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NEWS U CAN USE
August 28, 2020
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The Week that was…
24
th
Aug to 28
th
Aug
2
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Indian Economy
• According to corporate affairs ministry numbers, corporate incorporations in Jul 2020
reached a seven-year high of 16,487, or 530 per day, which is 50% increase from a year
earlier.
• According to media reports, the government proposes to bring within the scope of the
proposed social security code at least half a dozen social security schemes, including old
age pension and insurance schemes. The move aims to universalize by putting all current
programs under one umbrella without any extra costs to the exchequer and is projected
to cover more than 20% of the population's edge.
• According to a major credit rating agency, Indian economy could have contracted by 25%
in the first quarter of the FY21 making it one of the most negative estimates for Asia's
third largest economy. The agency also cautioned that recovery could take some time as
the virus spreads and numbers of infections increase, causing more localized closures.
• According to a report by Niti Aayog, Gujarat has topped the Niti Aayog's Export
Preparedness Index 2020 followed by Maharashtra and Tamil Nadu. A favorable
environment helps a country to make a major contribution to global supply chains and
benefit internationally from interconnected production networks.
3
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4
Domestic Equity Market Indices
Indices 28-Aug-20 1 Week Return YTD Return
S&P BSE Sensex
39,467.31 2.69% -4.33%
Nifty 50
11,647.60 2.43% -4.28%
S&P BSE Mid-Cap
15,238.14 1.90% 1.81%
S&P BSE Small-Cap
14,990.55 2.50% 9.43%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
24-Aug-20 1,068 860 1.24
25-Aug-20 851 1,058 0.80
26-Aug-20 1,102 782 1.41
27-Aug-20 951 934 1.02
28-Aug-20 750 1,147 0.65
Source: NSE
• Indian equity markets edged higher
during the week with investors taking
positive cues as different industries are
reopening after coronavirus-imposed
lockdown. Risk appetite boosted
further after the U.S. Food & Drug
Administration authorized the use of
blood plasma from recovered patients
as a treatment option for COVID-19.
Signs of progress in U.S.-China trade
negotiations provided some support to
the buying interest.
• Investors also welcomed reports of
government hinting at a fresh set of
stimulus measures, including a review
of GST on two-wheelers, once COVID-
19 subsides. There have been
projections of an extended economic
downturn in the wake of the pandemic,
which calls for additional stimulus
measures.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
28.98 32.92 35.16 -187.39
P/B
3.02 3.26 2.45 2.37
Dividend Yield
0.96 1.43 1.01 0.99
Source: BSE, NSE Va
lue as on Aug 28, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
18,292.8 2.14% 8.91%
S&P BSE Bankex
27,891.8 10.34% 11.25%
S&P BSE CD
23,482.8 1.28% 8.48%
S&P BSE CG
14,276.0 0.74% 11.61%
S&P BSE FMCG
11,586.7 -1.30% 1.24%
S&P BSE HC
19,278.8 0.26% 13.63%
S&P BSE IT
18,179.5 -0.46% -0.35%
S&P BSE Metal
9,150.2 -0.45% 17.69%
S&P BSE Oil & Gas
13,350.8 -0.02% -2.70%
Source:
Refinitiv *Value as on Aug 28, 2020
• On the BSE sectoral front, the indices
witnessed a mixed trend. S&P BSE Bankex was
the major gainer, up 10.34%, followed by S&P
BSE Realty and S&P BSE Auto, which rose
4.26% and 2.14%, respectively.
• Banking stocks saw an uptick after RBI in its
annual report said Indian government
consumption will continue to support current
economic demand while private consumption
will likely lead the recovery when the COVID-
19 outbreak eases.
Indian Derivatives Market Review
• Nifty Sep 2020 Futures stood at 11,675.25, a premium of 27.65 points above the spot
closing of 11,647.60. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 98.42 lakh crore as against Rs. 87.11 lakh crore for the week to Aug 21.
• The Put-Call ratio stood at 0.75 compared with the previous session’s close of 0.85.
• The Nifty Put-Call ratio stood at 1.64 compared with the previous session’s close of 1.54.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.43 3.43 3.48 5.01
91 Day T-Bill
3.31 3.19 3.32 5.08
05.22% 2025, (5 Yr GOI)
5.53 5.41 5.01 --
05.79% 2030, (10 YrGOI)
6.10 6.14 5.85 --
Source: Refinitiv Value as on Aug 28, 2020
• Bond yields fell after the Reserve Bank
of India (RBI) conducted a special open
market operations (OMO) and
included the benchmark bond in the
special OMO which fuelled
expectations that the RBI will continue
to manage the long-end supply
tactfully even though it chooses to
pause open market operations for a
while due to liquidity concerns.
However, heavy devolvement at the
weekly debt auction capped the gains.
• Yield on the present 10-year
benchmark paper (5.79% GS 2030) fell
4 bps to close at 6.10% compared to
the previous week’s closing of 6.14%
after trading in a range of 6.10% to
6.23%.
Domestic Debt Market
6.06
6.13
6.20
24-Aug 25-Aug 26-Aug 27-Aug 28-Aug
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.78 5.06 128
3 Year 5.13 6.01 88
5 Year 5.59 6.95 136
10 Year 6.24 7.38 114
Source: Refinitiv Value as on
Aug 28, 2020
• Yields on gilt securities rose across
maturities by up to 15 bps barring 10-year
paper that fell by 4 bps and 1- and 19- year
papers that stood steady.
• Corporate bond yields rose across
maturities in the range of 4 bps to 11 bps
barring 1-, 9-, 10- and 15- year papers that
fell in the range of 3 bps to 15 bps and 8-
year paper stood steady.
• Difference in spread between AAA
corporate bond and gilt contracted across
maturities by up to 22 bps. Highest
contraction was seen on 15-year paper.
Domestic Debt Market (Spread Analysis)
-6
6
18
2.50
5.10
7.70
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 28-Aug-20 21-Aug-20
Yield in %
Change in bps
Source: Refinitiv
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8
• The Reserve Bank of India’s (RBI) total asset grew 30% YoY to Rs. 53.35 lakh crore in 2019-20
as against Rs. 41.03 lakh crore in 2018-19 following rise in domestic and foreign
investments. On the liability side, the increase was due to a 21.52% rise in notes issued,
30.46% rise in other liabilities and provisions and a 53.72% jump in deposits. The central
bank follows Jul-Jun fiscal period. But the current year (FY21) will end in Mar 2021 to enable
a transition to start its financial year from Apr to end in Mar. So FY22 would run from Apr
2021 to Mar 2022.
• The RBI cautioned that after the pandemic, India's potential production could suffer a
structural downshift. Thus RBI said that In a post-pandemic scenario, deep-seated and wide-
ranging structural reforms in factor and product markets, the financial sector, legal
framework and international competitiveness will be required to recover potential losses in
production and return the economy to a path of strong and sustainable growth with
macroeconomic and financial stability.
• Securities and Exchange Board (SEBI) extended the timeframe for proxy advisors'
compliance with the procedural guidelines released earlier this month to Jan 1, 2021 from 1
Sep 2020. The market regulator said the timeframe was extended after taking into account
requests received from registered proxy advisors and the prevailing industry and market
conditions due to the COVID-19 pandemic.
Regulatory Updates in India
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9
• In a recent clarification, IRDAI said that general insurance companies could not reject claim
request of policyholders for not having a valid Pollution Under Control (PUC) certificate at
the time of claim request. Currently, it is mandatory for all vehicles on Indian roads to carry
a valid PUC certification. However, the insurance regulator clarified that policyholders are
required to have a valid PUC at the time of renewing their policy.
• According to media reports, SEBI shall no longer entertain email complaints and will only
process complaints that are registered on SCORES. Recently, SEBI has urged investors to
lodge complaints related to securities market entities like mutual funds, PMS, AIFs and
RIAs only through its web-based centralised grievance redressal system SEBI Complaints
Redress System (SCORES).
• According to media reports, IRDAI is likely to make license norms more rigid to ensure that
the insurers to whom license are granted are resilient to deep and prolonged crises.
Accordingly, entities which are financially strong not only at the time of entry but also
during tough liquidity phases for 5-10 years, may get a licence to launch or acquire an
insurance company.
• The Directorate General of Trade Remedies (DGTR) has proposed imposing anti-dumping
duty on 'choline chloride,' a chemical imported from China, Malaysia and Vietnam, to
protect domestic players from cheap inbound shipments for five years. Since conducting a
report on suspected dumping of choline chloride in all forms by these countries, DGTR has
recommended duty ranging from USD 94 per tonne to USD 315 per tonne.
Regulatory Updates in India (contd..)
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• U.S. Federal Reserve (Fed) Chairman in a highly anticipated speech to the Jackson Hole
economic symposium announced a widely expected shift with regard to the price-stability
side of the central bank's dual mandate. He revealed that the Fed will change its approach
to a "flexible form of average inflation targeting."
• U.S. real gross domestic product (GDP) plunged 31.7% in the Jun quarter of 2020
compared, slower than 32.9% previously reported. Slower fall came as private inventory
investment and consumer spending decreased less than previously estimated. Despite the
revision, the steep drop in GDP in the second quarter still represented the biggest
economic contraction on record.
• As per the Commerce Department report, U.S. durable goods orders surged 11.2% in Jul
2020, faster than revised 7.7% rise (7.6% jump originally reported) in Jun 2020. The rise
reflected sharp increase in orders for transportation equipment that jumped 35.6% in Jul
2020, higher than 19.7% rise in Jun 2020.
• Revised data from Destatis showed, Germany's Gross Domestic Product (GDP) contracted
9.7% QoQ in the Jun quarter of 2020, better than initial estimates of 10.1% fall and worse
than 2% fall in the Mar quarter of 2020. Contraction was the sharpest on record as the
coronavirus pandemic shattered spending, investment and trade.
• Survey data from the market researcher GfK showed, Germany's consumer confidence
index (forward-looking) surprisingly fell to -1.8 in Sep 2020 from -0.2 (revised from -0.3) in
Aug 2020.
10
Global News/Economy
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11
Global Indices
Indices
28-Aug-20
1-Week
Return
YTD
Return
Russell 3000 1,815.32 3.61% 27.30%
Nasdaq 100 11,995.86 3.81% 37.36%
FTSE 100 5,963.56 -0.64% -20.93%
DAX Index 13,033.20 2.10% -1.63%
Nikkei Average 22,882.65 -0.16% -3.27%
Straits Times 2,539.63 0.44% -21.20%
Source: Refinitiv Value as on Aug 28, 2020
U.S.
• U.S. markets traded higher with
investors taking positive cues from the
latest developments on the coronavirus
treatment. The U.S. Food and Drug
Administration announced that it has
issued an emergency use blood plasma
for the treatment of COVID-19 in
hospitalized patients.
Europe
• European markets largely remained higher on hopes for a coronavirus treatment amid
resurgence of virus cases around the world. Optimism about progress in U.S.-China trade
talks and hopes of stimulus measures also generated positive vibes.
Asia
• Majority of the Asian markets rose mainly led by U.S. Food and Drug Administration’s
emergency authorization for the use of blood plasma to treat hospitalized coronavirus
patients.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury rose
9 bps to close at 0.73% compared with
the previous week’s close of 0.64%.
•
U.S. Treasury prices fell as investors
turned to riskier assets on optimism
about progress in U.S.-China trade talks.
• U.S. Treasury prices fell further after the
Chairman of the U.S. Federal Reserve
unveiled a new policy plan encouraging
higher inflation to boost economic
growth and job creation.
• However, month-end buying by
investors restricted further losses.
Global Debt (U.S.)
0.62
0.70
0.78
24-Aug 25-Aug 26-Aug 27-Aug 28-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($/Barrel)
45.84 44.13
Gold ($/Oz)
1,964.49 1,939.40
Gold (Rs/10 gm)
50,981 51,840
Silver ($/Oz)
27.49 26.69
Silver (Rs/Kg)
64,613 65,633
Source: Refinitiv *Value as on Aug 28, 2020
Gold
• Gold prices traded higher as tension
between U.S. and China over South
China Sea rekindled which boosted the
safe haven appeal of the bullion.
However, positive developments on the
coronavirus treatment restricted the
gains.
Brent Crude
• Brent crude prices rose on growing
possibility of production cuts in the U.S.
Gulf Coast as Tropical Storm Laura was
forecast to become a major hurricane.
However, limited impact by the same
capped the gains.
Baltic Dry Index
• The index rose amid improving capesize
and panamax activities.
Commodities Market
9.50
10.00
10.50
11.00
11.50
12.00
28-Jul-20 7-Aug-20 17-Aug-20 27-Aug-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
3.00%
3.87%
1.29%
28-Aug-20
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
73.35 74.88
Pound Sterling
97.28 99.12
EURO
87.07 88.86
100 Yen
69.03 70.90
Source: Refinitiv Figures in INR , *Value as on Aug 28, 2020
Rupee
• The rupee witnessed the biggest gain
against the greenback in as many as
twenty weeks following foreign fund
inflow into domestic capital markets.
Euro
• The euro rose against the greenback
after the U.S. Federal Reserve’s new
policy framework indicated that interest
rates in U.S. would remain low for an
extended period of time.
Pound
• The pound rose against the greenback
on prospects of lower interest rates in
U.S. for a long time to come.
Yen
• The yen rose against the greenback after
Japan’s Prime Minister announced his
resignation due to worsening health
conditions.
Currencies Markets
9.70
10.05
10.40
28-Jul-20 7-Aug-20 17-Aug-20 27-Aug-20
USD GBP Euro JPY
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
-1.86%
-2.03%
-2.64%
-2.02%
Source: Refinitiv
28-Aug-20
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15
The Week that was…
24
th
Aug to 28
th
Aug
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16
The Week that was (Aug 24 – Aug 28)
Date Events Present Value Previous Value
Monday,
Aug 24, 2020
• U.S. Chicago Fed National Activity Index (Jul) 1.2 5.3
Tuesday,
Aug 25, 2020
• Germany Gross Domestic Product (YoY)(Q2) -11.3% -2.2%
• Germany IFO – Business Climate (Aug) 92.6 90.4
• U.S. Redbook Index (YoY) (Aug 21) 0.6% -2.8%
• U.S. Housing Price Index (MoM) (Jun) 0.9% -0.2%
• U.S. New Home Sales (MoM) (Jul) 13.9% 15.1%
Wednesday,
Aug 26, 2020
• Japan Leading Economic Index (Jun) 84.4 78.3
• U.S. Durable Goods Orders (Jul) 11.2% 7.7%
Thursday,
Aug 27, 2020
• Japan All Industry Activity Index (MoM) (Jun) 6.1% -4.1%
• U.S. Core Personal Consumption Expenditures (QoQ) (Q2)
Prel
-1.0% 1.6%
• U.S. Gross Domestic Product Price Index(Q2) Prel -31.7% -5.0%
Friday,
Aug 28, 2020
• Germany Gfk Consumer Confidence Survey (Sep) -1.8 -0.2
• Eurozone Consumer Confidence (Aug) -14.7 -15
• U.S. Personal Spending (Jul) 1.5% 5.6%
• U.S. Michigan Consumer Sentiment Index (Aug) 74.1 72.8
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17
The Week Ahead
31
st
Aug to 4
th
Sep
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18
Day Event
Monday,
August 31, 2020
• Japan Retail Sales YoY (Jul)
• India Fiscal Deficit (Aug)
• Germany Inflation Rate YoY Prel (Aug)
• India GDP Growth Rate YoY (Q2)
Tuesday,
September 1, 2020
• China Caixin Manufacturing PMI (Aug)
• India Markit Manufacturing PMI (Aug)
• Eurozone Inflation Rate YoY Flash (Aug)
• U.S. ISM Manufacturing PMI (Aug)
Wednesday,
September 2, 2020
• Germany Retail Sales YoY (Jul)
• U.S. ADP Employment Change (Aug)
Thursday,
September 3, 2020
• China Caixin Composite PMI (Aug)
• Germany Markit Composite PMI Final (Aug)
• Eurozone Markit Composite PMI Final (Aug)
• U.K. Markit/CIPS Composite PMI Final (Aug)
• Eurozone Retail Sales YoY (Jul)
Friday,
September 4, 2020
• U.S. Balance of Trade (Jul)
• U.S. ISM Non-Manufacturing Business Activity (Aug)
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) (formerly Reliance Nippon Life Asset Management Limited) 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 assures the accuracy or authenticity of such data and information. Some of the
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representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such data or information.
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