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NEWS U CAN USE
July 3, 2020
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The Week that was…
29
th
Jun to 3
rd
Jul
2
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Indian Economy
• The India Manufacturing Purchasing Managers’ Index surged to 47.2 in Jun 2020
compared with 30.8 in May 2020 as economic activity resumed after country eased
restrictions on coronavirus lockdowns. Reading below 50 indicates contraction in business
activity. Both output and new orders contracted at a slower pace.
• India's current account balance became surplus in the Mar quarter of 2020 for the first
time in more than a decade. Current account surplus stood at US$ 0.6 billion (0.1% of GDP)
in Mar quarter of 2020 compared with a deficit of US$ 4.6 billion (0.7% of GDP) in the
corresponding period last year and US$ 2.6 billion (0.4% of GDP) in the previous quarter.
The surplus was primarily on account of a lower trade deficit and a sharp rise in net
invisible receipts as compared with the corresponding period of last year.
• Core output, which constitutes 8 sectors of the economy contracted 23.4% in May 2020,
slower than 37% in Apr 2020. Factories remained constrained by a lack of labour and cash
in the wake of the nationwide coronavirus (COVID-19) lockdown. Out of 8 core sectors, 7
continued to contract in May 2020. Steel and cement output fell sharply by 48.4% and
22.2%, respectively.
• The IHS Markit Services Business Activity Index rose to 33.7 in Jun 2020 from 12.6 in May
2020. Despite improvement in index, services activity contracted for the fourth
consecutive month due to poor domestic demand and low export orders. New orders fell
at a sharp pace in Jun 2020.
3
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4
Domestic Equity Market Indices
Indices 03-Jul-20 1 Week Return YTD Return
S&P BSE Sensex
36,021.42 2.42% -12.68%
Nifty 50
10,607.35 2.16% -12.83%
S&P BSE Mid-Cap
13,288.70 0.23% -11.22%
S&P BSE Small-Cap
12,603.02 -0.22% -8.00%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
29-Jun-20 713 1,210 0.59
30-Jun-20 801 1,080 0.74
01-Jul-20 1,054 864 1.22
02-Jul-20 1,137 748 1.52
03-Jul-20 892 1,002 0.89
Source: NSE
• Indian equity markets rose during the
week after private survey results
showed contraction of domestic
manufacturing activity at a slower pace
in Jun. Investor sentiments were
further buoyed after government
approved a scheme aimed at improving
the liquidity position of NBFCs/HFCs
through a special purpose vehicle (SPV)
to avoid any potential systemic risks to
the financial sector.
• Positive developments in a coronavirus
vaccine trial also improved risk
sentiment. Stock specific movement
contributed to the gains after the
investment arm of a U.S. chipmaker
decided to pay around $255 million to
buy a 0.39% stake in the digital unit of
one of the domestic market
behemoths.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
24.19 27.78 27.87 -713.29
P/B
2.73 3.03 2.15 1.91
Dividend Yield
1.06 1.51 1.19 1.20
Source: BSE, NSE Va
lue as on Jul 3, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
15,817.3 3.53% 7.46%
S&P BSE Bankex
24,794.5 1.35% 2.93%
S&P BSE CD
21,003.1 2.35% 0.77%
S&P BSE CG
13,109.4 -0.32% 2.21%
S&P BSE FMCG
11,429.3 2.55% 3.56%
S&P BSE HC
16,344.1 -0.89% 3.20%
S&P BSE IT
15,480.8 2.35% 7.39%
S&P BSE Metal
7,253.4 -1.85% 2.54%
S&P BSE Oil & Gas
13,013.4 -0.46% 6.21%
Source:
Refinitiv *Value as on Jul 3, 2020
• On the BSE sectoral front, the indices
witnessed a mixed trend. S&P BSE Auto was
the major gainer, up 3.53%, followed by S&P
BSE FMCG and S&P BSE Teck, which went up
2.55% and 2.49%, respectively. Auto sector
rose on hopes of normal monsoon and
anticipation of pent up demand from
bookings from pre lockdown period.
• FMCG and teck sector witnessed buying
interest amid hopes that a vaccine for the
COVID-19 pandemic may soon be discovered
and that normalcy will soon return as
economies open up gradually.
Indian Derivatives Market Review
• Nifty Jul 2020 Futures stood at 10,572.45, a discount of 34.90 points below the spot closing
of 10,607.35. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 79.47 lakh crore as against Rs. 99.21 lakh crore for the week to Jun 26.
• The Put-Call ratio stood at 0.87 compared with the previous session’s close of 0.89.
• The Nifty Put-Call ratio stood at 1.50 compared with the previous session’s close of 1.33.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.50 3.54 3.76 4.94
91 Day T-Bill
3.17 3.18 3.35 4.99
05.22% 2025, (5 Yr GOI)
5.07 5.17 -- --
05.79% 2030, (10 YrGOI)
5.85 5.91 5.82 --
Source: Refinitiv Value as on Jul 3, 2020
• Bond yields fell on value-buying from
investors ahead of the quarter-end
and amid special open market
operation conducted by the Reserve
Bank of India during the week. Yields
fell further as states planned to sell a
lower-than-expected amount of notes
in Jul-Sep 2020. Investors also hoped
of supportive measures from the
central bank to ease excess debt
supply concern.
• Yield on the new 10-year benchmark
paper (5.79% GS 2030) fell 6 bps to
close at 5.85% from the previous
week’s close of 5.91%.
• Data from RBI showed that India's
foreign exchange reserves increased
to $506.84 billion as of the week
ended Jun 26, 2020 from $505.57
billion at the end of the previous week.
Domestic Debt Market
5.80
5.84
5.88
5.92
29-Jun 30-Jun 1-Jul 2-Jul 3-Jul
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.74 5.42 168
3 Year 4.40 5.97 157
5 Year 5.14 6.51 137
10 Year 5.93 6.88 95
Source: Refinitiv Value as on
Jul 3, 2020
• Yields on gilt securities increased on 1 and
2-year paper by 2 bps and 3 bps
respectively while it fell across the
remaining maturities by up to 30 bps.
• Corporate bond yields fell across the
maturities in the range of 2 bps to 57 bps
barring 2-year paper which increased 1
bps.
• Spread between AAA corporate bond and
gilt contracted across the maturities by up
to 53 bps barring 5-year paper which
expanded 14 bps.
Domestic Debt Market (Spread Analysis)
-30
-19
-8
3
3.00
4.40
5.80
7.20
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 03-Jul-20 26-Jun-20
Yield in %
Change in
bps
Source: Refinitiv
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8
• The World Trade Organisation (WTO) has agreed to a second request from the European
Union for the establishment of a dispute settlement panel to rule on India’s import tariffs on
certain information and communication technology (ICT) goods.
• Prime Minister said under PM Gareeb Kalyan Yojana every member of household will get 5
kg or rice or flour every month until the end of Nov 2020. In addition, each family will get 1
kg chana every month.
• Indian Railways has invited Request for Qualifications (RFQs) for private sector participation
on over 100 railway routes with 150 modern, world-class trains. These private trains,
manufactured under the ‘Make in India’ initiative, will be capable of attaining speeds of 160
kmph. It is expected to see private sector investment of around Rs 30,000 crore.
• The government is ready with a blueprint to implement a cashless treatment scheme for
road accident victims. The scheme will have an insurance coverage limit of Rs. 250,000 per
case, as per a communication to transport secretaries and commissioners of the states. The
scheme assumes significance as India accounts for about 500,000 road accidents per annum,
one of the highest globally.
Regulatory Updates in India
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9
• As per the circular, the Employees’ State Insurance Corporation (ESIC) will not take
registration for new employees unless their employers submit bank account and mobile
number details beginning Jul 1, 2020. It is done to remove to improve the efficiency in the
disbursement of ESIC benefits (including claim reimbursement) and bring transparency.
• Import restrictions from China have been announced by the Ministry of Power on
equipment used for power supply systems and networks amid security and cyber threats.
The ministry said prior permission would be needed to import from countries on the prior
reference list, which includes China and Pakistan.
• According to media reports, Insurance Regulatory and Development Authority of India
(IRDAI) has directed all insurance companies to offer a short-term policy, especially
dedicated to covering the treatment cost of coronavirus from Jul 10, 2020. Accordingly, all
the insurance companies can offer Corona Rakshak Policy which is a benefit-based policy
that pays fixed cost to a policyholder if he suffers from coronavirus. Further, non-life and
standalone health insurers can additionally offer Corona Kavach Policy. Kavach Policy is an
indemnity-based health insurance product that will cover the treatment cost of
hospitalization.
• According to media reports, IRDAI has asked the health and general Insurance companies
to launch short-term COVID Standard Policy by Jul 15, 2020 with specific name and
features as per the guidelines issued by the insurance regulator.
Regulatory Updates in India (contd..)
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• According to the U.S. Labor Department, U.S. non-farm payroll employment rose steeply
by 4.8 million jobs in Jun 2020 after increasing by an upwardly revised 2.7 million jobs in
May 2020. The Labor Department also said the unemployment rate fell 11.1% in Jun 2020
from 13.3% in May 2020.
• According to the minutes of the U.S. Federal Reserve's Jun meeting, the policy makers
maintained the interest rates at near-zero levels. Members stressed the need for
strengthened guidance about policy ahead, which they expect to be “highly
accommodative.” They also expressed a preference for policy tied to outcomes, preferably
inflation rather than unemployment.
• According to the Office for National Statistics, U.K.’s gross domestic product (GDP) fell
2.2% sequentially as against 2% decrease estimated initially and followed a nil growth in
the fourth quarter of 2019. On a yearly basis, GDP fell 1.7% in the first quarter down from
1.6% estimated in May 2020.
• According to latest survey from Caixin, China’s manufacturing PMI continued to expand in
Jun 2020 and rose to 51.2 from 50.7 in May 2020.
• According to final data from IHS Markit, China’s Caixin services PMI rose to 58.4 in Jun 2020
from 55.0 in May 2020. China's service sector expanded at the fastest rate in more than a
decade in Jun amid strong orders as restrictions related to the coronavirus pandemic
eased.
10
Global News/Economy
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11
Global Indices
Indices
03-Jul-20
1-Week
Return
YTD
Return
Russell 3000
*
1,572.02 4.80% 10.24%
Nasdaq 100
*
10,341.89 5.00% 18.42%
FTSE 100 6,157.30 -0.03% -18.36%
DAX Index 12,528.18 3.63% -5.44%
Nikkei Average 22,306.48 -0.91% -5.71%
Straits Times 2,652.94 1.86% -17.68%
Source: Refinitiv Value as on Jul 3, 2020;
*
Values as on Jul 2, 2020
U.S.
• U.S. markets rose despite the continued
spike in new coronavirus cases.
Investors took positive cues after
selected drug manufacturing majors
round the world announced positive
data from an early-stage human trial of
a potential coronavirus vaccine. On the
economic front, U.S. non-farm payroll
data showed another record spike in
employment in June.
Europe
• European markets mostly went up amid continued optimism over potential coronavirus
vaccine, and on encouraging economic data from across the globe. Gains were restricted
amid worries over rising new cases of coronavirus infections and Brexit concerns.
Asia
• Most of the Asian markets too witnessed global rally on optimism about a potential
coronavirus vaccine and signs that the global economy is emerging from the coronavirus
lockdown. Latest survey from Caixin showed the manufacturing sector in China expanded
in June, with a manufacturing PMI score of 51.2, up from 50.7 in May.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury rose
3 bps during the week under review to
close at 0.67% from the previous week’s
close of 0.64%.
• U.S. Treasury prices fell during the week
under review after data showed that
manufacturing activity rebounded in
U.S. for Jun 2020.
• Losses were extended after minutes
from the U.S. Federal Reserve's
monetary policy meeting held in Jun
indicated yield curve control was not
coming anytime soon.
• U.S. Treasury prices fell further after
U.S. nonfarm payroll employment data
for Jun 2020 came better than market
expectations. However, renewed
concerns over rising coronavirus
infection cases, particularly in U.S.
restricted further losses.
Global Debt (U.S.)
0.60
0.65
0.70
29-Jun 30-Jun 1-Jul 2-Jul
Yield in %
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)
43.96 41.51
Gold ($/Oz)
1,774.79 1,770.62
Gold (Rs/10 gm)
#
48,227 48,117
Silver ($/Oz)
18.04 17.75
Silver (Rs/Kg)
#
48,458 48,280
Source: Refinitiv *Value as on Jul 3, 2020
Gold
• Gold prices traded higher as worries
over the accelerating spread of the
coronavirus infection cases fuelled
concerns regarding the recovery of the
global economy.
Brent Crude
• Brent crude prices rose after data from
the U.S. Energy Information
Administration showed that U.S. crude
inventories for the week ended Jun 26
decreased by 7.2 million barrels.
However, a rapid increase in new
coronavirus infection cases across the
globe capped the gains.
Baltic Dry Index
• The Baltic Dry Index rose due to
improved capesize and panamax
activities.
Commodities Market
9.50
10.00
10.50
11.00
11.50
12.00
12.50
3-Jun-20 13-Jun-20 23-Jun-20 3-Jul-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
1.63%
5.90%
0.24%
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
74.78 75.48
Pound Sterling
93.27 93.71
EURO
84.05 84.63
100 Yen
69.56 70.47
Source: Refinitiv Figures in INR , *Value as on Jul 3, 2020
Rupee
• The rupee rose against the greenback for
the second straight week and witnessed
the best weekly gain in as many as nine
weeks following gains in the domestic
equity market.
Euro
• The euro rose against the greenback as
improving economic data from U.S. and
euro zone boosted risk sentiment.
Pound
• The pound rose against the greenback
following upbeat manufacturing activity
data from U.K. for Jun 2020.
Yen
• The yen weakened against the U.S. dollar
as the safe haven appeal of the
greenback improved on concerns over
rise in coronavirus infection cases in U.S.
Currencies Markets
9.70
9.85
10.00
10.15
10.30
3-Jun-20 13-Jun-20 23-Jun-20 3-Jul-20
USD GBP Euro JPY
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
Source: Refinitiv
-0.47%
-0.92%
-1.29%
-0.68%
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15
The Week that was…
29
th
Jun to 3
rd
Jul
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16
The Week that was (Jun 29 – Jul 3)
Date Events Present Value Previous Value
Monday,
June 29, 2020
• Euro Zone Economic Sentiment Indicator (Jun) 75.7 67.5
• U.K. Mortgage Approvals (May) 9.273 K 15.851 K
• U.S. Pending Home Sales (MoM) (May) 44.3% -21.8%
• Japan Industrial Production (YoY)(May) (P) -25.9% -15.0%
Tuesday,
June 30, 2020
• China NBS Manufacturing PMI (Jun) 50.9 50.6
• U.K. Gross Domestic Product (QoQ)(Q1) -2.2% -2.0%
• Euro Zone Consumer Price Index (YoY) (Jun) (P) 0.3% 0.1%
• Euro Zone Consumer Price Index -
Core (YoY) (Jun) (P)
0.8% 0.9%
• Japan Construction Orders (YoY) (May) -6.1% -14.2%
Wednesday,
July 1, 2020
• China Caixin Manufacturing PMI (Jun) 51.2 50.7
• Japan Jibun Bank Manufacturing PMI (Jun) 40.1 37.8
• U.S. ADP Employment Change (Jun) 2369 K 3065 K
• Germany Unemployment Rate s.a. (Jun) 6.4% 6.3%
• Euro Zone Markit Manufacturing PMI (Jun) 47.4 46.9
• U.K. Markit Manufacturing PMI (Jun) 50.1 50.1
• U.S. ISM Manufacturing PMI(Jun) 52.6 43.1
Thursday,
July 2, 2020
• U.S. Nonfarm Payrolls (Jun) 4800 K 2699 K
• U.S. Average Hourly Earnings (YoY) (Jun) 5.0% 6.6%
• U..S Unemployment Rate (Jun) 11.1% 13.3%
• U.S. Initial Jobless Claims(Jun 26) 1427 K 1482 K
Friday,
July 3, 2020
• China Caixin Services PMI (Jun) 58.4 55.0
• Euro Zone Markit Services PMI (Jun) 48.3 47.3
• U.K. Markit Services PMI (Jun) 47.1 47.0
• Japan Jibun Bank Services PMI (Jun) 45.0 26.5
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17
The Week Ahead
6
th
Jul to 10
th
Jul
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18
Day Event
Monday,
Jul 6, 2020
• U.S. ISM Non-Manufacturing PMI (Jun)
• Euro Zone Retail Sales (YoY) (May)
• U.K. Markit Construction PMI(Jun)
• Germany Factory Orders s.a. (MoM) (May)
Tuesday,
Jul 7, 2020
• Japan Leading Economic Index (May) (P)
• Germany Industrial Production s.a. (MoM)(May)
• U.K. Halifax House Prices (YoY/3m) (Jun)
Wednesday,
Jul 8, 2020
• U.S. MBA Mortgage Applications (Jul 3)
• U.S. Consumer Credit Change (May)
• U.K. RICS Housing Price Balance(Jun)
Thursday,
Jul 9, 2020
• China Consumer Price Index (YoY) (Jun)
• U.S. Initial Jobless Claims (Jul 3)
• U.S. Wholesale Inventories (May)
Friday,
Jul 10, 2020
• China New Loans (Jun)
• China M2 Money Supply (YoY)(Jun)
• U.S. Producer Price Index (YoY) (Jun)
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) (formerly Reliance Nippon Life Asset Management 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
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representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such data or information.
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