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NEWS U CAN USE
December 18, 2020
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The Week that was…
14
th
Dec to 18
th
Dec
2
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Indian Economy
• Consumer price index based inflation eased to 6.93% YoY in Nov 2020 from 7.61% in Oct
2020 due to considerable easing in vegetable prices. Consumer Food Price Index (CFPI)
eased to 9.43% YoY in Nov 2020 from 11.00% in the prior month. Vegetables and fruit
inflation stood at 15.63% and 0.27% respectively.
• Wholesale Price Index (WPI) based inflation accelerated for the fourth straight month and
touched 9-month high at 1.55% in Nov 2020 from 1.48% in Oct 2020. Manufactured
products inflation accelerated to 2.97% in Nov 2020 from 2.12% in Oct 2020 while food
inflation eased to 3.94% from 6.37%. Fruits witnessed fall in prices for the fifth month in a
row at 3.80% in Nov 2020.
• Government data showed that India’s trade deficit narrowed to $9.87 billion in Nov 2020
from $12.75 billion in the same period of the previous year. Exports came down 8.74%
over the year to $23.52 billion in Nov 2020 from $25.77 billion in the same period of the
previous year. Imports came down 13.32% over the year to $33.39 billion in Nov 2020 from
$38.52 billion in the same period of the previous year.
• According to the Labour Ministry, point-to-point rate of inflation based on the CPI-AL
(Consumer Price Index-Agricultural Labourers) and CPI-RL (Rural Labourers) fell to 6% and
5.86%, respectively, in Nov 2020, from 6.59% and 6.45%, respectively, in Oct 2020. The
decrease came mainly due to lower prices of food items.
3
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4
Domestic Equity Market Indices
Indices
18-Dec-20
1 Week Return
YTD Return
S&P BSE Sensex
46,960.69 1.87% 13.83%
Nifty 50
13,760.55 1.83% 13.08%
S&P BSE Mid
-Cap 17,801.18 1.60% 18.93%
S&P BSE Small
-Cap 17,769.10 1.23% 29.71%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
14-Dec-20 1253 697 1.80
15-Dec-20 946 1012 0.93
16-Dec-20 1216 747 1.63
17-Dec-20 870 1094 0.80
18-Dec-20 751 1196 0.63
Source: NSE
• Indian equity markets settled for the
week with modest gains. Investors took
positive cues from previous week’s data
showing Index of Industrial production
expanded 3.6% in Oct 2020 compared
with 6.6% contraction in Oct 2019.
Positive development on the COVID-19
vaccine shipment also supported
buying interest.
• Later, positive global cues helped
benchmark indices scale new highs.
Growing optimism over U.S. stimulus
measures, hopes of an effective COVID-
19 vaccine and U.S. Fed's signal that it
will keep pumping liquidity into the
market boosted sentiment.
• Nonetheless, bouts of volatility amid
profit booking, coupled with increasing
COVID-19 infections and resultant
lockdowns worldwide restricted gains.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
33.60 37.84 64.03 278.72
P/B
3.13 3.89 2.68 2.44
Dividend Yield
0.86 1.15 1.02 0.93
Source: BSE, NSE Va
lue as on Dec 18, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
20,738.17 -0.18% 5.65%
S&P BSE Bankex
35,194.25 0.48% 3.07%
S&P BSE CD
29,653.41 5.37% 15.04%
S&P BSE CG
18,607.16 4.70% 10.31%
S&P BSE FMCG
12,577.11 -0.85% 10.21%
S&P BSE HC
21,475.36 2.13% 9.08%
S&P BSE IT
23,226.73 2.47% 8.48%
S&P BSE Metal
11,370.86 1.89% 17.11%
S&P BSE Oil & Gas
14,397.38 -0.26% 11.05%
S&P BSE Realty
2,395.09 3.69% 19.79%
Source:
Refinitiv *Value as on Dec 18, 2020
• On the BSE sectoral front, barring S&P BSE
FMCG, S&P BSE Oil & Gas and S&P BSE Auto, all
the major indices closed in the green. S&P BSE
Consumer Durables was the top gainer, up
5.37%, followed by S&P BSE Capital Goods and
S&P BSE Realty, which rose 4.70% and 3.69%,
respectively.
• Consumer durable sector went up as the work
from home period underscored the
importance of consumer durables and
electronic products and featuring high on
people's shopping lists as the curbs relaxed.
Indian Derivatives Market Review
• Nifty Dec 2020 Futures stood at 13,774.05, a premium of 13.50 points above the spot
closing of 13,760.55. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 128.28 lakh crore as against Rs. 143.75 lakh crore for the week to Dec 11.
• The Put-Call ratio stood at 0.96 compared with the previous week’s close of 0.95.
• The Nifty Put-Call ratio stood at 1.62 compared with the previous week’s close of 1.52.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
3.22 3.13 3.13 3.59
91 Day T
-Bill
3.11 3.11 3.09 3.28
05.22% 2025, (5
Yr GOI)
5.05 5.08 5.10 5.18
05.77% 2030, (10
YrGOI)
5.96 5.96 5.88 5.82
Source:
Refinitiv Value as on Dec 18, 2020
• Bond yields were almost steady as market
participants awaited more open market
operations (OMO) by the Reserve Bank of
India (RBI). Although easing of retail
inflation in Nov 2020 was positive, it
remained short lived due to profit booking.
• Yield on the 10-year benchmark paper
(5.77% GS 2030) closed steady at 5.96%
from the previous week’s close after
moving in a range of 5.92% to 5.98%.
• RBI conducted the auction of special OMO
of simultaneous purchase and sale of
government of India securities for a
notified amount of Rs. 10,000 crore each,
which were fully accepted. RBI bought 4, 6
& 9-year maturities and sold securities
maturing within one year.
• RBI announced to conduct OMO to
purchase SDLs for an aggregate amount of
Rs. 10,000 crore on Dec 23, 2020.
Domestic Debt Market
5.89
5.93
5.97
14-Dec 15-Dec 16-Dec 17-Dec 18-Dec
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.70 5.10 140
3 Year 4.47 5.46 100
5 Year 5.15 6.32 117
10 Year 6.05 7.13 109
Source:
Refinitiv
Value as on
Dec 18, 2020
• Yields on gilt securities fell across 1 to 7-year
maturities and 30-year paper by up to 7 bps
and increased across the remaining maturities
by up to 9 bps barring 10, 12 and 13-year
paper which closed steady.
• Corporate bond yields closed steady on 2 and
3-year paper, fell across 4 to 7-year maturities
by up to 4 bps and increased across the
remaining maturities in the range of 2 bps to
17 bps.
Domestic Debt Market (Spread Analysis)
-9
-2
5
2.00
4.50
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 18-Dec-20 11-Dec-20
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
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8
• According to the minutes of the Monetary Policy Committee (MPC), the Reserve Bank of
India is likely to retain its accommodative monetary policy stance, but the scope for further
rate cuts is limited by a faster-than-expected recovery in inflation. In the midst of
persistently high inflation, the MPC kept key interest rates unchanged this month, but said it
would ensure enough liquidity for stressed sectors to keep India's nascent economic
recovery on track.
• The Securities and Exchange Board of India (Sebi) has proposed to tweak several rules to
encourage startups to go public and list on the so-called Innovators Growth Platform. The
regulator has proposed that the compulsory shareholding period before listing for investors
owning 25% or higher stake be halved to one year. It also proposed raising the open bid
trigger for investment transactions, as well as the recommended allocation to promoters
and current institutional investors of a higher percentage of shares to anchor investors in
public matters and special rights.
• Securities Exchange Board of India (SEBI) approved the new shareholding requirements for
companies in the Corporate Insolvency Resolution Process and agreed to relax the minimum
participation of the promoter in the follow-on public offer. With regard to companies which
continue to be listed as a result of the implementation of the resolution plan under the
Insolvency and Bankruptcy Law, SEBI stated that at the time of their admission to trading on
the stock exchange, such firms would be expected to have at least 5% public shareholding.
At present, there is no such minimum requirement.
Regulatory Updates in India
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9
• According to a Reserve Bank of India report, sound loans and poor capital positions mean
that Indian banks are unable to cut their interest rates in line with the key policy rate of
the central bank, reducing monetary policy effectiveness. The paper also illustrates that
concerns about the quality of assets must be addressed and the capital positions of
lenders strengthened to ensure that policy actions have their maximum effect.
• The Securities and Exchange Board of India (Sebi) has paved the way for technology start-
ups to enter the mutual fund market by renouncing the necessity of profitability,
approving the abolition of the minimum promoter contribution towards additional public
offerings (FPO), and also easing requirements for investing in insolvent firms.
• The Regulatory and Development Authority of the Pension Fund (PFRDA) said that the
total management pension assets increased by 35.76% and reached Rs. 5.32 lakh crore in
Nov 2020 as compared to Rs 3.92 lakh crore last year. The National Pension Scheme & Atal
Pension Yojana are managed by the PFRDA.
• As per media reports, to support the Mahatma Gandhi National Rural Jobs Guarantee
Scheme (MGNREGS) and India's rural infrastructure, the government signed a loan
agreement worth $1 billion with the New Development Bank (NDB). The loan would help
India's economic recovery from the pandemic by promoting expenditure on rural
infrastructure related to the management of natural resources (NRM) and rural
employment under the Mahatma Gandhi National Rural Employment Guarantee Scheme
of the Government of India.
Regulatory Updates in India (contd..)
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• The U.S. Federal Reserve kept interest rates unchanged in its monetary policy review.
However, the U.S. Federal Reserve indicated that it would continue its asset purchase program
until the U.S. economy shows significant progress towards the central bank's goals of price
stability and maximum employment.
• The Bank of England in its monetary policy review decided to keep interest rates on hold at
0.10% and the quantitative easing at £ 895 billion. The nine-member monetary policy
committee also decided to extend the availability of the term funding scheme for small and
medium-sized enterprises for six months until Oct 31, 2021.
• The Bank of Japan (BoJ) in its monetary policy review decided to keep interest rates
unchanged at -0.1%. BoJ also decided to extend the timeframe for emergency loan facility by
six months to Sep 2021. BoJ also decided to assess the sustainability of monetary easing policy
as consumer prices are expected to remain subdued due to the COVID-19 pandemic.
• Preliminary survey results from IHS Markit showed that the composite output index of euro
zone rose to 49.8 in Dec 2020 from 45.3 in the previous month. The services Purchasing
Managers' Index (PMI) rose to 47.3 in Nov 2020 from 41.7 in the previous month while the
manufacturing PMI rose to 55.5 in Dec 2020 from 53.8 in the previous month.
• Preliminary survey results from IHS Markit showed that the flash composite output index of
Germany rose to 52.5 in Dec 2020 from 51.7 in Nov 2020. The manufacturing PMI rose to 58.6
in Dec 2020 from 57.8 in Nov 2020. The services PMI rose to 47.7 in Dec 2020 from 46.0 in the
previous month.
10
Global News/Economy
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11
Global Indices
Indices
18-Dec-20
1-Week
Return
YTD
Return
Russell 3000
1,936.98 3.09% 35.83%
Nasdaq 100
12,738.18 2.93% 45.86%
FTSE 100
6,529.18 -0.27% -13.43%
DAX Index
13,630.51 3.94% 2.88%
Nikkei Average
26,806.67 0.58% 13.32%
Straits Times
2,848.98 0.97% -11.60%
Source:
Refinitiv Value as on Dec 18,
2020
U.S.
• U.S. markets went up amid positive
developments on the COVID-19 stimulus
package, with lawmakers hinting
progress toward an agreement on a new
relief package.
• Meanwhile, U.S. Fed announced its widely
expected decision to leave interest rates
unchanged. It also revealed plans to
continue its asset purchase program until
the economy shows substantial progress.
Europe
• European markets rose on the back of optimism about a post-Brexit trade deal. The European
Commission President said that Britain and the EU have moved closer to sealing an agreement,
and that the next days were going to be decisive. Buying interest boosted further following
European Union lawmakers' approval for the bloc's 1.8 trillion-euro stimulus package.
Asia
• Asian markets largely went up as sentiments were underpinned by possibility of new fiscal
stimulus deal in U.S. before previous benefits expire by the end of the year. Growing optimism
over COVID-19 vaccine provided additional support.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury rose
6 bps to close at 0.95% compared with
the previous week’s close of 0.89%.
• U.S. Treasury prices fell ahead of the
U.S. Federal Reserve policy decision and
investors looked for progress in
congressional spending negotiations in
Washington.
• Meanwhile, the U.S. Federal Reserve
disappointed market participants
expecting a shift toward more
purchases of longer-dated bonds.
• Treasury prices declined further on
expectations that the U.S. Congress
would pass a $900 billion stimulus
package before the weekend.
Global Debt (U.S.)
0.84
0.87
0.90
0.93
0.96
14-Dec 15-Dec 16-Dec 17-Dec 18-Dec
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
52.54 50.73
Gold ($/Oz)
1,880.66 1,839.03
Gold (Rs/10 gm)
49,939 48,985
Silver ($/Oz)
25.77 23.91
Silver (Rs/Kg)
66,431 62,215
Source:
Refinitiv *Value as on Dec 18, 2020
Gold
• Gold prices rose as the greenback
remained under pressure after the U.S.
Federal Reserve kept interest rates on hold
in its monetary policy review and vowed to
maintain its bond-buying policy until the
U.S. economic recovery shows significant
progress.
Brent Crude
• Brent crude prices rose after data from
Energy Information Administration showed
that U.S. crude inventories fell by 3.1
million barrels in the week ended Dec 11.
Progress towards a U.S. fiscal stimulus deal
and strong Asian demand also added to the
gains.
Baltic Dry Index
• The index rose WoW due to improving
capesize and panamax activities.
Commodities Market
8.80
10.80
12.80
18-Nov-20 3-Dec-20 18-Dec-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
7.76%
3.57%
2.26%
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
73.51 73.59
Pound Sterling
99.50 98.00
EURO
90.03 89.47
100 Yen
71.10 70.73
Source: RBI Figures in INR , *
Value as on Dec 18, 2020
Rupee
• Indian rupee gained against the U.S. dollar
amid broad decline in dollar index and
continuous inflows into domestic equity
market.
Euro
• Euro surged against the U.S. dollar amid broad
decline in dollar index and after U.S. Federal
Reserve disappointed market participants
expecting a shift toward more purchases of
longer-dated bonds.
Pound
• Sterling also jumped against the weak
greenback on optimism of a Brexit deal after
U.K. and the European Union extended
discussions on a post-Brexit trade deal.
Yen
• Yen rose against the greenback after dollar
index fell to its lowest in more than two years
against major currencies.
Currencies Markets
9.80
10.05
10.30
18-Nov-20 3-Dec-20 18-Dec-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
0.64%
0.52%
-0.10%
1.52%
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15
The Week that was…
14
th
Dec to 18
th
Dec
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16
The Week that was (Dec 14 – Dec 18)
Date Events
Present
Value
Previous
Value
Monday,
December 14, 2020
• Japan Capacity Utilization(Oct)
6.0% 6.4%
• Japan Industrial Production (YoY)(Oct)
-3.0% -3.20%
• Euro Zone Industrial Production w.d.a. (YoY)(Oct)
-3.80% -6.30%
Tuesday,
December 15, 2020
• China Industrial Production (YoY)(Nov)
7.0% 6.9%
• Britain ILO Unemployment Rate (3M)(Oct)
4.9% 4.8%
• U.S. Industrial Production (MoM)(Nov)
0.40% 0.90%
• U.S. Capacity Utilization(Nov)
73.3% 73.0%
Wednesday,
December 16, 2020
• Japan Jibun Bank Manufacturing PMI(Dec) PREL
49.7 49.0
• Germany Markit Manufacturing PMI(Dec) PREL
58.6 57.8
• Euro Zone Markit Manufacturing PMI(Dec) PREL
55.5 53.8
• Britain Markit Manufacturing PMI(Dec) PREL
57.3 55.6
• U.S. Markit Manufacturing PMI(Dec) PREL
56.5 56.7
• Euro Zone Construction Output w.d.a (YoY)(Oct)
-1.40% -2.50%
• U.S. Fed Interest Rate Decision
0.25% 0.25%
Thursday,
December 17, 2020
• Bank of England Interest Rate Decision
0.1% 0.1%
• Bank of England Asset Purchase Facility
£895 B £895 B
• U.S. Initial Jobless Claims (Dec 11)
885K 862K
Friday,
December 18 2020
• Bank of Japan Interest Rate Decision
-0.10% -0.10%
• Germany IFO
– Business Climate(Dec) 92.10 90.90
• Germany IFO
– Expectations(Dec) 92.80 91.80
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
21
st
Dec to 25
th
Dec
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18
Day Event
Monday,
Dec 21, 2020
•
China PBoC Interest Rate Decision
•
U.S. Chicago Fed National Activity Index (Nov)
Tuesday,
Dec 22, 2020
•
U.K. Gross Domestic Product (YoY)(Q3)
•
U.K. Total Business Investment (YoY)(Q3)
•
U.S. Gross Domestic Product Annualized(Q3)
Wednesday,
Dec 23, 2020
•
Japan Leading Economic Index (Oct)
•
Japan Coincident Index (Oct)
•
U.S. Initial Jobless Claims (Dec 19)
•
U.S. Initial Jobless Claims 4-week average (Dec 19)
•
U.S. Personal Income (MoM)(Nov)
Thursday,
Dec 24, 2020
•
Japan Unemployment Rate (Nov)
•
U.S. Durable Goods Orders (Nov)
•
U.S. Durable Goods Orders ex Defense (Nov)
Friday,
Dec 25, 2020
•
Japan Housing Starts YoY (Nov)
•
Japan Retail Sales YoY (Nov)
•
Japan Construction Orders YoY (Nov)
•
India Foreign Exchange Reserves (Dec 18)
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) 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
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19
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