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NEWS U CAN USE
February 05, 2021
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The Week that was…
01
st
Feb to 05
th
Feb
2
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Indian Economy
The Finance Minister in the Union Budget pegged the fiscal deficit target at 9.5% of GDP
for FY21 and at 6.8% of GDP for FY22. The Finance Minister also proposed a sharp increase
in capital expenditure from Rs. 4.39 lakh crore in FY21 (Revised Estimate) to Rs. 5.54 lakh
crore in FY22 (Budget Estimate) in FY22. The Nominal GDP for FY22 was projected at
14.4%. The government also announced to borrow Rs. 80,000 crore in the remaining two
months to meet FY21 expenditure
The Monetary Policy Committee (MPC) in its monetary policy review kept key policy repo
rate unchanged at 4.0% and decided to continue with the accommodative stance on the
monetary policy. The MPC also decided to gradually restore the cash reserve ratio (CRR) in
two phases in a non-disruptive manner. Banks moving ahead would be required to
maintain the CRR at 3.5% of Net Demand and Time Liabilities (NDTL) with effect from Mar
27, 2021 and 4.0% of NDTL with effect from May 22, 2021. 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.
MPC is of the view that core inflation is at elevated levels which it attributed to higher
prices of petroleum and diesel. Prices of petroleum and diesel are currently at a historical
high due a surge in global crude oil prices and high indirect taxes both at the Central level
and state level. As a result, MPC decided to maintain status quo on the monetary policy in
order to closely assess the evolving outlook for inflation and ensure that the domestic
economy returns to a higher growth trajectory.
3
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4
Domestic Equity Market Indices
Indices 05-Feb-21 1 Week Return YTD Return
S&P BSE Sensex
50,731.63 9.61% 6.24%
Nifty 50
14,924.25 9.46% 6.74%
S&P BSE Mid-Cap
19,413.17 7.36% 8.20%
S&P BSE Small-Cap
19,096.06 6.16% 5.51%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
01-Feb-21 1348 607 2.22
02-Feb-21 1235 715 1.73
03-Feb-21 1189 728 1.63
04-Feb-21 1212 705 1.72
05-Feb-21 764 1155 0.66
Source: NSE
Indian equity exhibited robust
performance as investor sentiments
remained upbeat following the Union
Budget announcements for FY22.
Markets extended the rally for rest of
the week as the post-Budget buying
euphoria continued unabated. Bourses
also witnessed strong foreign fund
inflow (net) from FPIs after Finance
Minister presented Budget proposals
for FY22.
Gains were also supported after MPC
kept key interest rates unchanged and
maintained the policy stance as
'accommodative' in its bi-monthly
monetary policy meeting held on Feb 5.
Better than expected earning numbers
reported by India’s biggest public
sector bank also buoyed market
sentiments.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
34.26 41.46 59.47 374.32
P/B
3.43 4.23 2.87 2.59
Dividend Yield
0.79 1.06 0.97 0.90
Source: BSE, NSE Va
lue as on Feb 05, 2021
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
24,227.91 9.49% 13.79%
S&P BSE Bankex
40,301.81 16.27% 11.10%
S&P BSE CD
31,793.49 5.63% 3.93%
S&P BSE CG
21,666.11 11.21% 12.30%
S&P BSE FMCG
12,774.56 4.55% -0.37%
S&P BSE HC
21,805.64 5.71% -1.36%
S&P BSE IT
25,470.92 2.62% 0.11%
S&P BSE Metal
12,327.11 11.75% 2.21%
S&P BSE Oil & Gas
14,618.56 5.84% 1.74%
Source: Refinitiv *Value as on Feb 05, 2021
On the BSE sectoral front, all the major indices
rose on the back of strong buying interest.
S&P BSE Bankex was the top gainer, up
16.27%, followed by S&P BSE Realty and S&P
BSE Metal, which went up 12.20% and 11.75%,
respectively. Encouraging earning numbers for
Dec quarter from major companies supported
gains across all the sectors.
Indian Derivatives Market Review
Nifty Feb 2021 Futures stood at 14,930.65, a premium of 6.40 points above the spot closing
of 14,924.25. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 231.98 lakh crore as against Rs. 175.93 lakh crore for the week to Jan 29.
The Put-Call ratio stood at 0.92 compared with the previous week’s close of 0.90.
The Nifty Put-Call ratio stood at 1.41 compared with the previous week’s close of 0.98.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.26 3.26 3.15 3.41
91 Day T-Bill
3.37 3.37 3.05 3.30
05.22% 2025, (5 Yr GOI)
5.45 5.22 4.97 4.98
05.85% 2030, (10 Yr GOI)
6.07 5.91 5.82 NA
Source: Refinitiv Value as on Feb 05, 2021
Bond yields surged after the government
announced a sharply higher than
anticipated borrowing for FY22 and also
increased this year’s borrowing in the
Union Budget FY22.
However, losses retreated on hopes that
the Reserve Bank of India would continue
to buy government securities to
smoothen the effect of substantial hike
in government borrowing. Meanwhile at
the weekly government auction, RBI
cancelled the auction of the 10-year
benchmark paper.
Yield on the new 10-year benchmark
paper (5.85% GS 2030) surged 16 bps to
close at 6.07% from the previous week’s
close of 5.91%.
Domestic Debt Market
6.00
6.10
6.20
1-Feb 2-Feb 3-Feb 4-Feb 5-Feb
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 4.32 4.88 56
3 Year 5.03 5.78 75
5 Year 5.67 6.65 98
10 Year 6.17 7.28 111
Source: Refinitiv Value as on
Feb 05, 2021
Yields on gilt securities surged in the range of
13 to 48 bps across maturities. Yield on 10-
year paper was unchanged.
Corporate bond yields rose in the range of 11
to 34 bps across the curve. Yield rose the
most on 2-year and the least on 15-year
paper.
Spread between AAA corporate bond and gilt
contracted in the range of 2 to 14 bps across
the segments, barring 3-, 4- & 10-year papers
that expanded by up to 4 bps.
Domestic Debt Market (Spread Analysis)
0
21
42
3.00
5.00
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 05-Feb-21 29-Jan-21
Yield in %
Change in bps
Source: Refinitiv
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8
The Finance Minister, in the Union Budget, launched the PM AtmaNirbhar Swasth Bharat
Yojana with an outlay of about Rs. 64,180 crore for over 6 years. The ministry also provided
Rs. 35,000 crore for COVID-19 vaccine in BE 2021-22 (Budget Estimates). The Finance
Minister also announced a voluntary vehicle scrapping policy, to phase out old and unfit
vehicles.
The Finance Minister, in the Union Budget, proposed to increase the permissible limit for
Foreign Direct Investment from 49% to 74% in insurance companies and allow foreign
ownership and control with safeguards. Under the new norms, the majority of the Directors
on the Board and key management persons would be resident Indians with at least 50% of
the Directors being independent directors.
The Finance Minister proposed to privatise two state run banks and one general insurance
company in FY22 in addition to the privatisation of IDBI bank. The Finance Minister further
announced to bring the IPO of LIC in FY22 and estimated to raise Rs. 1.75 lakh crore from
divestments in the same fiscal.
The Finance Minister provided an outlay of Rs. 20,000 crore for recapitalisation of state run
banks. She also announced the setting up of an Asset Reconstruction Company Limited and
Asset Management Company to resolve stressed assets problem of the public sector banks.
Regulatory Updates in India
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9
The Finance Minister proposed to create a permanent institutional framework in order to
improve the secondary market liquidity in the corporate debt market. The proposed body
would purchase investment grade debt securities both during normal times and stressed
times and thus aid in the development of the corporate bond market.
The Finance Minister in the Union Budget exempted senior citizens who have attained an
age of 75 years and above and who have only pension and interest income from filing
income tax returns. Eligibility for claiming tax holiday for start-ups was proposed to be
extended by one more year. The Finance Minister also announced the constitution of a
Dispute Resolution Committee for small taxpayers. An additional deduction of Rs. 1.5 lakh
shall be available for loans taken up till Mar 31, 2022 for purchase of affordable house.
The Reserve Bank of India (RBI) decided to provide retail investors online access to the
government securities market both primary and secondary. Retail investors would also
be given the facility of opening their gilt securities account (‘Retail Direct’) with the RBI.
The objective of the move is to encourage retail participation in the government securities
market.
RBI proposed that investment made by Foreign Portfolio Investors (FPIs) in defaulted
corporate bonds will be exempted from the short-term limit and the minimum residual
maturity requirement under the Medium-Term Framework (MTF). The objective of the
move is to encourage investment by FPIs in corporate bonds.
Regulatory Updates in India (contd..)
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Data from the U.S. Labour Department showed that non-farm payroll employment
increased by 49,000 jobs in Jan 2021 after coming down by a revised 227,000 jobs in Dec
2020 (loss of 140,000 jobs originally reported for the previous month). The unemployment
rate fell to 6.3% in Jan 2021 from 6.7% in Dec 2020. Average hourly employee earnings
rose $0.06 to $29.96 in Jan 2021.
According to a report released by payroll processor ADP, U.S. private sector employment
jumped by 174,000 jobs in Jan 2021 after decreasing by a revised 78,000 jobs in Dec 2020.
Bank of England policymakers unanimously decided to retain the record low U.K. interest
rate at 0.10% and quantitative easing at GBP 895 billion amid a third lockdown to curb the
coronavirus. On negative interest rates, the MPC claimed that it did not wish to send any
signal that at some stage in the future it planned to set a negative bank rate. Overall, it
concluded that it would be wise to start plans to have the opportunity to do so in the
future if necessary.
According to preliminary flash estimate published by Eurostat, eurozone’s gross domestic
product fell 0.7% sequentially in the fourth quarter of 2020 as against sharp growth of
12.4% in the third quarter of 2020. On a yearly basis, the economy fell 5.1% in the fourth
quarter as against 4.3% decline in the third quarter.
According to data from IHS Markit, China’s Caixin manufacturing PMI fell to 51.5 in Jan
2021 from 53.0 in Dec 2020. In Jan, in the midst of a slowdown in production and new
orders growth, China's manufacturing sector expanded at the slowest pace in seven
months.
10
Global News/Economy
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11
Global Indices
Indices
05-Feb-21
1-Week
Return
YTD
Return
Russell 3000 2,047.70 5.31% 4.87%
Nasdaq 100 13,603.96 5.25% 5.55%
FTSE 100 6,489.33 1.28% 0.45%
DAX Index 14,056.72 4.64% 2.46%
Nikkei Average 28,779.19 4.03% 4.86%
Straits Times 2,907.11 0.16% 2.23%
Source: Refinitiv Value as on Feb 05, 2021
U.S.
A host of encouraging data supported
gains in the U.S. markets during the
week. Investors took positive cues from
data showing a continued decline in
first-time claims for U.S. unemployment
benefits in the week to Jan 30. Further,
private sector employment rebounded
stronger than expected in Jan and
official survey showed U.S. service
sector activity unexpectedly grew at an
accelerated rate in the same period.
Europe
European markets went up with investors focusing on earnings reports, updates about
progress in vaccination programme, and political developments in Italy.
Asia
Asian markets rose as investors took positive cues from strong earning numbers reported
by some major companies. Encouraging news related to COVID-19 vaccine supplies and
U.S. stimulus plans also supported buying interest.
Global Equity Markets
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12
Yields on the 10-year U.S. Treasury rose 8
bps to close at 1.17%, from the previous
week’s close of 1.09%.
U.S. Treasury prices rose initially as efforts
by Republican lawmakers in the U.S. to
trim the relief package lowered
expectations for additional supply.
However, trend reversed and U.S.
Treasury prices fell continuously on
strong economic data along with non-
farm payroll numbers and a push in the
U.S. to pass a massive relief plan to aid
the coronavirus-battered economy.
Global Debt (U.S.)
1.04
1.11
1.18
1-Feb 2-Feb 3-Feb 4-Feb 5-Feb
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)
60.24 55.40
Gold ($/Oz)
1811.62 1846.09
Gold (Rs/10 gm)
47048 49205
Silver ($/Oz)
26.83 27.00
Silver (Rs/Kg)
67485 69944
Source: Refinitiv *Value as on Feb 05, 2021
Gold
Gold prices went down as upbeat data
from U.S., coupled with progress in
vaccination programme boosted the risk
appetite of the investors and dampening
the safe haven appeal of the precious
metal.
Brent Crude
Brent crude prices continued to remain at
elevated levels after data from the Energy
Information Administration showed that
U.S. crude oil stockpiles fell by 994,000
barrels to 475.7 million barrels in the week
ended Jan 29, 2021.
Baltic Dry Index
The index fell due to sluggish capesize and
panamax activities.
Commodities Market
8.50
10.10
11.70
5-Jan-21 21-Jan-21
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
-0.64%
8.74%
-1.87%
05-Feb-21
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing* 1-Wk Ago
US Dollar
72.90 72.95
Pound Sterling
99.73 100.02
EURO
87.20 88.30
100 Yen
69.07 69.82
Source: Refinitiv Figures in INR , *
Value as on Feb 05, 2021
Rupee
The Indian rupee was little changed against the
U.S. dollar as the government’s higher-than-
expected fiscal deficit neutralised optimism of a
quick economic rebound following the Union
Budget.
Euro
Euro fell against the U.S. dollar on expectations
that the U.S. has an advantage in growing its
economy and vaccinating its population against
COVID-19.
Pound
Sterling rose against the U.S. dollar after the
Bank of England left rates on hold and softened
lingering fears of negative rates.
Yen
Yen fell against the U.S. dollar on confidence in
the U.S. economic outlook and has an
advantage in vaccinating its population against
COVID-19.
Currencies Markets
9.65
9.95
10.25
5-Jan-21 21-Jan-21
USD GBP Euro JPY
Source: Refinitiv
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
5-Feb-21
-1.25%
-0.29%
-0.07%
-1.07%
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15
The Week that was…
01
st
Feb to 05
th
Feb
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16
The Week that was (Feb 01 Feb 05)
Date Events
Present
Value
Previous
Value
Monday,
February 1, 2021
• Japan Jibun Bank Manufacturing PMI Final (Jan) 49.80 50.00
• China NBS Manufacturing PMI (Jan) 51.30 51.90
• Euro Zone Markit Manufacturing PMI Final (Jan) 54.80 55.20
• U.K. Markit/CIPS Manufacturing PMI Final (Jan) 54.10 57.50
• U.S. ISM Manufacturing PMI (Jan) 58.70 60.50
Tuesday,
February 2, 2021
• Euro Zone GDP Growth Rate QoQ Flash (Q4) -0.70% 12.40%
• Euro Zone GDP Growth Rate YoY Flash (Q4) -5.10% -4.30%
• Japan Nationwide Housing Prices YoY (Jan) 6.40% 7.30%
Wednesday,
February 3, 2021
• Japan Jibun Bank Composite PMI Final (Jan) 47.10 48.50
• China Caixin Composite PMI (Jan) 52.20 55.80
• Euro Zone Markit Composite PMI Final (Jan) 47.80 49.10
• U.K. Markit/CIPS Composite PMI Final (Jan) 41.20 50.40
• U.S. ISM Non-Manufacturing PMI (Jan) 58.70 57.70
• Germany Markit Composite PMI Final (Jan) 50.80 52.00
• Euro Zone Core Inflation Rate YoY Flash (Jan) 1.4% 0.2%
Thursday,
February 4, 2021
• Bank of England Interest Rate Decision 0.10% 0.10%
• U.S. Initial Jobless Claims (Jan 30) 779K 812K
• U.K. Construction PMI (Jan) 49.20 54.60
Friday,
February 5, 2021
• U.S. Non Farm Payrolls (Jan) 49K -227K
• U.S. Unemployment Rate (Jan) 6.3% 6.7%
• U.S. Average Hourly Earnings MoM (Jan) 0.20% 1.00%
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17
The Week Ahead
08
th
Feb to 12
th
Feb
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18
Day Event
Monday,
Feb 08, 2021
Japan Eco Watchers Survey Current (Jan)
Japan Current Account (Dec)
Germany Industrial Production MoM (Dec)
Tuesday,
Feb 09, 2021
Japan Average Cash Earnings YoY (Dec)
Japan Machine Tool Orders YoY (Jan)
Germany Exports MoM s.a (Dec)
Germany Imports MoM s.a (Dec)
Wednesday,
Feb 10, 2021
China Inflation Rate YoY (Jan)
Germany Inflation Rate YoY Final (Jan)
U.S. Core Inflation Rate YoY (Jan)
U.S. Inflation Rate YoY (Jan)
Thursday,
Feb 11, 2021
U.S. Initial Jobless Claims (Feb 6)
Germany Wholesale Prices YoY (Jan)
U.S. Monthly Budget Statement (Jan)
Friday,
Feb 12, 2021
U.K. GDP YoY (Dec)
U.K. Industrial Production YoY (Dec)
China Vehicle Sales YoY (Jan)
U.S. Michigan Consumer Sentiment Prel (Feb)
The Week Ahead
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