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NEWS U CAN USE
July 17, 2020
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The Week that was…
13
th
Jul to 17
th
Jul
2
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Indian Economy
• India’s Wholesale Price Index (WPI) dropped 1.81% YoY in Jun 2020, slower than 3.21% in
May 2020. Slower fall in wholesale prices was due to fuel and power index that plunged
13.60% in Jun 2020 compared with a 19.83% fall in the prior month. Also food articles
inflation accelerated to 2.04% in Jun 2020 from 1.13% in May 2020.
• India’s consumer price index based inflation rose 6.09% YoY in June, majorly due to higher
prices of food items. Consumer Food price index rose 7.87% while fuel and light index
went up 2.69% in Jun 2020. The inflation figures are based on data collected from limited
markets in view of the restrictions imposed on account of coronavirus pandemic.
• India's Index of industrial production (IIP) contracted 34.7% YoY in May 2020, slower than
record fall of 57.6% in Apr 2020. Manufacturing sector contracted 39.3% in May 2020,
compared with a massive fall of 67.1% in the prior month. USE based classification
showed, consumer durables and consumer non-durables witnessed fall of 68.5% and
11.7%, respectively in the reported period.
• The Ministry of Commerce and Industry data showed, India witnessed its first trade surplus
in over 18 years in Jun 2020. Trade surplus stood at $790 million in reported period
compared with $15.28 billion deficit in Jun 2019. Merchandise imports plunged 47.59%
YoY in Jun 2020 to $21.11 billion. Imports fell as the coronavirus pandemic hit domestic
demand for crude oil, gold and other industrial products. Exports dropped 12.41% YoY to
$21.91 billion.
3
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4
Domestic Equity Market Indices
Indices 17-Jul-20 1 Week Return YTD Return
S&P BSE Sensex
37,020.14 1.16% -10.26%
Nifty 50
10,901.70 1.24% -10.41%
S&P BSE Mid-Cap
13,530.75 1.00% -9.60%
S&P BSE Small-Cap
12,782.53 -0.17% -6.69%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
13-Jul-20 779 1130 0.69
14-Jul-20 459 1427 0.32
15-Jul-20 745 1137 0.66
16-Jul-20 758 1115 0.68
17-Jul-20 1233 625 1.97
Source: NSE
• Indian equity markets went up amid a
host of domestic and global cues.
Strong buying was seen in the stocks of
one of the industry behemoths
following investment in the
conglomerate's digital arm by a U.S.-
based multinational company.
• Positive global updates on a potential
COVID-19 vaccine and better than
expected earning numbers reported by
one of the leading IT stocks for the
June quarter of FY 21 too contributed
to the upside.
• Nonetheless, gains were capped by
declines in the banking and financial
sectors as a global rating agency
warned of challenging economic and
credit environment stemming from
COVID-19 for Indian banks.
• .
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
24.72 28.55 29.37 -1517.07
P/B
2.78 3.11 2.17 1.93
Dividend Yield
1.04 1.47 1.16 1.17
Source: BSE, NSE Va
lue as on Jul 17, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
16161.5 1.20% 9.72%
S&P BSE Bankex
24873.6 -1.87% 8.19%
S&P BSE CD
21082.4 2.48% 4.16%
S&P BSE CG
12917.2 -0.88% 5.85%
S&P BSE FMCG
11616.9 2.08% 9.11%
S&P BSE HC
17123.9 3.34% 5.80%
S&P BSE IT
17046.2 8.19% 17.40%
S&P BSE Metal
7628.7 1.32% 8.72%
S&P BSE Oil & Gas
13290.5 3.81% 6.55%
Source:
Refinitiv *Value as on Jul 17, 2020
• On the BSE sectoral front, majority of the
sectors closed in the green. S&P BSE IT is the
top gainer, up 8.19%, followed by S&P BSE
Teck and S&P BSE Oil & Gas, which rose 6.11%
and 3.81%, respectively.
• IT and tech stocks rose as the earning numbers
from IT majors mirrored the resilience
flexibility and adaptability of their business
models to accommodate the requirement of
the clients at a time when the COVID-19
pandemic disrupted operations across the
globe.
Indian Derivatives Market Review
• Nifty Jul 2020 Futures stood at 10,905.05, a premium of 3.35 points above the spot closing
of 10,901.70. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 95.54 lakh crore as against Rs. 86.80 lakh crore for the week to Jul 10.
• The Put-Call ratio stood at 0.83 compared with the previous session’s close of 0.93.
• The Nifty Put-Call ratio stood at 1.76 compared with the previous session’s close of 1.47.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.49 3.50 3.55 5.02
91 Day T-Bill
3.24 3.19 3.30 5.10
05.22% 2025, (5 Yr GOI)
4.88 4.91 5.22 --
05.79% 2030, (10 YrGOI)
5.80 5.76 5.84 --
Source: Refinitiv Value as on Jul 17, 2020
• Bond yields fell for the third
consecutive week as aggressive
demand at the weekly debt auction
boosted investor’s appetite. Hopes of
support from the Reserve Bank of
India to absorb excess supply also
boosted domestic debt market.
• However, gains were capped as overall
market sentiment remained subdued
due to lack of domestic triggers. The
rise in headline inflation above the
Reserve Bank of India’s tolerance level
of 6% has also weakened the
possibility of further relaxation in
monetary policy in the near term
which also dampened sentiments.
• Yield on the 10-year benchmark paper
(5.79% GS 2030) fell 4 bps to close at
5.80% compared to previous close of
5.76%.
Domestic Debt Market
5.50
5.70
5.90
13-Jul 14-Jul 15-Jul 16-Jul 17-Jul
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.61 5.22 162
3 Year 4.36 5.73 137
5 Year 4.94 6.28 133
10 Year 5.89 7.08 119
Source: Refinitiv
Value as on
Jul 17, 2020
• Yields on gilt increased across the
maturities by up to 7 bps barring 1, 11, 12,
19 and 30-year maturities where yields fell
by up to 5 bps while the same on 14 and
15-year paper closed steady.
• Corporate bond yields increased across
the maturities by up to 11 bps. The
maximum increase of 11 bps was
witnessed on 3-year paper and the
minimum increase of 1 bps was witnessed
on 15-year paper.
Domestic Debt Market (Spread Analysis)
-6
0
6
2.60
4.80
7.00
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 17-Jul-20 10-Jul-20
Yield in %
Change in bps
Source: Thomson Reuters Eikon
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8
• The Income-tax Appellate Tribunal in it landmark ruling has paved the way for the Income-
tax department to recover money stashed away abroad. The appellate tribunal directed
income tax department to bring Rs. 196 crore, belonging to an NRI under the tax net.
• Tax deducted at source (TDS) levied on large cash withdrawals (2% TDS if cash withdrawal
exceeds Rs 1 crore) can now ascertain by banks and post offices by entering permanent
account number (PAN) of these assesses on the facility provided by the income tax
department. So far, more than 53,000 verification requests have been executed successfully
on this facility.
• According to media reports, the Department for Promotion of Industry and Internal Trade
would approach the Union Cabinet to seek approval for easing norms to allow up to 74%
foreign direct investment (FDI) in defence manufacturing under the automatic route, with a
view to attract overseas players in the sector.
• According to the Authority for Advance Ruling, Goods and Services Tax (GST) of 18% will be
applicable on all alcohol-based hand sanitisers. The authority further said that although the
Ministry of Consumer Affairs has classified hand sanitisers as an essential commodity, the
GST law has a separate list of exempted goods.
• Commerce and Industry Minister said that while domestic electronic goods manufacturers
would need to increase indigenous research in technology, India would also have to invite
technology from abroad as investments.
Regulatory Updates in India
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9
• The Reserve Bank of India (RBI) through a notification told Asset Reconstruction
Companies (ARC) to prepare a fair-practices code that would involve training their
recovery agents how not to harass people and instituting a grievance redressal mechanism
that would promptly address any genuine complaint.
• The Reserve Bank of India data showed, proportion of industrial credit in total bank credit
fell to 31.5% YoY in Mar 2020 from 33.1% a year ago. Bank credit growth continued to
decelerate across all population groups and stood at 6.3% in Mar 2020. However, bank
branches in rural areas maintained a double-digit growth.
Regulatory Updates in India (contd..)
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• Data from the U.S. Labour Department showed that initial jobless claims for the week
ended Jul 11, 2020 fell by 10,000 to 1.300 million from the previous week's revised level
1.310 million.
• Data from Eurostat showed that construction output in euro zone rose 27.9% on a
monthly basis in May 2020 after coming down by 18.3% in Apr 2020. On a yearly basis,
construction output in euro zone fell 11.9% in May 2020 following a 31.0% fall in the
previous month.
• Final data from Eurostat showed that inflation in euro zone increased as initially estimated
in Jun 2020. Inflation grew 0.3% on a yearly basis in Jun 2020 from 0.1% in May 2020. On a
monthly basis, the harmonized index of consumer prices gained 0.3% in Jun 2020.
• Data from the National Bureau of Statistics showed that China's economy rebounded and
grew at a faster-than-expected pace of 3.2% (YoY) in the second quarter of 2020
compared to a contraction of 6.8% in the first quarter of 2020. On a sequential basis, the
economy witnessed a growth of 11.5%. Growth in retail sales however slowed for the fifth
consecutive month and declined to 1.8% in Jun 2020 from 2.8% in May 2020.
• The Bank of Japan (BoJ) voted 8-1 to retain the interest rate at -0.1% in its monetary policy
review. BoJ also maintained its massive monetary policy stimulus. BoJ noted that the
uncertainty due to the COVID-19 pandemic is extremely high and expects Japan’s economy
to contract 4.7% in this fiscal year which ends on Mar 2021.
10
Global News/Economy
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11
Global Indices
Indices
17-Jul-20
1-Week
Return
YTD
Return
Russell 3000 1,613.36 -0.65% 13.14%
Nasdaq 100 10,645.22 -1.76% 21.90%
FTSE 100 6,290.30 3.20% -16.60%
DAX Index 12,909.75 2.18% -2.56%
Nikkei Average 22,696.42 1.82% -4.06%
Straits Times 2,618.48 -1.29% -18.75%
Source: Refinitiv Value as on Jul 17, 2020
U.S.
• U.S. markets rose initially, led by
positive development on potential
COVID-19 vaccine front.
• Nonetheless, gains were erased after
data showed that initial weekly jobless
claims came in at 1.3 million in the week
to Jul 11, higher than market
expectation of 1.25 million.
Europe
• European markets rose following positive developments on the coronavirus vaccine front
and optimism over massive stimulus announcement from the European Union.
Asia
• Asian markets largely remained weak, barring Nikkei which rose 1.82% WoW. Investors
fretted about a second wave of coronavirus infections and the re-imposition of
lockdowns. Additionally, the simmering U.S.- China trade tension and a mixed set of
Chinese economic data played spoilsport.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury
closed steady at 0.63% compared to the
previous week’s close.
• U.S. Treasury prices fell initially as
market participants grew optimistic on
signs of progress in COVID-19 vaccine
development
• However, most of the losses were
neutralized as the safe haven appeal of
U.S. Treasuries improved following a
surge in coronavirus infection cases in
U.S. which renewed concerns of
shutdowns and lockdowns.
• Meanwhile the core inflation in Jun
2020 remained well below the U.S.
Federal Reserve’s target of 2% that
increased the possibility of further
injection of liquidity into the ailing U.S.
economy by the U.S. central bank which
led to an increase in U.S. Treasury prices.
Global Debt (U.S.)
0.59
0.62
0.65
13-Jul 14-Jul 15-Jul 16-Jul 17-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)
44.27 43.71
Gold ($/Oz)
1,808.90 1,798.31
Gold (Rs/10 gm)
48,942 49,143
Silver ($/Oz)
19.31 18.67
Silver (Rs/Kg)
51,575 50,838
Source: Refinitiv *Value as on Jul 17, 2020
Gold
• Gold prices edged higher on renewed
concerns over rising tensions between U.S.
and China after the U.S. President signed
an executive order ending preferential
treatment for Hong Kong and China
responded that it might impose retaliatory
sanctions on the U.S.
Brent Crude
• Brent crude prices rose after data from the
Energy Information Administration showed
U.S. crude inventories fell 7.5 million
barrels in the week ended Jul 10, 2020.
However, gains were restricted as OPEC
and allies such as Russia agreed to ease
record supply curbs from Aug 2020.
Baltic Dry Index
• The index fell due to sluggish capesize and
panamax activities.
Commodities Market
9.80
10.50
11.20
17-Jun-20 2-Jul-20 17-Jul-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source:
Refinitiv
3.43%
1.28%
0.59%
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
75.10 75.29
Pound Sterling
94.25 94.77
EURO
85.50 84.80
100 Yen
70.06 70.46
Source: Refinitiv Figures in INR , *Value as on Jul 17, 2020
Rupee
• The rupee rose against the greenback as
hopes of a possible coronavirus vaccine
strengthened optimism over a quick
economic rebound.
Euro
• The euro rose against the greenback on
hopes that the EU summit will come to an
agreement on the recovery fund.
Pound
• The pound weakened against the
greenback amid worries over Brexit
uncertainty, concerns over Britain's bleak
economic outlook.
Yen
• The yen weakened against the greenback
as some progress was made toward a
COVID-19 vaccine which lowered its safe-
haven appeal.
Currencies Markets
9.60
9.85
10.10
17-Jun-20 27-Jun-20 7-Jul-20 17-Jul-20
USD GBP Euro JPY
Source: Refinitiv
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
0.82%
-0.57%
-0.25%
-0.54%
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15
The Week that was…
13
th
Jul to 17
th
Jul
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16
The Week that was (Jul 13 – Jul 17)
Date Events
Present
Value
Previous
Value
Monday,
July 13, 2020
Japan Tertiary Industry Index (MoM) (May) -2.1% -6.0%
Germany Wholesale Price Index (YoY)( Jun) -3.3% -4.3%
Germany Wholesale Price Index (MoM) (Jun) 6.0% -0.6%
U.K. BRC Like-For-Like Retail Sales (YoY)(Jun) 10.9% 7.9%
Tuesday,
July 14, 2020
Japan Industrial Production (YoY) (May) -26.3% -25.9%
U.K. Gross Domestic Product (MoM) (May) 1.8% -20.3%
Euro Zone ZEW Survey – Economic Sentiment (Jul) 59.60 58.60
U.S. Consumer Price Index (YoY) (Jun) 0.6% 0.1%
U.K. NIESR GDP Estimate (3M) (Jun) -21.2% -19.1%
Wednesday,
July 15, 2020
Bank of Japan Interest Rate Decision -0.1% -0.1%
U.S. Industrial Production (MoM) (Jun) 5.4% 1.4%
U.S. Capacity Utilization (Jun) 68.6% 65.1%
U.S. MBA Mortgage Applications (Jul 10) 5.1% 2.2%
Thursday,
July 16, 2020
China Gross Domestic Product (YoY)(Q2) 3.2% -6.8%
U.K. ILO Unemployment Rate (3M) (May) 3.9% 3.9%
U.S. Initial Jobless Claims (Jul 10) 1300 K 1310 K
U.S. Retail Sales Control Group (Jun) 5.6% 10.1%
Friday,
July 17, 2020
U.S. Housing Starts (MoM) (Jun) 1.186 M 1.011 M
U.S. Building Permits (MoM) (Jun) 1.241 M 1.216 M
U.S. Michigan Consumer Sentiment Index(Jul) (P) 73.2 78.1
Euro Zone Consumer Price Index (MoM) (Jun) 0.3% 0.3%
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17
The Week Ahead
20
th
Jul to 24
th
Jul
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18
Day Event
Monday,
Jul 20, 2020
• China PBoC Interest Rate Decision
• Germany Producer Price Index (MoM) (Jun)
• Japan National Consumer Price Index (YoY) (Jun)
Tuesday,
Jul 21, 2020
• U.S. Chicago Fed National Activity Index (Jun)
• U.S. Redbook Index (YoY) (Jul 17)
• U.S. Redbook Index (MoM) (Jul 17)
Wednesday,
Jul 22, 2020
• Japan Jibun Bank Manufacturing PMI(Jul) (P)
• U.S. MBA Mortgage Applications(Jul 17)
• U.S. Housing Price Index (MoM) (May)
• U.S. Existing Home Sales (MoM) (Jun)
• U.S. Existing Home Sales Change (MoM) (Jun)
Thursday,
Jul 23, 2020
• Germany Gfk Consumer Confidence Survey (Aug)
• Euro Zone Consumer Confidence(Jul) (P)
• U.S. Initial Jobless Claims (Jul 17)
• U.K. GfK Consumer Confidence(Jul)
Friday,
Jul 24, 2020
• U.S. Markit Manufacturing PMI(Jul) (P)
• Euro Zone Markit Manufacturing PMI(Jul) (P)
• Germany Markit Manufacturing PMI(Jul) (P)
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
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