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NEWS U CAN USE
July 10, 2020
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The Week that was…
6
th
Jul to 10
th
Jul
2
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Indian Economy
• According to report from Singapore's banking group DBS, India is expected to show
double-digit contraction during Apr-Jun 2020 quarter due to the COVID-19 pandemic
restriction on economic activities. In the Jan-Mar 2020 quarter, the gross domestic product
(GDP) grew by 3.1%.
• According to the Centre for Monitoring Indian Economy, unemployment rate rose by 0.1%
in the week ended Jun 28, 2020 to 8.6% and by 0.3% for the week ended Jul 3, 2020 to
8.9% following sharp decline from the peak of 23.5% in May 2020 to 11% in Jun 2020.
• The 15th Finance Commission’s (FC) high level group (HLG) on heath and World Bank will
together work to assist the FC in its recommendations for the health sector. Considering
its significance in the sense of the pandemic, the chairman of the Finance Commission said
that, for the first time, the final report of the commission would include a whole chapter
devoted to healthcare funding.
• The Prime Minister of India inaugurated Asia's largest 750 MW solar power project at Rewa
in Madhya Pradesh. The mega solar power project consists of three solar generating units
of 250 MW each located on a 500-hectare plot of land situated inside a solar park. This
project will benefit the poor, middle-class families, farmers and tribals of the state. The
project will make Madhya Pradesh a hub of cheap and clean electricity.
3
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4
Domestic Equity Market Indices
Indices
10-Jul-20
1 Week Return
YTD Return
S&P BSE Sensex
36,594.33 1.59% -11.29%
Nifty 50
10,768.05 1.52% -11.51%
S&P BSE Mid
-Cap
13,396.83 0.81% -10.50%
S&P BSE Small
-Cap
12,803.78 1.59% -6.54%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
06-Jul-20 1,160 771 1.50
07-Jul-20 920 1,004 0.92
08-Jul-20 812 1,107 0.73
09-Jul-20 1,019 858 1.19
10-Jul-20 618 1,268 0.49
Source: NSE
• Indian equity markets eked out small
gains during the week. The relentless
rise in covid-19 cases both in India as
well as on the global front continued to
weigh on investor sentiment.
• Buying interest found support as
investors turned attention towards
upcoming announcement of the June
quarter (Q1FY20) results of index
heavyweights. Market sentiments
boosted after Prime Minister said at
the India Global Week Summit that
India is seeing green shoots of
economic recovery.
• Metal sector rose with steel prices
gaining on demand prospects and low
China stockpiles due to flooding in
South China.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
24.25 28.27 29.47 -682.32
P/B
2.73 3.07 2.14 1.91
Dividend Yield
1.06 1.49 1.18 1.19
Source: BSE, NSE Va
lue as on Jul 10, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
15,969.7 0.96% 8.46%
S&P BSE Bankex
25,347.9 2.23% 5.17%
S&P BSE CD
20,572.4 -2.05% -0.20%
S&P BSE CG
13,032.1 -0.59% 1.37%
S&P BSE FMCG
11,380.4 -0.43% 3.12%
S&P BSE HC
16,570.9 1.39% 1.46%
S&P BSE IT
15,756.4 1.78% 6.23%
S&P BSE Metal
7,529.4 3.80% 3.51%
S&P BSE Oil & Gas
12,802.4 -1.62% 1.72%
S&P BSE Power
1,568.8 -2.38% 0.23%
Source:
Refinitiv *Value as on Jul 10, 2020
• On the BSE sectoral front, majority of the
sectors closed in the green. S&P BSE Metal
was the top gainer, up 3.80%, followed by S&P
BSE Bankex and S&P BSE IT that rose 2.23%
and 1.78%, respectively. Meanwhile, S&P BSE
Power was the major loser, down 2.38%,
followed by S&P BSE CD and S&P BSE Oil &
Gas, which slipped 2.05% and 1.62%,
respectively.
• Banking stocks remained in focus following
media reports that government may tell the
Indian Banks’ Association to set up its
proposed “bad bank” with financial support
from banks, instead of asking the government
to become a promoter.
Indian Derivatives Market Review
• Nifty Jul 2020 Futures stood at 10,766.65, a discount of 1.40 points below the spot closing
of 10,768.05. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 86.80 lakh crore as against Rs. 79.47 lakh crore for the week to Jul 3.
• The Put-Call ratio stood at 0.93 compared with the previous session’s close of 0.87.
• The Nifty Put-Call ratio stood at 1.47 compared with the previous session’s close of 1.50.
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 3.50 3.56 4.99
91 Day T
-Bill
3.19 3.17 3.43 5.05
05.22% 2025, (5
Yr GOI)
4.91 5.07 -- --
05.79% 2030, (10
YrGOI)
5.76 5.85 5.77 --
Source:
Refinitiv Value as on Jul 10, 2020
• Bond yields fell for the second
consecutive week on hopes that the
Reserve Bank of India (RBI) will come
out with more special open market
operations to absorb the excess
supply of sovereign debt. Hopes of
further easing of monetary policy by
the Monetary Policy Committee also
contributed to the upside.
• Yield on the 10-year benchmark paper
(5.79% GS 2030) fell 9 bps to close at
5.76% compared to previous close of
5.85% after moving in a range of
5.75% to 5.85%.
• Data from RBI showed that India's
foreign exchange reserves rose for the
second straight week to hit a record
high of $513.25 billion on Jul 3, 2020
against $506.84 billion in the previous
week.
Domestic Debt Market
5.00
5.50
6.00
6-Jul 7-Jul 8-Jul 9-Jul 10-Jul
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.66 5.23 157
3 Year 4.33 5.74 142
5 Year 4.90 6.27 137
10 Year 5.84 7.04 120
Source:
Refinitiv
Value as on
Jul 10, 2020
• Yields on gilt securities fell across
maturities by up to 24 bps barring 2-year
paper that rose by 1 bps.
• Corporate bond yields fell across
maturities in the range of 5 bps to 29 bps
barring 8- to 10- and 15-year papers that
rose in the range of 3 bps to 29 bps.
• Difference in spread between AAA
corporate bond and gilt expanded across
maturities in the range of 5 bps to 40 bps
barring 1- to 5-year papers that contracted
by up to 18 bps.
Domestic Debt Market (Spread Analysis)
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-12
4
2.50
5.00
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 10-Jul-20 03-Jul-20
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
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8
• The Cabinet has approved proposal to extend distribution of free food grains and pulses
under the Pradhan Mantri Garib Anna Yojana (PMGKAY) for five months till Nov 2020 to 81
crore PDS beneficiaries. Five kilograms of wheat or rice and one kilogram of pulses per
month are provided at no cost under the scheme.
• The Union Government said that the merger process of three ailing general insurance
companies in the public sector has been stopped, and instead will concentrate on their
profitable growth. The cabinet also approved capital infusion of Rs. 12,450 crore into the
three insurers, which includes Rs. 2,500 crore infused in Feb 2020.
• The Cabinet has approved extension of EPF contribution of 24% (12% employees share and
12% employers share) for another 3 months from Jun to Aug 2020 under Pradhan Mantri
Garib Kalyan Yojana (PMGKY) /Aatmanirbhar Bharat. With a total estimated expenditure of
Rs. 4,860 crore, this move will benefit over 367,000 employers and 7.2 million employees.
• The Union Cabinet has approved setting up an agri-infra fund with a corpus of Rs. 1 lakh
crore to provide financial support to agri-entrepreneurs, start-ups, agri-tech players and
farmer groups for infrastructure and logistics facilities.
Regulatory Updates in India
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9
• As per media reports, the Securities and Exchange Board of India (Sebi) is looking to allow
futures trading in petrol and diesel, as there was no disruption in commodity derivatives
trading during the COVID-19 crisis. Sebi is also looking to re-allow futures trade in tur and
urad, which was banned in 2007 following a spike in these commodities prices.
• In the light of the COVID-19 crisis, Sebi further extended the deadline for municipal debt
securities issuers to comply with certain regulatory requirements by Jul 31, 2020. The
relaxation relates to submission under ILDM Regulation of investor grievance report,
financial results, and accounts maintained by issuers.
• According to a release issued by the Multi Commodity Exchange of India (MCX), the
exchange obtained approval from Securities Exchange Board of India for the launch of
gold mini option with gold mini (100 gm) as its underlying. According to MCX, Gold mini
option Aug 2020, Sep 2020 and Oct 2020 contracts will be available for trading from Jul
10, 2020. The maximum single order size shall be 100 lots.
• The National Stock Exchange of India (NSE) announced the introduction of uniform gold
standard NSE Refiner Standards (NRS) for Bureau of Indian Standard (BIS). This will allow
for the acceptance of gold bars provided by the Indian domestic refiners to settle the gold
futures contracts traded on the NSE platform.
Regulatory Updates in India (contd..)
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• According to the Institute for Supply Management, U.S. non-manufacturing index surged
to 57.1 in Jun 2020 from 45.4 in May 2020. The index rose at its fastest pace on monthly
basis since its debut in 1997 due to surge in business activity and new orders index.
• According to the survey results from the behavioral research firm Sentix showed, eurozone
investor confidence index improved for the third consecutive month and stood at -18.2 in
Jul 2020 compared with -24.8 in Jun 2020. However, outlook remained weak as the
economy is expected to recover only slowly.
• According to the European Commission Forecast, Eurozone is estimated to contract 8.7%
in 2020 compared with 7.7% projected in earlier forecast. Nonetheless, in 2021 the region
is forecast to grow 6.1%, which is slightly slower than 6.3% rise projected previously.
• According to the National Bureau of Statistics, China’s consumer price inflation (CPI) rose
2.7% YoY in Jun 2020 up from 2.4% in May 2020. However, on a monthly basis, CPI fell
0.1% following 0.8% decline in the previous month.
• Data from the Cabinet Office showed, the Japan leading index (measures future economic
activity) increased to 79.3 in May 2020 from 77.7 in Apr 2020. The coincident index (current
economic activity) dropped to 74.6 in Jun 2020 from 80.1 in the previous month.
10
Global News/Economy
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11
Global Indices
Indices
10-Jul-20
1-Week
Return
YTD
Return
Russell 3000
1,623.87 3.30% 13.87%
Nasdaq 100
10,836.33 4.78% 24.08%
FTSE 100
6,095.41 -1.01% -19.19%
DAX Index
12,598.30 0.56% -4.91%
Nikkei Average
22,290.81 -0.07% -5.77%
Straits Times
2,652.65 -0.01% -17.69%
Source:
Refinitiv Value as on Jul 10, 2020
U.S.
• U.S. markets largely remained positive
despite persistent surge in coronavirus
cases across America.
• Meanwhile, economic optimism
somewhat outweighed the recent surge
in coronavirus cases following better
than expected jobs data.
Europe
• European markets declined following continued surge in coronavirus cases worldwide.
Moreover, disappointing industrial production data from Germany and lowering of
economic forecasts by the European Commission, deepened losses.
Asia
• Asian markets witnessed a mixed trend as concerns over spike in coronavirus cases in
some U.S. states and other parts of the world neutralized positive vibes generated from
further signs of economic recovery.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury fell 4
bps during the week under review to
close at 0.63% from the previous week’s
close of 0.67%.
• U.S. Treasury prices rose as rapidly rising
coronavirus cases raised concerns about
reopening of businesses too quickly
thus boosting the safe-haven debt.
• Prices rose further as auction of 30-year
bond also received strong demand amid
the pandemic.
• However, the gains were capped as
optimism about an antivirus drug to
treat coronavirus offset worries about
the economic fallout from a record rise
in coronavirus cases in the U.S.
Global Debt (U.S.)
0.56
0.63
0.70
6-Jul 7-Jul 8-Jul 9-Jul 10-Jul
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
43.71 43.96
Gold ($/Oz)
1,798.31 1,774.79
Gold (Rs/10 gm)
49,143 48,227
Silver ($/Oz)
18.67 18.04
Silver (Rs/Kg)
50,838 48,458
Source:
Refinitiv *Value as on Jul 10, 2020
Gold
• Gold prices surged during the week as its
safe haven appeal improved on persisting
concerns over increase in coronavirus
infection cases in U.S.
Brent Crude
• Brent crude prices slipped as increase in
coronavirus infection cases in U.S. fuelled
concerns over global growth. However,
further losses were restricted as data from
the U.S. Energy Information Administration
showed U.S. gasoline stockpiles fell by 4.8
million barrels in the week ended Jul 3,
2020 indicating recovery in U.S. gasoline
demand.
Baltic Dry Index
• The index fell due to sluggish capesize and
panamax activities.
Commodities Market
8.00
9.00
10.00
11.00
12.00
10-Jun-20 25-Jun-20 10-Jul-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
3.49%
-0.57%
1.33%
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
75.29 74.78
Pound Sterling
94.77 93.27
EURO
84.80 84.05
100 Yen
70.46 69.56
Source:
Refinitiv Figures in INR , *Value as on Jul 10, 2020
Rupee
• The rupee weakened against the greenback
and witnessed the worst week against the
U.S. dollar in as many as fourteen weeks
due to persistent dollar demand from state
run banks, private banks and foreign banks.
Euro
• The euro rose against the greenback on
hopes of a strong recovery of the China’s
economy moving ahead.
Pound
• The pound rose against the greenback after
Britain’s finance minister unveiled plans to
revive the British economy.
Yen
• The yen rose against the greenback as the
continued surge in coronavirus infection
cases, particularly in U.S. boosted the safe
haven appeal of the Japanese currency.
Currencies Markets
9.20
9.60
10.00
10.40
10-Jun-20 20-Jun-20 30-Jun-20 10-Jul-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
0.89%
1.29%
0.67%
1.60%
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15
The Week that was…
6
th
Jul to 10
th
Jul
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16
The Week that was (Jul 6 – Jul 10)
Date Events
Present
Value
Previous
Value
Monday,
Jul 6, 2020
• U.S. ISM Non
-Manufacturing PMI(Jul) 57.1 45.4
• Germany Factory Orders (MoM)(May)
10.4% -26.2%
• Eurozone Retail Sales (YoY)(May)
-5.1% -19.6%
Tuesday,
Jul 7, 2020
• Japan Leading Economic Index(May) PREL
79.3 77.7
• Japan Current Account (May) (Yen)
1176.8B 262.7B
• U.K. Halifax House Prices (MoM)(Jun)
-0.1% -0.2%
• Germany Industrial Production (MoM)(May)
7.8% -17.5%
Wednesday,
Jul 8, 2020
• Japan Eco Watchers Survey: Outlook(Jun)
44.0 36.5
• U.S. Consumer Credit Change(May) (USD)
-18.3B -70.2B
• U.K. RICS Housing Price Balance(Jun)
-15.0% -32.0%
• Japan Machinery Orders (YoY)(May)
-16.3% -17.7%
Thursday,
Jul 9, 2020
• China Consumer Price Index (YoY)(Jun)
2.5% 2.4%
• Germany Trade Balance (May) (Euro)
7.6B 3.4B
• U.S. Wholesale Inventories (May)
-1.2% -1.2%
• Japan Producer Price Index (YoY)(Jun)
-1.6% 2.8%
Friday,
Jul 10, 2020
• U.S. Producer Price Index (YoY)(Jun)
-0.8% -0.8%
• China M2 Money Supply (YoY)(Jun)
11.1% 11.1%
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17
The Week Ahead
13
th
Jul to 17
th
Jul
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18
Day Event
Monday,
Jul 13, 2020
•
Japan Tertiary Industry Index (MoM)(May)
•
U.K. BRC Like-For-Like Retail Sales (YoY)(Jun)
•
U.S. Monthly Budget Statement (Jun)
Tuesday,
Jul 14, 2020
•
U.S. Consumer Price Index (YoY)(Jun)
•
U.K. Gross Domestic Product (MoM)(May)
•
Japan Industrial Production (YoY)(May)
•
Germany Consumer Price Index (YoY)(Jun)
•
Germany ZEW Survey – Economic Sentiment (Jul)
Wednesday,
Jul 15, 2020
•
Bank of Japan Interest Rate Decision
•
U.K. Consumer Price Index (YoY)(Jun)
•
U.S. Federal Reserve Beige Book
Thursday,
Jul 16, 2020
•
China Gross Domestic Product (QoQ)(Q2)
•
China Industrial Production (YoY)(Jun)
•
U.K. ILO Unemployment Rate (3M) (May)
•
European Central Bank Interest Rate Decision
Friday,
Jul 17, 2020
•
U.S. Michigan Consumer Sentiment Index (Jul) PREL
•
U.S. Housing Starts (MoM)(Jun)
•
Eurozone Consumer 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
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