro rose against the greenback as the
latter remained under pressure with
policymakers in U.S. failing to make any
progress on the new stimulus package which
is expected to help the U.S. economy combat
the COVID-19 pandemic.
Pound
• The pound rose against the greenback on
growing hopes of a post-Brexit trade deal
before a transition period ends this year.
Yen
• The yen weakened against the greenback
after consumer price index-based inflation in
U.S. rose in Jul 2020 from the previous
month.
Currencies Markets
9.60
10.00
10.40
10.80
14-Jul-20 29-Jul-20 13-Aug-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-0.44%
-0.67%
-1.44%
-0.24%
14-Aug-20
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15
The Week that was…
10
th
Aug to 14
th
Aug
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16
The Week that was (Aug 10 – Aug 14)
Date Events Present Value Previous Value
Monday,
Aug 10, 2020
• China Consumer Price Index (YoY)(Jul)
2.7% 2.5%
• U.K. BRC Like
-For-Like Retail Sales (YoY)(Jul) 4.3% 10.9%
• Japan Current Account (Jun) (Yen)
167.5B 1176.8B
Tuesday,
Aug 11, 2020
• India Index of Industrial Production (YoY) (Jun)
-16.6% -18.3%
• U.K. ILO Unemployment Rate (3M)(Jun)
3.90% 3.90%
• Eurozone ZEW Survey
– Economic Sentiment(Aug) 64.0 59.6
Wednesday,
Aug 12, 2020
• India Consumer Price Inflation (YoY) (Jul)
6.93% 6.23%
• U.K. Gross Domestic Product (
QoQ)(Q2) PREL -20.40% -2.20%
• U.S. Consumer Price Index (YoY)(Jul)
1.00% 0.60%
• U.S. Monthly Budget Statement(Jul)
63B -864B
Thursday,
Aug 13, 2020
• Germany Wholesale Price Index (YoY)(Jul)
-2.60% -3.30%
• Japan Machine Tool Orders (YoY)(Jul) PREL
-31.10% -32%
• Germany Consumer Price Index (YoY)(Jul)
-0.10% -0.10%
• U.S. Import Price Index (YoY)(Jul)
-3.30% -3.80%
Friday,
Aug 14, 2020
• India Wholesale Price Index (YoY) (Jul)
-0.58% -1.81%
• India Trade Deficit (USD) (Jul)
4.83B -0.79B
• China Retail Sales (YoY)(Jul)
-1.10% -1.80%
• U.S. Michigan Consumer Sentiment Index(Aug) PREL
72.8 72.5
• U.S. Retail Sales (MoM)(Jul)
1.20% 8.40%
• Eurozone Gross Domestic Product (YoY)(Q2) PREL
-15% -15%
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17
The Week Ahead
17
th
Aug to 21
st
Aug
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18
Day Event
Monday,
Aug 17, 2020
•
Japan Industrial Production (YoY)(Jun)
•
U.S. NAHB Housing Market Index (Aug)
Tuesday,
Aug 18, 2020
•
U.S. Building Permits (MoM)(Jul)
•
U.S. Housing Starts (MoM)(Jul)
•
Japan Merchandise Trade Balance Total (Jul)
Wednesday,
Aug 19, 2020
•
U.K. Consumer Price Index (YoY)(Jul)
•
U.S. Federal Reserve Minutes
Thursday,
Aug 20, 2020
•
Germany Gfk Consumer Confidence Survey (Sep)
•
U.K. GfK Consumer Confidence (Aug)
•
Japan National Consumer Price Index (YoY) (Jul)
Friday,
Aug 21, 2020
•
U.S. Markit PMI Composite(Aug) PREL
•
Eurozone Consumer Confidence(Aug) PREL
•
Eurozone Markit PMI Composite(Aug) PREL
•
Germany Markit PMI Composite(Aug) PREL
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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