Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
NEWS U CAN USE
January 24, 2020
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
The Week that was…
20
th
Jan to 24
th
Jan
2
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Indian Economy
• The International Monetary Fund (IMF) lowered its growth forecast for the Indian
economy for FY20 to 4.8% from the earlier projection of 6.1% in Oct 2019. IMF attributed
the downgrade to a sharper-than-expected slowdown in domestic demand, decline in
credit growth and stress in the non-banking financial segment. IMF however projected the
growth of the Indian economy to improve to 5.8% in FY 21 and 6.5% in FY22 (120 bps and
90 bps lower respectively than the estimation in Oct 2019) on the back of monetary and
fiscal stimulus as well as lower global crude oil prices.
• According to the oil ministry’s monthly consumption review report, India’s oil demand
grew 1.8% in the first nine months of the current fiscal. This is slower than 2.7% in the
same period of the previous year. The fall in oil demand can be attributed to a slowdown in
the domestic economy which led to a decline in consumption of petrol, diesel and various
industrial fuels in recent months.
• According to media reports, the government is planning to raise more than Rs. 10,000
crore from Central Public Sector Enterprises ETF's seventh tranche that would be launched
by the end of Jan 2020. The portfolio is primarily concentrated towards the energy and oil
sector. The proceeds from the ETF will provide assistance to the government in meeting
its disinvestment target of Rs. 1.05 lakh crore for the current fiscal.
3
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
4
Domestic Equity Market Indices
Indices
24-Jan-20
1 Week Return
YTD Return
S&P BSE Sensex
41,613.19 -0.79% 0.87%
Nifty 50
12,248.25 -0.84% 0.66%
S&P BSE Mid
-Cap 15,822.54 0.72% 5.71%
S&P BSE Small
-Cap 14,845.96 0.93% 8.37%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date
Advances
Declines
Advance/Decline Ratio
20-Jan-20 626 1,225 0.51
21-Jan-20 787 1,055 0.75
22-Jan-20 737 1,097 0.67
23-Jan-20 1,078 752 1.43
24-Jan-20 1,064 766 1.39
Source: NSE
• Indian equity markets closed on a weak
note in the week ended Jan 24, 2020.
Reports that IMF has cut India’s GDP
growth forecast for FY20 weighed on
the market sentiment. Losses were
extended following reports that
domestic crude oil production fell
during Dec 2019.
• Investors remained focused on mixed
bag of earnings results for the quarter
ended Dec 31, 2019.
• Further, weak global cues amid concerns
about spread of a deadly virus in China
as millions of Chinese are preparing to
travel for the Lunar New Year weighed
on the indices. However, reports that
World Health Organization has marked
outbreak of coronavirus as an
emergency for China, but not yet for the
rest of the world, restricted the losses.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
25.54 28.10 29.86 48.05
P/B
3.22 3.45 2.58 2.11
Dividend Yield
1.02 1.24 1.04 1.02
Source: NSE,BSE
Value as on Jan 24, 2020
Indian Equity Market
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
18,566.26
-1.77%
1.69%
S&P BSE Bankex
35,667.71
-1.02%
-3.07%
S&P BSE CD
26,352.69 2.01% 5.14%
S&P BSE CG
17,726.61 2.21% 4.63%
S&P BSE FMCG
11,940.92 0.16% 4.37%
S&P BSE HC
14,108.82 0.41% 5.31%
S&P BSE IT
16,233.99 0.72% 3.97%
S&P BSE Metal
10,364.35
-2.42%
2.06%
S&P BSE Oil & Gas
14,596.48
-1.03%
-0.77%
Source: BSE * Value as on Jan 24, 2020
• Back home, expectations from the government to
provide necessary fiscal stimulus during Union
Budget FY21 to lift the economy supported
buying interest. Fall in crude oil prices also
boosted market sentiment.
• S&P BSE Metal was the major loser that fell 2.42%
followed by S&P BSE Auto that fell 1.77%. Auto
sector came under pressure following data from
Federation of Automobile Dealers Associations
that total vehicle registration reportedly fell 15%
YoY to 16,06,002 units in Dec 2019. S&P BSE Oil &
Gas and S&P BSE Bankex fell 1.03% and 1.02%,
respectively.
Indian Derivatives Market Review
• Nifty Jan 2020 Futures stood at 12,271.60, a premium of 23.35 points above the spot
closing of 12,248.25. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 86.51 lakh crore as against Rs. 73.65 lakh crore for the week to Jan 17.
• The Put-Call ratio stood at 0.91 against the previous week’s close of 0.87.
• The Nifty Put-Call ratio stood at 1.42 against the previous week’s close of 1.55.
Indian Equity Market (contd.)
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
4.96 5.02 5.12 5.58
91 Day T
-Bill
5.45 5.48 5.02 5.77
07.32% 2024, (5
Yr GOI)
6.36 6.41 6.42 6.40
06.45% 2029, (10 Yr GOI)
6.58 6.63 6.58 6.44
Source: Thomson Reuters Eikon
Value as on Jan 24, 2020
• Bond yields rose initially during the
week as market participants preferred
to remain on the sidelines and awaited
the outcome of the Union Budget.
Market participants expect the
government to announce measures in
the Union Budget which will improve
the growth prospects of the domestic
economy despite fiscal constraints.
• However, the trend reversed after the
cut off price of the benchmark paper
at the central bank’s special OMO
came better than market
expectations.
• Yield on the 10-year benchmark paper
(6.45% GS 2029) fell 4 bps to close at
6.58% compared with the previous
week’s close of 6.62% after trading in
a range of 6.57% to 6.65%.
Domestic Debt Market
6.50
6.60
6.70
20-Jan 21-Jan 22-Jan 23-Jan 24-Jan
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 6.32 6.57 25
3 Year 6.48 7.05 57
5 Year 6.94 7.17 23
10 Year 7.01 7.96 95
Source: Thomson Reuters Eikon
Value as on Jan 24, 2020
• Yields on gilt securities fell across the
maturities by up to 9 bps. The maximum
decline was witnessed on 11 and 19-year
paper and the minimum decline was
witnessed on 5-year paper.
• Corporate bond yields fell across the
maturities in the range of 7 bps to 22 bps
barring 2-year paper and 15-year paper
which increased 7 bps and 15 bps
respectively.
Domestic Debt Market (Spread Analysis)
-8
-4
0
4.50
6.00
7.50
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 24-Jan-20 17-Jan-20
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
8
• Securities and Exchange Board of India notified norms for portfolio managers. According to
the new norms, the minimum investment limit for investors has been doubled to Rs. 50 lakh.
SEBI also mandated that the portfolio managers need to increase their net worth to Rs 5
crore within three years. The objective of the move is to keep retail investors from portfolio
management schemes and put a check on mis-selling.
• According to a media report, government has prepared a draft for a new legislation to
improve protection for foreign investors in India. The bill offers relief to foreign investors
from possible policy changes but will uphold the state's right to tax them. The bill also adds
setting up new adjudicating authorities to speedily resolve disputes, in a bid to upgrade
India's investment climate and boost foreign investment.
• The government is looking to provide credit guarantee to medium sized companies to
access more and cheaper funds, enlarging the scope of the existing scheme, which is
restricted to micro and small enterprises. The proposed inclusion of medium enterprises will
resolve the issue of units becoming ineligible on its upgradation to medium category from
small category on investment in plant and machinery/ equipment.
• Finance minister said decriminalising corporate laws, settling tax disputes and rapid
privatisation of state-owned companies are some of the measures government is working to
put India on the path to a $5-trillion economy. By decriminalising companies, government
want to ensure that no other Acts, including Income Tax and Prevention of Money
Laundering Act, have such provisions.
Regulatory Updates in India
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
9
• According to a media report, the government is considering a new formula for payments
to creditors of distressed companies. The new formula will be created under the
insolvency and bankruptcy law, which would give a better deal to unsecured lenders and
operational creditors. There are two options under consideration- liquidation amount set
by the valuers before the resolution is started, and anything in excess of this amount.
• The central government would soon come out with an industrial package for Jammu and
Kashmir (J&K) Union Territory, Minister for Railways and Commerce said. He expressed
hope that it would attract large amounts of investment to the valley. He also announced
that Kashmir would be linked with the rest of the country by train by Dec 2021.
Regulatory Updates in India (contd..)
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
• The International Monetary Fund (IMF) in the latest update to its World Economic Outlook
report lowered global growth projections for the 2020 and 2021, mainly due to the
weaker-than-expected expansion in India. Global growth for the current year is forecasted
at 3.3%, compared with 3.4% forecast made in Oct 2019. In 2021, global growth is
projected to rise by 3.4%, which is 0.2% lower than the Oct 2019 forecast.
• The European Central Bank (ECB) kept interest rates on hold in its monetary policy review.
The asset purchase program and the forward guidance was also left unchanged. In
addition, the new ECB Chief launched a broad review of the bank's monetary policy
strategy which will cover "a whole host of issues" ranging from the inflation target to the
impact of climate change. A review of the ECB's monetary policy strategy was last
undertaken in 2003. The process is expected to conclude at the end of the year.
• The Bank of Japan (BoJ) kept its monetary policy stimulus unchanged while interest rates
were retained at -0.1%. The bank will purchase Japanese government bonds in a flexible
manner so that their outstanding amount will increase at an annual pace of about JPY 80
trillion. BoJ raised its growth forecast for the financial year 2020 citing the effects of the
fiscal stimulus. Japanese economy is estimated to grow 0.9% in fiscal 2020, higher than the
previous forecast of 0.7%.
• The People's Bank of China left its benchmark lending rates unchanged for the second
straight month. The one-year loan prime stood at 4.15% and the five-year loan prime rate
at 4.80%.
10
Global News/Economy
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
11
Global Indices
Indices
24-Jan-20
1-Week
Return
YTD
Return
Russell 3000
1,481.56 -0.82% 3.89%
Nasdaq 100
9,141.47 -0.35% 4.68%
FTSE 100
7,585.98 -1.15% 0.58%
DAX Index
13,590.82 0.48% 2.58%
Nikkei Average
23,827.18 -0.89% 0.72%
Straits Times
3,240.02 -1.25% 0.53%
Source: Thomson Reuters Eikon
Value as on Jan 24, 2020
U.S.
• U.S. markets largely remained under
pressure with investors concerned over
the deadly coronavirus outbreak in
China.
• Sentiments soured further after the
International Monetary Fund
downwardly revised its forecast for
global economic outlook due to bigger
than expected slowdowns in emerging
markets.
Europe
• Most of the European markets remained low as investors turned cautious following news
about the outbreak of the deadly coronavirus in China. Selling pressure intensified amid
global growth worries after the International Monetary Fund lowered its forecast for
global economic growth.
Asia
• Asian markets ended the week in the red amid concerns over deadly virus spread after the
death toll from China’s new corona virus continued to increase. Investors are worried that
the new virus may spread globally over the week-long Lunar New Year holidays, when
millions of Chinese travel domestically and abroad.
Global Equity Markets
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
12
• Yields on the 10-year U.S. Treasury
Treasuries plunged 16 bps to close at
1.68% compared to the previous week’s
close of 1.84%.
• U.S. Treasury prices fell during the week
under review after the Bank of Canada
kept interest rates on hold and opened
the door for possible easing amid an
economic slowdown which fuelled
concerns of a slowdown in global growth.
• U.S. Treasury prices rose further as its
safe haven appeal improved amid
concerns that the coronavirus outbreak in
China might affect the growth prospects
of the global economy.
• Worries about the latest virus outbreak in
China reminded of another deadly virus,
Severe Acute Respiratory Syndrome that
killed nearly 800 people between 2002
and 2003.
Global Debt (U.S.)
1.65
1.68
1.71
1.74
1.77
1.80
21-Jan 22-Jan 23-Jan 24-Jan
US 10-Year Treasury Yield
Movement
Source: Thomson Reuters Eikon
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
59.63 64.34
Gold ($/Oz)
1,570.37 1,556.22
Gold (Rs/10 gm)
40,002 39,804
Silver ($/Oz)
18.08 18.00
Silver (Rs/Kg)
46,116 46,527
Source: Thomson Reuters Eikon *
Value as on
Jan 24, 2020
Gold
• Gold prices were up following the missile
attack in Yemen, which fuelled geopolitical
tension. In addition, the fall in global equity
market due to increasing concerns over the
coronavirus outbreak in China also added to
the bullion’s safe-have appeal.
Brent Crude
• Brent crude prices weakened amid
increasing concerns over the commodity’s
demand outlook as the coronavirus
epidemic in China may adversely impact the
global economy. Additionally, the
International Energy Agency’s projection of
a market surplus in the first half of this year
further dampened sentiments.
Baltic Dry Index
• The Baltic Dry Index fell due to lower
capesize and panamax activities.
Commodities Market
8.00
9.00
10.00
11.00
24-Dec-19 9-Jan-20
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Commodities Movement
24-Jan-20
0.47%
-7.32%
-0.91%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
71.24 71.04
Pound Sterling
93.51 92.95
EURO
78.69 79.14
100 Yen
65.04 64.45
Source: RBI Figures in INR , *
Value as on
Jan 24, 2020
Rupee
• The Indian rupee weakened against the U.S.
dollar following losses in the domestic
equity market.
Euro
• The euro fell against the U.S. dollar after
lacklustre eurozone flash composite PMI
data for Jan 2020 and comments from ECB
President indicated that policymakers will
maintain loose monetary policy.
Pound
• The pound rose against the U.S. dollar after
the U.K. economy created jobs at its
strongest rate in nearly a year in three
months to Nov 2019.
Yen
• The yen rose against the greenback as its
safe haven appeal improved due to the
spread of coronavirus in China, which
dampened risk appetite.
Currencies Markets
9.80
10.10
10.40
24-Dec-19 9-Jan-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
24-Jan-20
-0.57%
0.28%
0.60%
0.92%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
15
The Week that was…
20
th
Jan to 24
th
Jan
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
16
The Week that was (Jan 20 – Jan 24)
Date Events
Present
Value
Previous
Value
Monday,
January 20, 2020
• China PBoC Interest Rate Decision
4.15% 4.15%
• Japan Industrial Production (YoY) (Nov)
-8.20% -8.10%
• Germany Producer Price Index (MoM) (Dec)
0.10% 0.00%
Tuesday,
January 21, 2020
• Bank of Japan Interest Rate Decision
-0.10% -0.10%
• U.K. ILO Unemployment Rate (3M) (Nov)
3.80% 3.80%
• Germany ZEW Survey
- Economic Sentiment (Jan) 26.70 10.70
Wednesday,
January 22, 2020
• U.K. Public Sector Net Borrowing (Dec)
£4.04 B
£4.195 B
• U.S. Housing Price Index (MoM) (Nov)
0.20% 0.20%
• Japan Foreign Bond Investment (Jan 17)
¥175.1 B
¥2329.7 B
• Japan Merchandise Trade Balance Total (Dec)
¥-152.5 B ¥-82.1 B
Thursday,
January 23, 2020
• European Central Bank Interest Rate Decision
0.00% 0.00%
• Japan National Consumer Price Index (YoY) (Dec)
0.80% 0.50%
• U.S. Initial Jobless Claims (Jan 10)
211 K 205 K
Friday,
January 24, 2020
• Germany Markit Manufacturing PMI (Jan) (P)
45.20 43.70
• Germany Markit Composite PMI (Jan) (P)
51.10 50.20
• Eurozone Markit Composite PMI (Jan) (P)
50.90 50.90
• U.K. Markit Services PMI (Jan) (P)
52.90 50.00
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
27
th
Jan to 31
st
Jan
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
18
Day Event
Monday,
January 27, 2020
•
Germany IFO - Expectations (Jan)
•
U.S. New Home Sales (MoM) (Dec)
Tuesday,
January 28, 2020
•
U.S. Nondefense Capital Goods Orders ex Aircraft (Dec)
•
U.S. Durable Goods Orders (Dec)
•
U.S. Consumer Confidence
Wednesday,
January 29, 2020
•
U.S. Fed Interest Rate Decision
•
U.S. Pending Home Sales (MoM) (Dec)
•
Germany Gfk Consumer Confidence Survey (Feb)
Thursday,
January 30, 2020
•
Bank of England Interest Rate Decision
•
Germany Harmonized Index of Consumer Prices (YoY) (Jan) (P)
•
U.S. Gross Domestic Product Annualized (Q4) (P)
•
Germany Unemployment Change (Dec)
•
Eurozone Unemployment Rate (Dec)
•
U.S. Initial Jobless Claims (Jan 24)
•
Japan Unemployment Rate (Dec)
Friday,
January 31, 2020
•
Eurozone Consumer Price Index (YoY) (Jan) (P)
•
Eurozone Gross Domestic Product (YoY) (Q4) (P)
The Week Ahead
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
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 Company 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
statements & assertions contained in these materials may reflect NAM India’s views or opinions, which in turn may have been formed on the basis of
such data or information. The Sponsor(s), the Investment Manager, the Trustee or any of their respective directors, employees, affiliates or
representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such data or information.
Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and
opinions given are fair and reasonable, to the extent possible. This information is not intended to be an offer or solicitation for the purchase or sale
of any financial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Before
making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed
investment decision. None of the Sponsor(s), the Investment Manager, the Trustee, their respective directors, employees, affiliates or
representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on
account of lost profits arising from the information contained in this material.
All information contained in this document has been obtained by ICRA Online Limited from sources believed by it to be accurate and reliable.
Although reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of
any kind, and ICRA Online Limited or its affiliates or group companies and its respective directors, officers, or employees in particular, makes no
representation or warranty, express or implied, as to the accuracy, suitability, reliability, timelines or completeness of any such information. All
information contained herein must be construed solely as statements of opinion, and ICRA Online Limited, or its affiliates or group companies and its
respective directors, officers, or employees shall not be liable for any losses or injury, liability or damage of any kind incurred from and arising out of
any use of this document or its contents in any manner, whatsoever. Opinions expressed in this document are not the opinions of our holding
company, ICRA Limited (ICRA), and should not be construed as any indication of credit rating or grading of ICRA for any instruments that have been
issued or are to be issued by any entity.
19
Disclaimer
Thank you for
your time.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Thank you for
your time.
