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NEWS U CAN USE
July 23, 2021
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The Week that was…
19
th
July to 23
rd
July
2
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Indian Economy
• The Asian Development Bank has downgraded India's economic growth forecast for FY22
to 10% from 11% projected in Apr 2021 due to negative impact of the coronavirus
pandemic. As per the bank, the negative economic impact of these new waves will be
minimal, as firms and consumers are now better prepared to adjust to pandemics and
containment measures than they were a year ago.
• According to the Reserve Bank of India (RBI), although deposit and lending rate
transmission has improved dramatically in recent years, numerous obstacles continue to
hinder effective monetary transmission to these bank rates. According to the RBI Bulletin
for Jul 2021, the central bank has undertaken many measures to increase the
effectiveness of monetary transmission by improving the mechanism of banks determining
interest rates.
• According to India's Labour Minister, the unemployment rate in urban India was 20.8% in
the Apr-Jun quarter of 2020, a period that included two months of statewide lockdown to
prevent the spread of the first wave of the Covid-19 epidemic.
• India’s ranking in terms of trade facilitation has significantly improved due to various
reforms undertaken by various departments especially customs under the Central Board
of Indirect Taxes. As per the latest Global Survey on Digital and Sustainable Trade
Facilitation, United Nation’s Economic and Social Commission for Asia Pacific, India has
scored 90.32% in 2020 from 78.49% during 2019.
3
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4
Domestic Equity Market Indices
Indices 23-Jul-21 1 Week Return YTD Return
S&P BSE Sensex
52,975.80 -0.31% 10.94%
Nifty 50
15,856.05 -0.42% 13.41%
S&P BSE Mid-Cap
23,021.14 -0.47% 28.31%
S&P BSE Small-Cap
26,425.91 -0.14% 46.01%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
19-Jul-21 915 1114 0.82
20-Jul-21 479 1511 0.32
22-Jul-21 1369 638 2.15
23-Jul-21 875 1120 0.78
Source: NSE
• Indian equity markets settled for the
week with modest losses. Investors
fretted about the impact of highly
contagious Delta variant coronavirus.
The potential third waves across the
world and lock-down like restrictions
has stalled the economic growth rally.
Amid sell-off pressure across the globe,
investors are concerned about stricter
lock-down like restrictions may disrupt
the business all over.
• However, fall was cushioned by positive
cues from U.S. markets with investors
reacting to upbeat earnings reports
from some top name European and U.S.
companies. Value buying in recent
beaten down stocks provided
additional support.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
31.77 28.28 41.98 48.23
P/B
3.41 4.16 3.20 3.38
Dividend Yield
1.02 1.13 0.89 0.72
Source: BSE, NSE Va
lue as on July 23, 2021
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
22,796.85 -2.20% -3.76%
S&P BSE Bankex
39,832.64 -1.65% 1.80%
S&P BSE CD
35,997.46 -0.10% 0.01%
S&P BSE CG
23,845.96 -0.10% 5.12%
S&P BSE FMCG
13,642.96 0.37% 1.06%
S&P BSE HC
26,328.44 0.08% 5.85%
S&P BSE IT
30,577.60 1.54% 5.33%
S&P BSE Metal
19,383.13 -0.60% 7.28%
S&P BSE Oil & Gas
15,711.68 0.04% -7.44%
Source: Refinitiv *Value as on July 23, 2021
• On the BSE sectoral front, the indices
witnessed a mixed trend. S&P BSE Auto was
the major loser, down 2.20%, followed by S&P
BSE Bankex and S&P BSE Power which fell
1.65% and 1.25%, respectively. Meanwhile,
S&P BSE IT was the top gainer, up 1.54%,
followed by S&P BSE Teck and S&P BSE Realty,
which went up 1.29% and 0.82%, respectively.
• The auto sector fell, which can be attributed
to multiple headwinds namely elevated global
crude oil prices, shortage in semi-conductor
and worries of a third COVID-19 wave.
Indian Derivatives Market Review
• Nifty Jul 2021 Futures stood at 15,853.10, a discount of 2.95 points below the spot closing
of 15,856.05. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 237.94 lakh crore as against Rs. 245.61 lakh crore for the week to Jul 16.
• The Put-Call ratio stood at 0.84 compared with the previous week’s close of 0.92.
• The Nifty Put-Call ratio stood at 1.15 compared with the previous week’s close of 1.24.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.21 3.17 3.17 3.20
91 Day T-Bill
3.42 3.44 3.46 3.32
05.22% 2025, (5 Yr GOI)
5.42 5.50 5.51 5.22
06.10% 2031, (10 Yr GOI)
6.16 6.13 -- --
Source: Refinitiv Value as on July 23, 2021
• Bond yields rose following increase in
global crude oil prices and a rebound in
yield on U.S. Treasuries. Yields rose after
the Reserve Bank of India (RBI) devolved
a majority of the scheduled amount of
10-year benchmark paper on primary
dealers at its weekly auction.
• Yield on the 10-year benchmark paper
(6.10% GS 2031) rose 3 bps to close at
6.16% as compared to the previous
week’s close of 6.13%
• RBI conducted the auction of four
government securities- 4.26% GS 2023,
6.10% GS 2031 and 6.76% GS 2061 for a
cumulative amount of Rs. 26,000 crore,
which was oversubscribed with
devolvement on primary dealers. The cut-
off stood at Rs. 100.02/4.2453%, Rs.
99.63/6.1498% and Rs. 94.39/7.1890%,
respectively.
Domestic Debt Market
6.00
6.10
6.20
19-Jul 20-Jul 22-Jul 23-Jul
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 4.08 4.60 52
3 Year 4.73 5.26 53
5 Year 5.77 6.32 55
10 Year 6.26 7.18 92
Source: Refinitiv
Value as on
July 23, 2021
• Yields on gilt securities fell by up to 9 bps
across the maturities, barring 1-, 5- & 10- to
12-year papers that rose by up to 9 bps.
• Corporate bond yields rose in the range of 2
to 12 bps across the curve, leaving on 1-, 7- &
8-year papers that fell by up to 13 bps. Yield
on 6- & 9-year papers was unchanged.
• Spread between AAA corporate bond and gilt
expanded in the range of 2 to 21 bps across
segments, leaving 1- & 10-year papers that
contracted 23 & 1 bps, respectively. Spread
on 7-year was unchanged.
Domestic Debt Market (Spread Analysis)
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3
11
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 23-Jul-21 16-Jul-21
Yield in %
Change in bps
Source: Refinitiv
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8
• SEBI has issued a concept paper on introduction of swing pricing mechanism in debt mutual
funds that aims to discourage short term traders and protect the interest of existing
investors especially during difficult times like market dislocation. Swing pricing is
adjustment of NAV such that if outflow is higher than pre-determined level, the NAV goes
down for investors redeeming MF units. Similarly, the NAV price goes up if investors invest
more than pre-determined level.
• The Union Cabinet approved Production-linked Incentive (PLI) Scheme for Specialty Steel.
The duration of the scheme will be five years from FY24 to FY28. With a budgetary outlay of
Rs. 6322 crores, the scheme is expected to bring in investment of approximately Rs. 40,000
crores and capacity addition of 25 MT for speciality steel. The scheme will give employment
to about 5,25,000 people of which 68,000 will be direct employment.
• The government has received 27 proposals from private entities for undertaking various
space activities in India. The participation of private sector including academic institutions,
start-ups and industries in end-to-end space activities is expected to expand the national
space economy, generate more employment opportunities and create better manufacturing
facilities.
Regulatory Updates in India
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9
• The Finance Minister sought Parliament nod to spend a net additional Rs. 23,675 crore,
including Rs. 17,000 crore for the health ministry in FY22. The extra spending is on top of
the budgeted Rs. 34.83 trillion announced for FY22 in Feb 2021.
• According to the Pension Regulatory and Development Authority (PFRDA), pension fund
managers (PFMs) will soon be able to invest in initial public offers (IPOs) as well as a
greater range of companies. With the spike in interest during the pandemic, PFRDA hopes
to increase the number of subscribers looking to create a retirement corpus by 1 crore in
FY22. PFMs can currently only invest the equity component of a corpus in scrips traded on
the options and futures segment with a market capitalization of over Rs 5,000 crore.
• According to AMFI data, more than 16% of the assets of the mutual fund industry came
from B30 locations in June 2021. Assets from B30 locations increased from 5.33 lakh crore
in May 2021 to 5.56 lakh crore in June 2021, representing an increase of 4%. Assets from
B30 increased from 4.01 lakh crore in June 2020 to 5.56 lakh crore in June 2021,
representing an increase of 39%. Moreover, 70% of the assets from B30 locations are in
equity schemes in June 2021. For T30 locations, equity-oriented schemes accounted for
40% of assets in June 2021.
Regulatory Updates in India (contd..)
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
• Data from the U.S. Labour Department showed that initial jobless claims for the week
ended Jul 17, 2021 increased by 51,000 to 419,000 from the previous week's revised level
of 368,000 (360,000 originally reported for the previous week).
• The European Central Bank (ECB) kept interest rates unchanged in its monetary policy
review. However, ECB revised its forward guidance on the same to support its new
inflation target. Policymakers now expect ECB interest rates to remain at their present or
lower levels until inflation "durably" reaches 2% well ahead of the end of its projection
horizon.
• Flash data from IHS Markit showed, the euro area composite output index touched the
highest level in 21 years in Jul 2021, as the member countries eased COVID-19 restrictions.
The private sector index rose to 60.6 in Jul 2021 from 59.5 in Jun 2021. The services index
rose the most in 15 years, while manufacturing index eased to a four-month low due to
worsening supply lines.
• UK retail sales went up 0.5% MoM in Jun 2021 compared with a fall of 1.3% in May 2021.
Food store sales surged 4.2%, while non-food store sales fell 1.7% in Jun 2021. The start of
the Euro 2020 football championship boosted food store sales.
• The People’s Bank of China left its one-year loan prime rate and the five-year loan prime
rate unchanged at 3.85% and 4.65%, respectively. The bank had held the rate on its
medium-term loan facility steady earlier this month, so markets expected the rates to
remain unchanged.
10
Global News/Economy
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11
Global Indices
Indices
23-July-21
1-Week
Return
YTD
Return
Russell 3000 2,280.91 3.33% 16.81%
Nasdaq 100 15,111.79 2.93% 17.25%
FTSE 100 7,027.58 0.28% 8.78%
DAX Index 15,669.29 0.83% 14.22%
Nikkei Average 27548 -1.63% 0.38%
Straits Times 3157.05 0.15% 11.01%
Source: Refinitiv Value as on July 23 2021
U.S.
• U.S. markets rose with investors
reacting to upbeat earnings reports
from some top name European and U.S.
companies.
• Report showing an unexpected increase
in initial U.S. weekly jobless claims too
boosted buying interest.
Europe
• European markets rose following dovish comments from the European Central Bank,
encouraging economic data and some encouraging earnings announcements.
Asia
• Asian markets witnessed a mixed trend amid positive earnings reports from major
European and U.S. companies, coupled with renewed optimism over economic growth.
Worries over the new wave of COVID-19 infections loomed large.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury fell
down 2 bps to close at 1.28%, from the
previous week’s close of 1.30%.
• U.S. Treasury prices surged initially as the
spread of the Delta variant of the
coronavirus sparked fears of a slowdown
in global growth.
• U.S. Treasury prices rose further after
data from the U.S. Labour Department
showed that initial jobless claims in U.S.
increased for the week ended Jul 17,
2021. This led to expectations that the
U.S. Federal Reserve will continue to keep
interest rates low for the time being.
• However, fears of new COVID-19
lockdowns eased to some extent as a rally
in U.S. and European equity markets
pointed to a robust economic recovery
which helped neutralize most of the
gains.
Global Debt (U.S.)
1.18
1.26
1.34
19-Jul 20-Jul 21-Jul 22-Jul 23-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($/Barrel)
75.25 75.48
Gold ($/Oz)
1801.34 1810.89
Gold (Rs/10 gm)
47560 48182
Silver ($/Oz)
25.16 25.66
Silver (Rs/Kg)
67049 68924
Source: Refinitiv *Value as on July 23, 2021
Gold
• Gold prices eased as the recent strength in
U.S. dollar and rebound in U.S. Treasury
yields outweighed the precious metal’s
safe-haven status. Meanwhile, investors
looked forward to the U.S. Federal
Reserve’s next meeting for policy cues.
Brent Crude
• Brent crude oil prices fell as OPEC+
members overcame internal
disagreements and agreed to increase
output, raising concerns about a crude
surplus as COVID-19 infections spread
across numerous countries.
Baltic Dry Index
• The index rose on WoW basis due to
improved capesize and panamax activities.
Commodities Market
9.20
9.40
9.60
9.80
10.00
10.20
10.40
10.60
23-Jun-21 8-Jul-21 23-Jul-21
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
-1.95%
-0.30%
-0.53%
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing* 1-Wk Ago
US Dollar
74.43 74.62
Pound Sterling
102.38 103.14
EURO
87.61 88.11
100 Yen
67.49 67.84
Source: Refinitiv Figures in INR , *
Value as on July 23, 2021
Rupee
• The rupee rose against the greenback following
gains in the domestic equity market amid
corporate dollar inflows and selling of the
greenback by exporters.
Euro
• The euro fell against the greenback as the risk
sentiment dampened on concerns over the
rapid spread of the delta coronavirus variant.
Pound
• The pound fell against the dollar on concerns
over rising numbers of COVID-19 Delta variant
cases in Britain and uncertainty over the lifting
of COVID-19 induced restrictions in the country.
Yen
• The yen weakened against the greenback as
concerns over the rapid spread of the Delta
coronavirus variant boosted the safe haven
appeal of the U.S. dollar.
Currencies Markets
9.80
9.90
10.00
10.10
10.20
23-Jun-21 8-Jul-21 23-Jul-21
USD GBP Euro JPY
Source: Refinitiv
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
-0.57%
-0.74%
-0.26%
-0.52%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
15
The Week that was…
19
th
July to 23
rd
July
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16
The Week that was (July 19 – July 23)
Date Events
Present
Value
Previous
Value
Monday,
July 19, 2021
• Euro Area Construction Output YoY (May) 13.60% 45.20%
• U.S. NAHB Housing Market Index (JUL) 80.00 81.00
Tuesday,
July 20, 2021
• Japan Inflation Rate YoY (Jun) 0.20% -0.10%
• U.S. Building Permits (Jun) -5.1% -2.9%
• U.S. Housing Starts MoM (Jun) 6.3% 2.1%
Wednesday,
July 21, 2021
• Japan Exports YoY (Jun) 48.60% 49.60%
• Japan Imports YoY (Jun) 32.70% 27.90%
• U.S. Mortgage Applications (Jul 16) -4% 16%
• U.K. Public Sector Net Borrowing (Jun) £-22.8B £-20.6B
• U.S. API Crude Oil Stock Change (Jul 16) 0.806M -4.079M
Thursday
July 22 2021
• European Central Bank Interest Rate Decision 0% 0%
• U.S. Initial Jobless Claims (Jul 17) 419K 368K
• Euro Area Consumer Confidence Flash (Jul) -4.40 -3.30
Friday,
July 23, 2021
• Germany Markit Composite PMI Flash (Jul) 62.50 60.10
• Euro Area Markit Composite PMI Flash (Jul) 60.60 59.50
• U.S. Markit Manufacturing PMI Flash (Jul) 63.10 62.10
• U.K. Markit/CIPS Composite PMI Flash (JUL) 57.70 62.20
• U.K. Gfk Consumer Confidence (Jul) -7.00 -9.00
• U.K. Retail Sales YoY (Jun) 9.7% 24.6%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
26
th
July to 30
th
July
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
18
Day Event
Monday,
July 19, 2021
• Germany IFO – Business Climate (Jul)
• U.S. New Home Sales (MoM)(Jun)
Tuesday,
July 20, 2021
• U.S. Durable Goods Orders (Jun)
• U.S. Housing Price Index (MoM)(May)
• U.S. Consumer Confidence (Jul)
Wednesday,
July 21, 2021
• U.S. Federal Reserve Interest Rate Decision
• U.S. Goods Trade Balance (Jun) PREL
Thursday,
July 22, 2021
• U.S. Gross Domestic Product Annualized(Q2) PREL
• Germany Harmonized Index of Consumer Prices (YoY) (Jul) PREL
• Eurozone Consumer Confidence (Jul)
• Japan Unemployment Rate (Jun)
• Japan Industrial Production (YoY) (Jun) PREL
Friday,
July 23, 2021
• Germany Gross Domestic Product (QoQ)(Q2) PREL
• Eurozone Gross Domestic Product (QoQ)(Q2) PREL
• Eurozone Consumer Price Index (YoY)(Jul) PREL
• U.S. Michigan Consumer Sentiment Index (Jul)
• Japan Consumer Confidence Index (Jul)
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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completeness, adequacy and reliability of such data or information. Whilst no action has been solicited based upon the information provided herein,
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