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NEWS U CAN USE
July 02, 2021
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The Week that was…
28
th
June to 02
nd
July
2
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Indian Economy
• Data from Reserve Bank of India showed that India’s current account balance recorded a
deficit of US$ 8.1 billion (1% of GDP) in Q4 of FY21 from a surplus of US$ 0.6 billion (0.1%
of GDP) in Q4 of FY20. India has a current account deficit of US$ 2.2 billion (0.3% of GDP)
in Q3 of FY21. The current account deficit in Q4 of FY21 was primarily due to higher trade
deficit and lower net invisible receipts than in the corresponding period of the previous
year.
• Government data showed that the index of eight core industries witnessed a growth of
16.8% in May 2021 as against growth of 60.9% in the previous month and a contraction of
21.4% in the same period of the previous year. The steel sector witnessed the growth of
59.3% in May followed by natural gas and refinery product sector. Fertilizer sector
witnessed the maximum contraction of 9.6% in May.
• Government data showed that India’s fiscal deficit stood at 8.20% of GDP. The revenue
deficit stood at 5.70 % of GDP. Total receipts stood at Rs. 3.55 lakh crore or 18% of the
budget estimate as compared to 2% in the corresponding period of the previous year.
Total expenditure stood at Rs. 4.78 lakh crore or 13.7% of the budget estimate as
compared to 16.8% in the corresponding period of the previous year.
• IHS Markit survey showed India’s Manufacturing Purchasing Managers’ Index (PMI) fell to
48.1 in Jun 2021 from 50.8 in May 2021. The manufacturing sector slowed to 11-month
low in Jun as measures to contain the coronavirus put manufacturing into “reverse gear”.
3
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4
Domestic Equity Market Indices
Indices 02-Jul-21 1 Week Return YTD Return
S&P BSE Sensex
52,484.67 -0.83% 9.91%
Nifty 50
15,722.20 -0.87% 12.45%
S&P BSE Mid-Cap
22,505.82 -0.19% 25.44%
S&P BSE Small-Cap
25,567.26 2.28% 41.27%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
28-Jun-21 1069 940 1.14
29-Jun-21 903 1084 0.83
30-Jun-21 965 1017 0.95
01-Jul-21 966 1011 0.96
02-Jul-21 1165 804 1.45
Source: NSE
• Indian equity markets settled for the
week in the negative territory. Market
sentiments were dampened by weak
cues from global peers due to the
outbreak of delta variant of COVID
cases across Asia. However, the
downturn was restricted by reports of
relief measures announced by the
finance minister to support the
domestic economy, which is battered
by a second wave of COVID-19, and is
bracing for a possible third wave.
• Markets retreated as geo-political risk
kept investors cautious as India
deployed additional 50,000 troops
along the China border. Investor
sentiments soured after IHS Markit
India Manufacturing Purchasing
Managers’ Index (PMI) slipped in June.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
31.82 28.33 43.04 49.51
P/B
3.36 4.24 3.10 3.24
Dividend Yield
1.04 1.23 0.93 0.77
Source: BSE, NSE Va
lue as on July 02, 2021
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
23,945.23 -0.09% 0.32%
S&P BSE Bankex
39,451.42 -1.44% -1.51%
S&P BSE CD
36,058.30 1.17% 7.01%
S&P BSE CG
22,776.12 -1.33% 0.38%
S&P BSE FMCG
13,583.00 0.86% 3.89%
S&P BSE HC
26,004.17 3.60% 5.19%
S&P BSE IT
30,029.81 -0.09% 9.70%
S&P BSE Metal
18,432.93 -1.45% -2.16%
S&P BSE Oil & Gas
16,093.33 -2.49% -3.65%
Source: Refinitiv *Value as on July 02, 2021
• On the BSE sectoral front, majority of the
indices closed in the red. S&P BSE Power was
the major loser, down 4.26%, followed by S&P
BSE Oil & Gas and S&P BSE Metal, which
slipped 2.49% and 1.45%, respectively.
• Meanwhile, S&P BSE Healthcare, S&P BSE
Consumer Durables and S&P BSE FMCG were
the only gainers, up 3.60%, 1.17% and 0.86%,
respectively.
Indian Derivatives Market Review
• Nifty Jul 2021 Futures stood at 15,741.55, a premium of 19.35 points above the spot
closing of 15,722.20. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 223.74 lakh crore as against Rs. 241.06 lakh crore for the week to Jun 25.
• The Put-Call ratio stood at 0.87 compared with the previous week’s close of 0.84.
• The Nifty Put-Call ratio stood at 1.09 compared with the previous week’s close of 1.20.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.12 3.13 3.12 3.20
91 Day T-Bill
3.41 3.42 3.42 3.03
05.22% 2025, (5 Yr GOI)
5.61 5.56 5.35 5.04
05.85% 2030, (10 Yr GOI)
6.06 6.03 6.01 5.88
Source: Refinitiv Value as on July 02, 2021
• Bond yields rose on expectations of
higher securities issuances in the Sep
quarter of 2021. Losses increased on the
last day as the Reserve Bank of India (RBI)
devolved as well as used greenshoe
option at the weekly government
securities auction. Meanwhile, market
participants awaited clarity on bond
purchases.
• Yield on the 10-year benchmark paper
(5.85% GS 2030) rose 3 bps to close at
6.06% as compared to the previous
week’s close of 6.03%.
• RBI conducted the auction of four
government securities- 5.63% GS 2026,
GOI FRB 2033, 6.64% GS 2035 and 6.67%
GS 2050 for a cumulative amount of Rs.
32,000 crore, which was oversubscribed
with devolvement on primary dealers.
Domestic Debt Market
6.00
6.04
6.08
28-Jun 29-Jun 30-Jun 1-Jul 2-Jul
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 4.10 4.77 66
3 Year 4.94 5.54 60
5 Year 5.83 6.59 76
10 Year 6.16 7.30 114
Source: Refinitiv Value as on
July 02, 2021
• Yields on gilt securities rose by up to 15 bps
across the maturities, barring 2-, 6- & 30-year
papers that fell 21, 1 and 2 bps, respectively.
• Corporate bond yields fell in the range of 2 to
7 bps on 1- to 3-year and 15-year papers while
6- to 10-year papers rose 1 bps each. Yield on
4- & 5-year papers were unchanged.
• Spread between AAA corporate bond and gilt
contracted in the range of 3 to 10 bps across
segments, leaving 2- & 6-year papers that
expanded 15 & 2 bps, respectively.
Domestic Debt Market (Spread Analysis)
-12
3
18
2.80
5.30
7.80
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 02-Jul-21 25-Jun-21
Yield in %
Change in bps
Source: Refinitiv
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8
• The Finance Minister proposed a loan guarantee scheme worth Rs. 1.1 lakh crore for Covid-
affected sectors. The scheme would include a loan of Rs. 50,000 crore to the health sector,
which would be used to expand medical infrastructure in underserved areas. Besides,
additional Rs. 1.5 lakh crore limit enhancement done for Emergency Credit Line Guarantee
Scheme (ECLGS) scheme. The guarantee cover is for expansion of new projects under
health, in areas other than 8 metro cities. Guarantee coverage is of 50% for expansion and
75% for new projects for 3 years. Interest rate capped has been capped at 7.95%; normal
interest rate without guarantee cover is 10% -11%.
• The government has extended the Atmanirbhar Bharat Rojgar Yojana (ABRY) by nine
months to Mar 31,2022, with the goal of encouraging formal job development in the
country. Under the system, the government pays both the employer and the employee's
provident fund contributions for two years.
• The Reserve Bank of India (RBI) has instructed co-operative banks not to outsource core
management operations like policy formulation, internal audit and compliance, KYC
compliance, credit sanction, and portfolio management. The RBI said in recommendations
for controlling risk in cooperative banks' outsourcing of financial services that they can hire
experts on a contractual basis, including former workers, subject to certain criteria.
Regulatory Updates in India
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9
• Securities Exchange Board of India (Sebi) mandated that two-third of the members of the
nomination & remuneration committee (NRC) and the audit committee (AC) of the board
of a listed company should be independent directors. This is being done to give more
power to non-promoting shareholders in a company. Currently, rules say that most of the
members of these two key committees of the board should be independent directors.
• The Securities and Exchange Board of India has reduced the minimum application value for
retail investors in Real Estate Investment Trusts (REITs) from Rs. 50,000 to between Rs.
10,000 and Rs.15,000, bringing it in line with equity shares. The trading lot has also been
reduced to just one unit, bringing it in line with equity shares. The move is expected to
enhance the liquidity of the asset class in addition to providing the much-needed depth to
the market that has so far seen a total three REIT listings in India. Retail investors can now
participate in this asset class.
• The Securities Exchange Board of India (Sebi) has approved the issuance of bonds by
relatively new companies with less than three years of existence. This is being done for
bonds to become a major source of funding in India.
• Sebi approved a proposal to combine listing regulations for debt securities and non-
convertible redeemable preference shares into a single regulation to make compliance
easier for listed entities.
Regulatory Updates in India (contd..)
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• According to Institute for Supply Management, U.S. manufacturing Purchasing Managers'
Index (PMI) slipped to 60.6 in Jun 2021 from 61.2 in May 2021.
• According to the Labour Department, U.S. non-farm payroll employment rose by 850,000
jobs in Jun 2021 after rising by an upwardly revised 583,000 jobs in May 2021. Meanwhile,
the Labor Department said the unemployment rate unexpectedly inched up to 5.9% in Jun
from 5.8% in May.
• According to preliminary data from Eurostat, eurozone inflation rose 1.9% YoY in Jun 2021
as against 2% YoY rise in May 2021. Core inflation eased to 0.9% from 1% in the previous
month.
• According to the Office for National Statistics, U.K. gross domestic product fell 1.6% in the
quarter ended Mar 2021 as against 1.3% rise in the quarter ended Dec 2020. The decline
came as the lockdown restrictions were re-introduced.
• According to the National Bureau of Statistics, China’s manufacturing Purchasing
Managers' Index (PMI) fell to 50.9 in Jun 2021 from 51.0 in May 2021. The non-
manufacturing PMI declined to 53.5 in Jun from 55.2 in May.
• According to the Ministry of Economy, Trade and Industry, Japan’s retail sales rose 8.2%
YoY in May 2021 as against 11.9% rise in Apr 2021.
10
Global News/Economy
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11
Global Indices
Indices
02-July-21
1-Week
Return
YTD
Return
Russell 3000 2,221.14 2.21% 13.75%
Nasdaq 100 14,727.63 2.67% 14.27%
FTSE 100 7,123.27 -0.18% 10.26%
DAX Index 15,650.09 0.27% 14.08%
Nikkei Average 28,783.28 -0.97% 4.88%
Straits Times 3,128.95 0.24% 10.03%
Source: Refinitiv Value as on July 02, 2021
U.S.
• U.S. markets went up after Labor
Department released a report showing
first-time claims for U.S. unemployment
benefits fell by more than expected in
the week ended June 26.
• Nonetheless, concerns about the spread
of the delta variant COVID-19 in Europe
and Asia, and the resultant fresh
restrictions on travel in several
countries restricted gains.
Europe
• European markets largely showed a mixed trend amid a surge in the Delta variant
coronavirus cases and travel curbs in several countries. However, the fall was cushioned
after Eurostat data showed that unemployment rate in the euro area fell to 7.9% in May.
Asia
• Majority of the Asian markets went down as the delta variant of coronavirus stoked risk
aversion among the investors. Meanwhile, fall in the Caixin China General Manufacturing
PMI for June, primarily due to an uptick in COVID-19 cases kept investors wary.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury fell 9
bps to close at 1.43%, from the previous
week’s close of 1.52%.
• U.S. Treasury price rose ahead of the Jun
2021 U.S. employment data to gauge the
strength of the economic recovery from
the covid-19 pandemic.
• Gains increased further after a strong U.S.
nonfarm payroll report and rise in
unemployment rate left uncertainty
about how the U.S. Federal Reserve might
respond.
Global Debt (U.S.)
1.42
1.46
1.50
28-Jun 29-Jun 30-Jun 1-Jul 2-Jul
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($/Barrel)
78.79 77.30
Gold ($/Oz)
1786.79 1780.34
Gold (Rs/10 gm)
47434 46991
Silver ($/Oz)
26.46 26.07
Silver (Rs/Kg)
68919 68388
Source: Refinitiv *Value as on July 02, 2021
Gold
• Gold prices rose as its safe haven appeal
got boosted due to rising concerns over
the spread of the Delta coronavirus variant.
Brent Crude
• Brent crude oil remained at elevated levels
on robust demand outlook and drawdown
in U.S. weekly inventories after EIA data
showed U.S. stockpiles fell by 6.7 million
barrels last week. However, gains were
restricted after OPEC+ ministers
postponed their output policy meeting on
reports that United Arab Emirates refused
to return 2 million barrels per day (bpd) to
the market in the second half of the year.
Baltic Dry Index
• The index rose during the week due to
improved capesize and panamax activities.
Commodities Market
9.00
9.50
10.00
10.50
11.00
11.50
2-Jun-21 17-Jun-21 2-Jul-21
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
1.48%
1.93%
0.94%
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing* 1-Wk Ago
US Dollar
74.77 74.18
Pound Sterling
102.88 103.30
EURO
88.53 88.57
100 Yen
67.01 66.92
Source: Refinitiv Figures in INR , *
Value as on July 02, 2021
Rupee
• The Indian rupee dropped against the U.S.
dollar tracking broad gains in U.S. dollar index,
greenback buying by importers and on
expectations of upbeat US nonfarm report.
Euro
• Euro fell against the U.S. dollar on decline in risk
appetite as new delta covid-19 variant
outbreaks threatened to disrupt the global
economic recovery.
Pound
• Pound fell against the broad strengthening in
the U.S. dollar after Bank of England Governor
warned against over-reaction to rising inflation
in Britain.
Yen
• Yen fell against the broad strengthening in the
U.S. dollar on a surprise hawkish shift by the U.S.
Federal Reserve.
Currencies Markets
9.75
10.00
10.25
2-Jun-21 12-Jun-21 22-Jun-21 2-Jul-21
USD GBP Euro JPY
Source: Refinitiv
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
-0.04%
-0.41%
0.80%
0.13%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
15
The Week that was…
28
th
June to 02
nd
July
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16
The Week that was (June 28 – July 02)
Date Events
Present
Value
Previous
Value
Monday,
June 28, 2021
• Germany Import Prices (YoY)(May) 11.80% 10.30%
• U.S. Dallas Fed Manufacturing Business Index(Jun) 31.1 34.9
Tuesday,
June 29, 2021
• Germany Harmonized Index of Consumer Prices (YoY)(Jun) PREL 2.10% 2.40%
• Japan Unemployment Rate(May) 3.00% 2.80%
• Eurozone Consumer Confidence(Jun) -3.3 -3.3
• U.S. Housing Price Index (MoM)(Apr) 1.80% 1.60%
Wednesday,
June 30, 2021
• China Non-Manufacturing PMI(Jun) 53.5 55.2
• U.S. ADP Employment Change (Jun) 692K 886K
• Eurozone Consumer Price Index (YoY)(Jun) PREL 1.9% 2.00%
• Japan Industrial Production (YoY)(May) PREL 22.00% 15.80%
• U.K. Gross Domestic Product (QoQ)(Q1) -1.60% -1.50%
• Germany Unemployment Rate (Jun) 5.9% 5.9%
Thursday
July 01, 2021
• Japan Tankan Large Manufacturing Index (Q2) 14 5
• Germany Retail Sales (YoY)(May) -2.40% 4.40%
• U.S. ISM Manufacturing PMI (Jun) 60.6 61.2
• Eurozone Unemployment Rate (May) 7.90% 8.10%
Friday,
July 02, 2021
• U.S. Nonfarm Payrolls (Jun) 850K 583K
• U.S. Unemployment Rate(Jun) 5.90% 5.80%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
05
th
July to 09
th
July
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18
Day Event
Monday,
July 05, 2021
• India Markit Services PMI (Jun)
• China Caixin Services PMI (Jun)
• Germany Composite PMI (Jun)
• Eurozone Markit Composite PMI (Jun)
Tuesday,
July 06, 2021
• Eurozone Retail Sales (YoY)(May)
• U.S. ISM Services PMI (Jun)
• Germany ZEW Survey – Economic Sentiment (Jul)
• Eurozone ZEW Survey – Economic Sentiment (Jul)
• Germany Factory Orders (MoM)(May)
• Japan Overall Household Spending (YoY)(May)
Wednesday,
July 07, 2021
• U.S. FOMC Minutes
• Germany Industrial Production (MoM)(May)
• Japan Leading Economic Index (May) PREL
Thursday,
July 08, 2021
• Japan Current Account (May)
• Germany Trade Balance (May)
Friday,
July 09, 2021
• China Consumer Price Index (YoY)(Jun)
• U.K. Industrial Production (MoM)(May)
• U.K. Gross Domestic Product (MoM)(May)
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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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
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