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NEWS U CAN USE
January 08, 2021
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The Week that was…
01
st
Jan to 08
th
Jan
2
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Indian Economy
According to first advance estimates of Gross Domestic Product (GDP) released by the
National Statistical Office, the central government projects the India’s economy to
contract by 7.7% in FY21. The agriculture sector estimate stood at 3.4%, mining estimate
stood at -12.4% for FY21. The report also mentioned that inability of India during the
lockdown to contain the coronavirus and to go about doing business had a profound
impact on the economy.
Data from a private survey showed that the growth in the Indian manufacturing sector
ended a rough 2020 on a stronger note as manufacturers boosted production to meet
increasing demand in Dec 2020. The seasonally adjusted IHS Markit India Manufacturing
Purchasing Managers’ Index (PMI) rose slightly to 56.4 in Dec 2020 from 56.3 in Nov 2020.
Data from the private survey showed that the seasonally adjusted India Services Business
Activity Index fell to 52.3 in Dec 2020 from 53.7 in Nov 2020. The Composite PMI Output
Index fell from 56.3 in Nov 2020 to 54.9 in Dec 2020. The decline came as staff hiring came
to a halt due to liquidity concerns, shortages in labour and subdued demand, while
business optimism faded. Both manufacturing and service companies witnessed weaker
expansions.
According to IHS Markit, Indian economy is expected to bounce back with an 8.9% FY22.
IHS Markit further stated that Indian economy suffered a severe recession in 2020. The
economy reflected worst contraction from Mar 2020 to Aug 2020 following a national
lockdown to prevent the spread of the coronavirus.
3
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4
Domestic Equity Market Indices
Indices 08-Jan-21 1 Week Return YTD Return
S&P BSE Sensex
48,782.51 1.91% 2.16%
Nifty 50
14,347.25 2.35% 2.61%
S&P BSE Mid-Cap
19,138.72 5.36% 6.67%
S&P BSE Small-Cap
18,908.59 3.55% 4.48%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
04-Jan-21 1375 604 2.28
05-Jan-21 1116 867 1.29
06-Jan-21 859 1121 0.77
07-Jan-21 1210 737 1.64
08-Jan-21 1074 887 1.21
Source: NSE
Indian equity markets posted modest
gains for the week, largely led by
positive development on the
coronavirus vaccine, optimism over
strong third quarter corporate earnings
from major companies and upbeat
global cues.
Initially, Sensex surpassed 48,000-mark
following positive development on the
COVID-19 vaccine front.
Investors also keenly awaited the
corporate earnings result for Q3FY21
from major companies.
After witnessing a brief volatility,
markets managed to turnaround later
on the back of positive global cues
amid prospects of more fiscal stimulus
under the new U.S. President Elect’s
administration.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
33.93 39.45 70.21 229.49
P/B
3.31 4.07 2.86 2.56
Dividend Yield
0.82 1.11 0.95 0.88
Source: BSE, NSE Va
lue as on Jan 08, 2021
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
21,997.89 4.82% 4.67%
S&P BSE Bankex
36,658.77 2.40% 6.16%
S&P BSE CD
31,190.74 2.74% 11.01%
S&P BSE CG
19,918.89 5.13% 12.61%
S&P BSE FMCG
12,595.44 -0.79% 3.78%
S&P BSE HC
22,286.01 1.97% 5.30%
S&P BSE IT
25,835.98 5.58% 14.11%
S&P BSE Metal
12,657.93 9.06% 15.28%
S&P BSE Oil & Gas
14,732.06 4.19% 4.06%
Source: Refinitiv *Value as on Jan 08, 2021
On the BSE sectoral front, major indices closed
in the green. S&P BSE Metal was the top
gainer, up 9.06%, followed by S&P BSE Teck
and S&P BSE IT, which rose 5.63% and 5.58%,
respectively.
Strong buying was seen in major stocks across
all the sectors, on hopes of robust Q3FY21
earning numbers.
Indian Derivatives Market Review
Nifty Jan 2021 Futures stood at 14,370.90, a premium of 23.65 points above the spot
closing of 14,347.25. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 169.38 lakh crore as against Rs. 138.82 lakh crore for the week to Jan 1.
The Put-Call ratio stood at 0.87 compared with the previous week’s close of 0.95.
The Nifty Put-Call ratio stood at 1.71 compared with the previous week’s close of 1.37.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.18 3.20 3.09 3.51
91 Day T-Bill
3.06 3.03 3.03 3.18
05.22% 2025, (5 Yr GOI)
5.01 5.04 5.08 4.98
05.77% 2030, (10 Yr GOI)
5.89 5.90 5.94 5.78
Source: Refinitiv Value as on Jan 08, 2021
Bond yields inched down during the
week under review on hopes that the
Reserve Bank of India (RBI) would
continue to purchase sovereign debt
through open market operations.
Market sentiments were further boosted
after the benchmark note was included
in special open market operation for next
week.
However, rise in U.S. Treasury yields,
increase in global crude oil prices and
profit booking to some extent
neutralized most of the gains.
Yield on the 10-year benchmark paper
(5.77% GS 2030) fell marginally by 1 bps
to close at 5.89% compared to the
previous week’s close of 5.90%.
Domestic Debt Market
5.80
5.86
5.92
4-Jan 5-Jan 6-Jan 7-Jan 8-Jan
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 4.47 77
3 Year 4.44 5.40 96
5 Year 5.17 6.35 118
10 Year 5.98 7.07 109
Source: Refinitiv Value as on
Jan 08, 2021
Yields on gilt securities fell across the
maturities by up to 4 bps barring 6 and 13-
year paper which closed steady while the
same increased on 2, 5, 7, 12 and 14-year
maturities by up to 3 bps.
Corporate bond yields increased across the
maturities in the range of 3 bps to 12 bps
barring 1 and 2-year paper which fell 24 bps
and 6 bps respectively while the same on 3-
year paper closed steady.
Domestic Debt Market (Spread Analysis)
-6
0
6
2.00
5.00
8.00
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Yield in %
Change in bps
Source: Refinitiv
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8
The Securities and Exchange Board of India (Sebi) has proposed the development of a
liberalized ownership system to enable stock exchanges and depositories to be set up by
new entrants. The proposed structure would allow for higher shareholdings with dilution
over a period of time at the start-up level.
SEBI came out with a timetable for exchanges concerning the repayment of a security
deposit by trading members on the surrender of membership. For trading members (TMs)
engaged in trading on behalf of customers, exchanges must release the security deposit
after three years from the date of receipt of the surrender request by the exchange or five
years from the date of impairment of the trading terminals of TM, whichever is the earlier,
upon the acceptance of the surrender request by SEBI.
As per notice issued by the Department of Telecommunications (DoT), India will conduct
spectrum auctions from Mar 1 2021, after a gap of more than four years, offering 2,251.25
megahertz for Rs 3.92 trillion. Spectrum will be offered in seven frequency bands 700
MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz. The 3,300 MHz to
3,600 MHz frequency bands, which are the 5G airwave bands, were left aside. The DoT has
set Jan12, 2021 as the final date for the pre-bid conference and Jan 28, 2021 as the final
date for its notice to be explained.
Regulatory Updates in India
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9
Madhya Pradesh and Andhra Pradesh have become the first group of States to complete
three out of the four citizen centric reforms as stipulated by the Indian government. The
two states have completed the One Nation, One Ration Card Reforms, Ease of Doing
Business Reforms, and Urban Local Bodies Reforms. As a result these two states will get
financial assistance of Rs. 1,004 crore for capital expenditure.
According to a major rating agency, the credit quality of rated entities, captured by
Modified Credit Ratio (MCR), improved in the third quarter of FY21 amid favourable
financial conditions in terms of scale of operations, liquidity situation, capital structure,
debt servicing parameters, and capital structure. The MCR, the ratio of upgrades plus
reaffirmations to downgrades plus reaffirmations, rose to 0.96 for Q3 FY21, implying a
marginally improving credit quality as against the preceding two quarters. The MCR in the
first two quarters of FY21 was 0.94.
According to a Finance Ministry report, India has been experiencing a 'V-shaped' recovery
since June with the gradual easing of restrictions on economic activities. Furthermore, the
report claimed that the continued progress of the high frequency indicators ignited
optimism with regard to better results in the second half of the year. The Monthly
Economic Recovery for December by the Department of Economic Affairs (DEA) also
noted that the forthcoming vaccine is likely to boost the momentum of global economic
activity.
Regulatory Updates in India (contd..)
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U.S. Payroll processor ADP report showed, private sector employment fell by 123,000 jobs
in Dec 2020 compared with a downwardly revised rise of 304,000 jobs (rise of 307,000 jobs
originally reported) in the previous month. Fall indicated the impact of the coronavirus
pandemic on the labor market intensifies.
The Institute for Supply Management report showed U.S. manufacturing Purchasing
Managers' Index (PMI) unexpectedly rose to 60.7 in Dec 2020 from 57.5 in Nov 2020. The
index rose to its highest level since Aug 2018. Total new business across the service sector
fell for the third straight month.
Germany's Industrial output increased 0.9% MoM in Nov 2020, slower than the revised
3.4% rise seen in Oct 2020. Industrial production fell 2.6% YoY, slower than 2.7% in the
prior month. Excluding energy and construction, output was rose 1.2% in Nov 2020.
Preliminary data from the European Commission showed, eurozone economic sentiment
index improved to 90.4 in Dec 2020 from 87.7 in Nov 2020. Recovery was driven by marked
higher confidence in industry and among consumers.
The survey results from IHS Markit showed, China's Caixin services Purchasing Managers'
Index dropped to 56.3 in Dec 2020 from 57.8 in Nov 2020. Slower increase in overall
activity coincided with a slower expansion of total new work.
The latest survey from Jibun Bank showed Japan’s manufacturing PMI rose to 50.0 from
49.0 in Nov 2020. Output stabilized for the first time in 23 months and employment rose
for the first time since Feb 2020.
10
Global News/Economy
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11
Global Indices
Indices
08-Jan-21
1-Week
Return
YTD
Return
Russell 3000 1,982.28 1.52% 1.52%
Nasdaq 100 13,105.20 1.68% 1.68%
FTSE 100 6,873.26 6.39% 6.39%
DAX Index 14,049.53 2.41% 2.41%
Nikkei Average 28,139.03 2.53% 2.53%
Straits Times 2,993.19 5.25% 5.25%
Source: Refinitiv Value as on Jan 08, 2021
U.S.
U.S. markets went up with the U.S.
Senate election dominating investor
sentiments over the week. Market
participants cheered after U.S.
lawmakers certified President-elect's
victory along with Democratic victories
in Georgia's Senate runoff elections.
Investors seem optimistic that a
Democratic-controlled government will
lead to additional stimulus.
Europe
European markets went up during the week amid hopes of additional fiscal stimulus in the
U.S. following the Electoral College certifying U.S. President-elect's victory.
Asia
Asian markets largely remained upbeat amid expectations that additional U.S. fiscal
stimulus under the new U.S. President-elect administration and a mass rollout of
coronavirus vaccines will spur a strong economic recovery later in the year.
Global Equity Markets
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12
Yields on the 10-year U.S. Treasury
increased 20 bps to close at 1.11%
compared with the previous week’s close
of 0.91%.
U.S. Treasury prices fell as elections in
Georgia eventually gave Democrats
control of the U.S. Senate.
Treasury prices declined further as
market is considering a Democrat-
controlled U.S. government and the
potential for further stimulus spending.
Moreover, plunge in U.S. non-farm
payrolls raised the expectations of more
U.S. federal spending.
Global Debt (U.S.)
0.80
1.00
1.20
4-Jan 5-Jan 6-Jan 7-Jan 8-Jan
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($/Barrel)
55.26 50.86
Gold ($/Oz)
1,848.3 1,898.1
Gold (Rs/10 gm)
50,256 50,040
Silver ($/Oz)
25.37 26.36
Silver (Rs/Kg)
67,467 66,966
Source: Refinitiv *Value as on Jan 08, 2021
Gold
Gold prices fell following increase in yields
on U.S. 10-year Treasury after the Senate
victory by Democrats in Georgia increased
the possibility for a larger fiscal stimulus
under the U.S. President-elect.
Brent Crude
Brent crude prices remained at elevated
levels after data from the Energy
Information Administration showed that
crude inventories in U.S. fell by 8 million
barrels in the week ended Jan 1, 2021 to
485.5 million barrels. Gains were extended
after Saudi Arabia unilaterally agreed to
cut output over the next two months.
Baltic Dry Index
The index rose during the week due to
improved capesize and panamax activities.
Commodities Market
9.50
10.45
11.40
8-Dec-20 24-Dec-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-3.76%
8.65%
-2.63%
8-Jan-21
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing* 1-Wk Ago
US Dollar
73.33 73.03
Pound Sterling
99.52 99.80
EURO
89.94 89.23
100 Yen
70.60 70.70
Source: Refinitiv
Figures in INR , *Value as on Jan 08, 2021
Rupee
The Indian rupee fell against the U.S. dollar,
following losses in most Asian counterparts and
on likely intervention by the RBI through
continuous greenback purchases.
Euro
Euro rose initially against the U.S. dollar after
China decided to lift its official yuan exchange
rate by its highest margin since 2005 but gains
retreated on disappointing U.S. payrolls data
for Dec 2020.
Pound
Pound fell against the U.S. dollar as warnings of
tighter U.K. lockdown measures outweighed
the relief over the last-minute Brexit trade deal.
Yen
Yen fell against the greenback as U.S. President
elect's victory has raised expectations for more
fiscal stimulus measures to bolster the
economic outlook.
Currencies Markets
9.80
10.00
10.20
8-Dec-20 24-Dec-20
USD GBP Euro JPY
Source: Refinitiv
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
8-Jan-21
0.80%
-0.28%
0.41%
-0.14%
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15
The Week that was…
04
th
Jan to 08
th
Jan
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16
The Week that was (Jan 04 Jan 08)
Date Events Present Value Previous Value
Monday,
January 4, 2021
Japana Jibun Bank Manufacturing PMI (Dec) 50.00 49.70
• China Caixin Manufacturing PMI (Dec) 53.00 54.90
• Britain Markit Manufacturing PMI (Dec) 57.50 57.30
• Euro Zone Markit Manufacturing PMI (Dec) 55.20 55.50
• U.S. Markit Manufacturing PMI (Dec) 57.10
Tuesday,
January 5, 2021
• Germany Unemployment Rate s.a.(Dec) 6.1% 6.1%
• U.S. ISM Manufacturing PMI(Dec) 60.70 57.50
• U.S. ISM Manufacturing Employment Index(Dec) 51.50 48.40
• U.S. ISM Manufacturing New Orders Index(Dec) 67.90 65.10
Wednesday
January 6, 2021
• Japan Jibun Bank Services PMI (Dec) 47.7 47.8
• China Caixin Services PMI (Dec) 56.3 57.8
• Euro Zone Markit Services PMI (Dec) 46.4 47.3
Britain Markit Services PMI (Dec) 49.4 49.9
• U.S. ADP Employment Change (Dec) -123K 304K
• U.S. Markit Services PMI (Dec) 54.8 55.3
• U.S. Factory Orders (MoM) (Nov) 1.0% 1.3%
Thursday,
January 7, 2021
• U.S. Initial Jobless Claims (Jan 1, 2021) 787K 790K
Britain Markit Construction PMI (Dec) 54.60 54.70
Friday,
January 8, 2021
• U.S. Nonfarm Payrolls (Dec) -140K 336K
• U.S. Unemployment Rate (Dec) 6.7% 6.7%
• U.S. Average Hourly Earnings (YoY)(Dec) 5.1% 4.4%
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17
The Week Ahead
11
th
Jan to 15
th
Jan
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18
Day Event
Monday,
Jan 11, 2021
Euro Zone Sentix Investor Confidence (Jan)
U.K. NIESR GDP Estimate (3M)(Dec)
China Inflation Rate YoY (Dec)
Tuesday,
Jan 12, 2021
Japan Eco Watchers Survey: Current (Dec)
Japan Eco Watchers Survey: Outlook (Dec)
U.S. NFIB Business Optimism Index (Dec)
Wednesday,
Jan 13, 2021
Japan Machine Tool Orders (YoY)(Dec) PREL
Euro Zone Industrial Production w.d.a. (YoY)(Nov)
Japan Machinery Orders (YoY)(Nov)
U.S. Fed's Beige Book
Thursday,
Jan 14, 2021
U.S. Initial Jobless Claims (Jan 8)
U.S. Initial Jobless Claims 4-week average (Jan 8)
U.S. Continuing Jobless Claims (Jan 1)
Friday,
Jan 15, 2021
China Gross Domestic Product (YoY)(Q4)
China Industrial Production (YoY)(Dec)
U.S. Industrial Production (MoM)(Dec)
U.S. Capacity Utilization (Dec)
U.S. Business Inventories (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
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) 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 statements & assertions contained in these materials may reflect NAM
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19
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