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NEWS U CAN USE
December 4, 2020
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The Week that was…
30
th
Nov to 4
th
Dec
2
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Indian Economy
• The Monetary Policy Committee (MPC) in its monetary policy review kept key policy repo
rate unchanged at 4.0%. 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%. The MPC
also decided to continue with its accommodative stance as long as necessary – at least
during the current financial year and into the next financial year – to revive growth of the
Indian economy on a durable basis and mitigate the impact of COVID-19 pandemic on the
economy, while ensuring that inflation remains within the target going forward. All the
members of the MPC unanimously voted for keeping the policy repo rate unchanged and
continuing with the accommodative stance on the monetary policy.
• Data from a private survey showed that the growth in the Indian manufacturing sector lost
momentum in Nov 2020. The seasonally adjusted IHS Markit India Manufacturing
Purchasing Managers’ Index (PMI) fell to 56.3 in Nov 2020 from 58.9 in Oct 2020.
• Results from a private survey showed that the seasonally adjusted India Services Business
Activity Index came above the critical 50.0 mark that separates growth from contraction
for the second month in a row in Nov 2020. However, the same fell from 54.1 in Oct 2020
to 53.7 in Nov 2020. The Composite PMI Output Index also came down to 56.3 in Nov 2020
from 58.0 in Oct 2020. According to the survey participants, a pickup in demand,
marketing efforts and relaxation of restrictions on coronavirus lockdowns led to an
increase in sales.
3
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4
Domestic Equity Market Indices
Indices 04-Dec-20 1 Week Return YTD Return
S&P BSE Sensex
45,079.55 2.11% 9.27%
Nifty 50
13,258.55 2.23% 8.96%
S&P BSE Mid-Cap
17,389.02 2.80% 16.18%
S&P BSE Small-Cap
17,317.29 2.62% 26.41%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
01-Dec-20 1,294 651 1.99
02-Dec-20 1,096 796 1.38
03-Dec-20 1,393 568 2.45
04-Dec-20 1,088 846 1.29
Source: NSE
• Indian equity markets settled for the
week with fresh record highs. Investors
took initial positive cues from recovery
in the GDP data for the Sep quarter,
although the same remained in
contraction. Consistency in GST
revenue figures for Nov also generated
positive vibes. Later market
participants keenly awaited for the
cues from the MPC’s latest monetary
policy meeting, held during Dec 2-4 and
pinned hopes for upward economic
growth forecast.
• The central bank committee did not
disappoint the market by keeping key
rates unchanged, as expected, and
revised upwards the economic growth
projections for FY21 coupled with
assurance of ample liquidity for the
stressed sectors.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
32.18 36.46 62.42 840.69
P/B
3.00 3.75 2.61 2.36
Dividend Yield
0.90 1.20 1.05 0.96
Source: BSE, NSE Va
lue as on Dec 4, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
21,019.9 4.43% 17.81%
S&P BSE Bankex
34,360.1 1.41% 16.26%
S&P BSE CD
28,271.6 4.53% 14.63%
S&P BSE CG
17,571.5 3.23% 21.20%
S&P BSE FMCG
11,959.8 2.00% 8.96%
S&P BSE HC
20,977.3 3.24% 7.08%
S&P BSE IT
22,265.1 2.91% 4.67%
S&P BSE Metal
11,039.1 8.03% 32.89%
S&P BSE Oil & Gas
14,018.6 5.79% 18.00%
Source:
Refinitiv *Value as on Dec 4, 2020
• On the BSE sectoral front, all the major indices
closed in the green. S&P BSE Realty was the
major gainer, up 8.60%, followed by S&P BSE
Metal and S&P BSE Oil & Gas, which rose
8.03% and 5.79%, respectively. Rate sensitive
sector went up with overall positive tone led
by the MPC policy meeting.
• Metal sector rose primarily on account of
higher capacity utilisation and healthy
realizations sequentially. The boosted
investment sentiments, along with demand
recovery from China is expected to support
base metals to trade up.
Indian Derivatives Market Review
• Nifty Dec 2020 Futures stood at 13,311.60, a premium of 53.05 points above the spot
closing of 13,258.55. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 113.75 lakh crore as against Rs. 169.40 lakh crore for the week to Nov 27.
• The Put-Call ratio stood at 0.87 compared with the previous week’s close of 0.93.
• The Nifty Put-Call ratio stood at 1.57 compared with the previous week’s close of 1.28.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.06 3.13 3.16 3.75
91 Day T-Bill
3.01 2.93 3.23 3.44
05.22% 2025, (5 Yr GOI)
5.03 5.08 5.18 4.97
05.77% 2030, (10 Yr GOI)
5.90 5.91 5.89 --
Source: Refinitiv Value as on Dec 4, 2020
• Bond yields rose initially ahead of the
Monetary Policy Committee’s (MPC)
meeting decision on Dec 04, 2020,
which remained status quo as market
expected. However, losses almost
reversed as many market participants
had expected some liquidity absorbing
measure from the Reserve Bank of
India (RBI), which was not announced
in the meeting.
• Yield on the 10-year benchmark paper
(5.77% GS 2030) eased 1 bps to close
at 5.90% from the previous week’s
close of 5.91% after moving in a range
of 5.89% to 5.95%.
• According to the RBI’s scheduled
banks’ statement of position in India as
on Nov 20, 2020, banks credit and
deposit growth stood at 5.82% and
10.90%, respectively.
Domestic Debt Market
5.88
5.91
5.94
1-Dec 2-Dec 3-Dec 4-Dec
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 4.93 115
3 Year 4.49 5.34 85
5 Year 5.13 6.37 124
10 Year 5.98 7.03 105
Source: Refinitiv Value as on
Dec 4, 2020
• Yields on gilt securities increased on 1, 3 and 19-
year paper by up to 37 bps while it fell across the
remaining maturities by up to 7 bps barring 13-
year paper which closed steady.
• Corporate bond yields increased across 1 to 4-
year maturities by up to 15 bps while it
contracted across the remaining maturities by
up to 5 bps barring 9-year paper which closed
steady.
• Difference in spread between AAA corporate
bond and gilt expanded across the maturities by
up to 7 bps barring 1 and 5-year paper which
contracted 22 bps and 1 bps respectively while
the same on 7-year paper closed steady.
Domestic Debt Market (Spread Analysis)
-5
5
15
25
35
45
2.60
4.80
7.00
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 04-Dec-20 27-Nov-20
Yield in %
Change in bps
Source: Refinitiv
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8
• RBI proposed to bring the 26 sectors that have been identified to be under stress by the
Kamath Committee within the ambit of sectors eligible under on tap TLTRO (Targeted Long
Term Repo Operations). The on tap TLTRO will thus be expanded to provide credit support
to other stressed sectors in synergy with the credit guarantee available under the
Emergency Credit Line Guarantee Scheme (ECLGS 2.0) of the Government. The objective of
the move is to encourage banks in extending credit support to stressed sectors at lower
cost.
• RBI has decided to extend the Liquidity Adjustment Facility (LAF) and Marginal Standing
Facility (MSF) to Regional Rural Banks (RRBs). In addition, RBI has decided to allow RRBs to
participate in the call/notice money market, both as borrowers and lenders. The objective of
the move is to facilitate more efficient liquidity management by the RRBs at competitive
rates. Detailed guidelines will be issued shortly.
• RBI after conducting a review decided that scheduled commercial banks and cooperative
banks shall not make any dividend pay-out from the profits pertaining to financial year FY20.
The decision was taken after taking into account the ongoing stress and the heightened
uncertainty on account of COVID-19 pandemic.
• RBI took note of the changing risk profile of NBFCs and underlined the need to review the
regulatory framework of the same. According to the RBI, a scale-based regulatory approach
linked to the systemic risk contribution of NBFCs could be the way forward.
Regulatory Updates in India
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9
• RBI has decided to formulate guidelines on dividend distribution by non-banking financial
companies (NBFCs). The decision was taken after taking into account the increasing
significance of NBFCs in the financial system and their interlinkages with different
segments. NBFCs under different categories would be allowed to declare dividend as per a
matrix of parameters, subject to a set of generic conditions.
• RBI has decided to issue guidelines to large Urban Cooperative Banks (UCBs) and NBFCs on
adoption of Risk Based Internal Audit (RBIA). The objective of the move is to enable the
creation of independent risk focussed internal audit system. RBI also decided to harmonise
guidelines on appointment of Statutory Auditors for commercial banks, UCBs and NBFCs.
This will enable supervised entities (SEs) to appoint the audit firms as per their needs in a
timely, transparent and effective manner which in turn will improve the quality of financial
reporting of SEs.
• It was proposed to issue Reserve Bank of India (Digital Payment Security Controls)
Directions, 2020 for setting up a robust governance structure for digital payment systems
in India. The objective of the move is to implement common minimum standards of
security controls for channels like internet, mobile banking, card payments, among others.
• RBI has decided to put in place a comprehensive framework for improving the internal
grievance redress mechanism of the banks and to provide better customer service. The
framework would be put in place during Jan 2021.
Regulatory Updates in India (contd..)
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• The Organisation for Economic Cooperation and Development has downgraded global
growth outlook for 2021 and targeted for determined policy action to achieve sustainable
and inclusive growth. The world economy is forecasted to fall 4.2% in 2020 before
rebounding 4.2% in 2021. The agency upgraded its 2020 outlook from -4.5% but lowered
the projection for next year from 5%. The growth is seen at 3.7% in 2022.
• According to the Labor Department, U.S. non-farm payroll employment rose by 245,000
jobs in Nov 2020 after increasing by a downwardly revised 610,000 jobs in Oct 2020.
Despite the weaker than expected job growth, the unemployment rate dipped to 6.7% in
Nov from 6.9% in Oct.
• According to a report by the Institute for Supply Management, U.S. manufacturing
Purchasing Managers’ Index fell to 57.5 in Nov 2020 from 59.3 in Oct 2020.
• According to Payroll processor ADP, U.S. private sector employment rose less than
expected by 307,000 jobs in Nov 2020 after climbing by an upwardly revised 404,000 jobs
in Oct 2020.
• Data from the National Bureau of Statistics showed that China's manufacturing Purchasing
Managers' Index (PMI) rose to 52.1 in Nov 2020 from 51.4 in Oct 2020. The non-
manufacturing PMI rose to 56.4 in Nov 2020 from 56.2 in the previous month.
10
Global News/Economy
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11
Global Indices
Indices
4-Dec-20
1-Week
Return
YTD
Return
Russell 3000 1,891.12 1.59% 32.61%
Nasdaq 100 12,528.48 2.20% 43.46%
FTSE 100 6,550.23 2.87% -13.16%
DAX Index 13,298.96 -0.28% 0.38%
Nikkei Average 26,751.24 0.40% 13.08%
Straits Times 2,839.89 -0.56% -11.88%
Source: Refinitiv Value as on Dec 4, 2020
U.S.
• U.S. markets traded higher amid
optimism that lawmakers will reach an
agreement on a new fiscal stimulus bill
as both parties issued new proposals.
Sentiments boosted further after
report from the Labor Department
showed bigger than expected decrease
in initial U.S. jobless claims in the week
to Nov 28.
Europe
• European markets largely remained lower amid caution with investors tracking stimulus
negotiations in the U.S. and anxiety over Brexit talks. Meanwhile, market sentiments
remained upbeat on hopes of imminent availability of the COVID-19 vaccine.
Asia
• Asian markets witnessed mixed trend over the week. Rising COVID-19 cases across the
U.S. weighed on the market sentiment. However, hopes for additional COVID-19 stimulus
measures supported buying interest.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury
surged 13 bps to close at 0.97%
compared with the previous week’s
close of 0.84%.
• U.S. Treasury prices plunged, driven by a
new push in Congress to provide
government support to businesses and
state and local governments affected by
the coronavirus pandemic.
• Treasury prices fell further after a
disappointing U.S. employment report
for Nov 2020, increased pressure for the
U.S. government to pass a new round of
stimulus to help the coronavirus-
battered economy which made market
participants hopeful of a swift economic
recovery.
Global Debt (U.S.)
0.80
0.90
1.00
30-Nov 1-Dec 2-Dec 3-Dec 4-Dec
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($/Barrel)
49.27 46.06
Gold ($/Oz)
1,837.61 1,788.13
Gold (Rs/10 gm)
49,153 48,778
Silver ($/Oz)
24.17 22.70
Silver (Rs/Kg)
62,992 59,990
Source: Refinitiv *Value as on Dec 4, 2020
Gold
• Gold prices went up as growing
possibility of a breakthrough in
negotiations over a fresh U.S.
coronavirus aid package kept the
greenback under pressure.
Brent Crude
• Brent crude prices rose on growing
expectations that OPEC and its partners,
known collectively as OPEC+, may decide
to extend oil production cuts of 7.7
million barrels per day through to at
least Mar 2021. Additionally, hopes that
a COVID-19 vaccine will lead to swift
economic growth provided additional
support.
Baltic Dry Index
• The index fell due to sluggish capesize
and panamax activities.
Commodities Market
9.00
11.00
13.00
4-Nov-20 19-Nov-20 4-Dec-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
6.48%
6.97%
2.77%
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
73.74 73.80
Pound Sterling
99.26 98.71
EURO
89.64 88.02
100 Yen
70.99 70.97
Source: Refinitiv Figures in INR , *Value as on Dec 4, 2020
Rupee
• The Indian rupee rose against the U.S.
dollar, due to greenback sales by foreign
banks.
Euro
• Euro surged against the U.S. dollar on
prospects of further fiscal stimulus from
the U.S. and as optimism about COVID-
19 vaccines kept investors upbeat.
Pound
• Pound rose strongly against the weak
U.S. dollar as market participants
remained optimistic about the
probability of a Brexit deal being
reached, despite a lack of tangible
progress in negotiations.
Yen
• The yen inched up against the U.S. dollar
on prospects of further fiscal stimulus
from the U.S.
Currencies Markets
9.80
10.10
10.40
4-Nov-20 19-Nov-20 4-Dec-20
USD GBP Euro JPY
Source: Refinitiv
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
0.56%
-0.08%
0.03%
1.84%
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15
The Week that was…
30
th
Nov to 4
th
Dec
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16
The Week that was (Nov 30 – Dec 4)
Date Events Present Value Previous Value
Monday,
November 30, 2020
• China Non-Manufacturing PMI (Nov) 56.4 56.2
• China NBS Manufacturing PMI(Nov) 52.1 51.4
• Germany Consumer Prices (YoY) (Nov) PREL -0.70% -0.50%
Tuesday,
December 01, 2020
• India Markit Manufacturing PMI (Nov) 56.3 58.9
• Eurozone Consumer Price Index (YoY) (Nov) PREL -0.30% -0.30%
• U.S. ISM Manufacturing PMI (Nov) 57.5 59.3
• Germany Unemployment Rate (Nov) 6.10% 6.20%
Wednesday,
December 02, 2020
• Germany Retail Sales (YoY) (Oct) 8.20% 6.50%
• U.S. ADP Employment Change (Nov) 307K 404K
Thursday,
December 03, 2020
• India Markit Service PMI (Nov) 53.7 58.9
• China Caixin Services PMI(Nov) 57.5 56.8
• Eurozone Retail Sales (Nov) 4.30% 2.50%
• Eurozone Markit PMI Composite (Nov) 45.3 45.1
• U.S. ISM Services PMI (Nov) 55.9 56.6
Friday,
December 04, 2020
• U.S. Nonfarm Payrolls (Nov) 245K 610K
• U.S. Unemployment Rate (Nov) 6.70% 6.90%
• Germany actory Orders (MoM) (Oct) 2.90% 1.10%
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17
The Week Ahead
7
th
Dec to 11
th
Dec
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18
Day Event
Monday,
December 7, 2020
• Japan Gross Domestic Product (QoQ)
• China Trade Balance (USD) (Nov)
• Japan Leading Economic Index (Oct) PREL
• Germany Industrial Production (MoM) (Oct)
• U.K. BRC Like-For-Like Retail Sales (YoY) (Nov)
Tuesday,
December 8, 2020
• Eurozone Gross Domestic Product (YoY) (Q3)
• U.S. Nonfarm Productivity (Q3)
• Germany ZEW Survey – Current Situation (Dec)
Wednesday,
December 9, 2020
• China Consumer Price Index (YoY) (Nov)
• Germany Trade Balance (Oct)
Thursday,
December 10, 2020
• European Central Bank Interest Rate Decision
• U.S. Consumer Price Index (YoY) (Nov)
• U.K. Gross Domestic Product (MoM) (Oct)
Friday,
December 11, 2020
• India Index of Industrial Production (YoY) (Oct)
• U.S. Michigan Consumer Sentiment Index(Dec) PREL
• U.S. Producer Price Index (YoY) (Nov)
• Germany Harmonized Index of Consumer Prices (YoY) (Nov)
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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Management Limited (NAM India) (formerly Reliance Nippon Life Asset Management Limited) has not independently verified the accuracy or
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