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NEWS U CAN USE
July 31, 2020
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The Week that was…
27
th
Jul to 31
st
Jul
2
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Indian Economy
• Government data showed, India's fiscal deficit stood at Rs 6.62 lakh crore or 83.2% of the
budgeted target for the FY21 in the first three months till Jun 2020. During the same
period, net tax receipts were Rs. 1,34,822 crore and total expenditure was at Rs. 8.16 lakh
crore. Apr-Jun 2020 total expenditure and total receipts were 26.8% and 6.8% of FY21
estimates.
• Core output, which constitutes 8 sectors of the economy contracted 15.0% in Jun 2020,
slower than a revised contraction of 22% from previously reported fall of 23.4% in May
2020. Out of 8 core sectors, 7 continued to contract in Jun 2020. Steel and coal output fell
sharply by 33.8% and 15.5%, respectively. Only fertilizers witnessed a growth of 4.2%
during the month under review. Infrastructure output contracted 24.6% YoY in the first
three months of FY21 compared to 3.4% expansion for the same period a year earlier.
• Data from Reserve Bank of India (RBI) showed that India's foreign exchange reserves rose
for the fifth consecutive week to hit a fresh record high of $522.63 billion as of the week
ended Jul 24, against $517.64 billion in the previous week.
• According to the finance ministry, the government declared it had released Rs. 1.65 lakh
crore of Goods and Services Tax (GST) compensation in FY20 while Rs. 95,444 crore was
the cess collections. Maharashtra received the highest compensation at Rs. 19,233 crore
followed by Karnataka at Rs. 18,628 crore.
3
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4
Domestic Equity Market Indices
Indices 31-Jul-20 1 Week Return YTD Return
S&P BSE Sensex
37,606.89 -1.37% -8.84%
Nifty 50
11,073.45 -1.08% -9.00%
S&P BSE Mid-Cap
13,759.11 0.41% -8.08%
S&P BSE Small-Cap
13,021.76 0.43% -4.95%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
27-Jul-20 532 1,370 0.39
28-Jul-20 930 939 0.99
29-Jul-20 996 869 1.15
30-Jul-20 674 1,212 0.56
31-Jul-20 820 1,023 0.80
Source: NSE
• Indian equity markets edged lower
amid profit-booking and rise in
coronavirus cases. Investor sentiments
weighed down after the RBI in the bi-
annual Financial Stability Report stated
that gross NPA ratio of banks may
increase from 8.5% in Mar 2020 to
12.5% by March 2021 under the
baseline scenario, but it could worsen
to as much as 14.7% under a very
severely stressed scenario.
• Some amount of volatility was also
seen as market participants rushed to
settle their positions ahead of the
expiration of monthly derivative
contracts for Jul scheduled on Jul 30.
Disappointing U.S. GDP data for second
quarter of 2020 too, dented investor
sentiment. A mixed set of corporate
earning numbers across all the sectors
also impacted buying interest.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
26.20 30.20 29.73 -409.64
P/B
2.82 3.12 2.21 1.97
Dividend Yield
1.03 1.49 1.13 1.14
Source: BSE, NSE Va
lue as on Jul 31, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
16,489.6 0.90% 7.95%
S&P BSE Bankex
24,599.5 -4.22% 1.26%
S&P BSE CD
21,479.2 -1.67% 5.61%
S&P BSE CG
12,734.8 -0.61% -0.96%
S&P BSE FMCG
11,445.4 -0.28% 1.66%
S&P BSE HC
18,284.8 7.04% 12.43%
S&P BSE IT
18,251.1 5.02% 22.60%
S&P BSE Metal
7,825.7 3.41% 8.54%
S&P BSE Oil & Gas
13,174.3 -3.70% 4.00%
Source:
Refinitiv *Value as on Jul 31, 2020
• On the BSE sectoral front, the sectors
witnessed a mixed trend. S&P BSE Healthcare
was the top gainer, up 7.04%, followed by S&P
BSE IT which rose 5.02%. Healthcare sector
rose on the back of encouraging corporate
earning numbers by one of the industry
heavyweights coupled with hopes of drastic
change in health infrastructure and
administration after Indian Medical
Association (IMA) demanded the setting up of
an Indian Medical Service (IMS), on the lines of
IAS, IPS and IFS.
Indian Derivatives Market Review
• Nifty Aug 2020 Futures stood at 11,095.85, a premium of 22.40 points above the spot
closing of 11,073.45. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 93.44 lakh crore as against Rs. 91.28 lakh crore for the week to Jul 24.
• The Put-Call ratio stood at 0.91 compared with the previous session’s close of 0.88.
• The Nifty Put-Call ratio stood at 1.31 compared with the previous session’s close of 1.74.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.48 3.42 3.65 4.97
91 Day T-Bill
3.31 3.29 3.15 5.13
05.22% 2025, (5 Yr GOI)
4.99 4.92 5.07 --
05.79% 2030, (10 YrGOI)
5.84 5.82 5.89 --
Source: Refinitiv Value as on Jul 31, 2020
• Bond yields rose during the week
under as hopes of a rate cut by the
Monetary Policy Committee in its
upcoming monetary policy review on
Aug 6, 2020 faded as the retail
inflation had breached the central
bank's tolerance level in Jun 2020.
Lack of any supportive measures from
the RBI to absorb the excess supply of
sovereign debt also weighed on the
market sentiment. However, further
losses were restricted after the
government announced the auction of
a new 10-year benchmark paper.
• Yield on the 10-year benchmark paper
(5.79% GS 2030) rose 2 bps to close at
5.84% compared to previous close of
5.82% after moving in a range of
5.81% to 5.89%.
Domestic Debt Market
5.70
5.80
5.90
27-Jul 28-Jul 29-Jul 30-Jul 31-Jul
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.69 5.17 148
3 Year 4.45 5.75 130
5 Year 5.05 6.33 128
10 Year 5.92 7.24 132
Source: Refinitiv Value as on
Jul 31, 2020
• Yields on gilt securities rose across
maturities by up to 5 bps barring 3-year
paper that fell by 28 bps and 11- and 19-
year papers that stood steady.
• Corporate bond yields fell across
maturities in the range of 3 bps to 14 bps
barring 9-, 10- and 15-year papers that
rose in the range of 4 bps to 68 bps.
• Difference in spread between AAA
corporate bond and gilt contracted across
maturities in the range of 6 bps to 18 bps
barring 3-, 10- and 15-year papers that
expanded in the range of 14 bps to 65 bps.
Domestic Debt Market (Spread Analysis)
0
3
6
2.80
5.00
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 31-Jul-20 24-Jul-20
Yield in %
Change in bps
Source: Refinitiv
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8
• The Union Cabinet approved the new National Education Policy (NEP). Now there would be
a single regulator for all higher education institutions and MPhil would be discontinued. To
give a fillip to digital learning, a National Educational Technology Forum (NETF) would be set
up.
• According to the RBI Governor, despite the coronavirus-led gloom, India is experiencing
some dramatic shift and both industry and policymakers need to make the most of it. The
governor identified five emerging trends of the country – boom in the farm sector,
renewable energy getting precedence, growth led by information and communication
technology and start-ups, changes in supply and value chains in both domestic and global
and infrastructure as the force multiplier of growth. The RBI governor has told major players
of the industry to take advantage of the improvements that are medium term in nature,
even as coronavirus is a short-term problem that can be overcome.
• RBI has signed a currency swap agreement with the Central Bank of Sri Lank. As per the
agreement, the Central Bank of Sri Lanka can withdraw U.S. dollar, Euro or Indian Rupee in
multiple tranches up to a maximum of USD 400 million or its equivalent under a currency
swap agreement. The agreement was signed under the SAARC Currency Swap Framework
2019-22 would be valid till Nov 13, 2022.
Regulatory Updates in India
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9
• Securities and Exchange Board has moved the deadline for introducing the latest margin
collection system for brokers from their customers by one month. The penalty clause will
be enforced with effect from Sep 01, 2020 for short-collection, non-collection of upfront
margins in cash category. The new norms were to start from Aug 1, 2020.
• In a bid to improve the standard of disclosures as an investor friendly measure, AMFI, vide
its Best Practices Guidelines Circular No. 88 / 2020 -21, has directed all its members to
make certain disclosures in its monthly factsheets as a best practice and the same needs to
be adopted uniformly. Among the list of disclosures, AMCs need to disclose Macaulay
Duration, Modified Duration, Average Maturity and Yield to Maturity separately in their
factsheets. The members are required to adopt the above Best Practice guidelines
effective from Aug 1, 2020.
• According to media reports, AMFI has introduced uniform policy for conversion of minor to
major accounts. Accordingly, fund houses are no longer allowed to accept fresh money or
honour redemption once the minor turns major till his/her KYC is complete. Till date, the
mutual fund industry did not have a uniform policy to deal with minor to major accounts.
Hence, a few AMCs were allowing transactions or accept fresh money even after the minor
turns major.
Regulatory Updates in India (contd..)
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
• The Commerce Department report showed U.S. real gross domestic product (GDP)
plunged 32.9% YoY in the Jun quarter of 2020, much sharper than 5.0% fall in the Mar
quarter 2020. GDP was the biggest quarterly drop on record reflecting the impact of the
coronavirus pandemic. Consumer spending was down 34.6% in the second quarter while
exports plummeted 64.1% led by capital goods.
• The U.S. Federal Reserve (Fed) in its monetary policy maintained its target range for the
federal funds rate at zero to 0.25%, which has remained at this level since Mar 15, 2020.
Rates were unchanged near-zero levels amid the economic hardship imposed by the
coronavirus pandemic. Fed noted that economic activity and employment have picked up
somewhat in recent months following sharp declines but remain well below their levels at
the beginning of the year.
• Preliminary flash estimate by Eurostat showed, Euro area GDP contracted 15% in the Jun
quarter of 2020, much higher than 3.1% decline in the previous quarter. Euro area
economy contracted at the fastest pace on record to enter a historic recession as all major
economies in the bloc logged double-digit declines.
• The National Bureau of Statistics reported that China’s manufacturing Purchasing
Managers' Index (PMI) rose to 51.1 in Jul 2020 from 50.9 in Jun 2020. Non-manufacturing
PMI eased to 54.2 from 54.4 in the prior month.
10
Global News/Economy
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11
Global Indices
Indices
31-Jul-20
1-Week
Return
YTD
Return
Russell 3000 1,659.70 3.65% 16.38%
Nasdaq 100 10,905.88 4.03% 24.88%
FTSE 100 5,897.76 -3.69% -21.81%
DAX Index 12,313.36 -4.09% -7.06%
Nikkei Average 21,710.00 -4.58% -8.23%
Straits Times 2,529.82 -1.93% -21.50%
Source: Refinitiv Value as on Jul 31, 2020
U.S.
• Most of the U.S. markets traded higher
in reaction to the latest batch of
earnings, with a number of well-known
big companies reported upbeat results
for the Jun quarter of 2020. However,
gains were largely restricted as U.S.
economic activity showed a record
contraction of 32.9% in the Jun quarter
of 2020.
Europe
• European markets dipped as worries about the economic impact of the coronavirus
pandemic mounted after data showed a sharp contraction in U.S. GDP, and on the U.S.
Federal Reserve's weak outlook for the U.S. economy.
Asia
• Asian markets fell amid relentless surge in coronavirus cases around the world coupled
with worries over escalating U.S.-China tensions.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury fell 5
bps to close at 0.54% compared to the
previous close of 0.59%.
• U.S. Treasury prices rose during the
week under review after the U.S.
Federal Reserve kept interest rates
unchanged in its monetary policy review
and reiterated its commitment of using
its full range of tools to provide support
to the U.S. economy to combat the
COVID-19 pandemic.
• The safe haven appeal of U.S. Treasuries
improved further after the U.S.
economy contracted a record 32.9% in
the second quarter of 2020 while initial
jobless claims in U.S. rose to 1.434
million for the week ended Jul 25, 2020
which fuelled concerns over the impact
of the COVID-19 pandemic on the U.S.
economy.
Global Debt (U.S.)
0.52
0.57
0.62
27-Jul 28-Jul 29-Jul 30-Jul 31-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)
43.74 43.72
Gold ($/Oz)
1,974.69 1,900.98
Gold (Rs/10 gm)
#
53,615 50,960
Silver ($/Oz)
24.37 22.74
Silver (Rs/Kg)
#
63,877 59,821
Source: Refinitiv *Value as on Jul 31, 2020
Gold
• Gold prices surged as persisting
concerns over rising coronavirus
infection cases across the globe boosted
the safe haven appeal of the yellow
metal.
Brent Crude
• Brent crude prices remained flat as
positive impact of data showing slump in
U.S. crude oil inventories in the week to
Jul 24 was neutralized by persisting
concerns over rise in coronavirus
infections across the globe, which led to
uncertainty over the recovery in fuel
demand.
Baltic Dry Index
• The Baltic Dry Index rose due to
improved capesize and panamax
activities.
Commodities Market
9.00
10.00
11.00
12.00
13.00
14.00
30-Jun-20 10-Jul-20 20-Jul-20 30-Jul-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
7.17%
0.05%
3.88%
31-Jul-20
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
74.77 74.87
Pound Sterling
98.17 95.42
EURO
88.87 86.95
100 Yen
71.64 70.40
Source: Refinitiv Figures in INR , *Value as on Jul 31, 2020
Rupee
• The Indian rupee was little changed
against the U.S. dollar as suspected
intervention by the RBI, neutralized the
positive impact of a weak dollar index.
Euro
• Euro surged and touched two year high
against the U.S. dollar on concerns over a
rising number of coronavirus cases in the
U.S.
Pound
• The pound jumped against the
greenback as a broad-based dollar
decline fuelled demand for the British
currency.
Yen
• Yen rose against the greenback amid
persisting concerns over COVID-19
pandemic.
Currencies Markets
9.66
10.11
10.56
30-Jun-20 10-Jul-20 20-Jul-20 30-Jul-20
USD GBP Euro JPY
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
2.89%
- 0.13%
1.76%
2.22%
Source: Refinitiv
31-Jul-20
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15
The Week that was…
27
th
Jul to 31
st
Jul
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16
The Week that was (Jul 27 – Jul 31)
Date Events Present Value Previous Value
Monday,
July 27, 2020
• U.S. Durable Goods Orders (Jun) 7.3% 15.1%
• Germany IFO – Business Climate (Jul) 90.5 86.3
• Japan All Industry Activity Index (MoM)(May) -3.5% -7.6%
Tuesday,
July 28, 2020
• U.S. CB Consumer Confidence (Jul) 92.6 98.3
• U.S. S&P/Case-Shiller Home Price Indices (YoY) (May) 3.7% 3.9%
Wednesday,
July 29, 2020
• U.S. Federal Reserve Interest Rate Decision 0.25% 0.25%
• U.S. Pending Home Sales (MoM) (Jun) 6.3% -5.1%
Thursday,
July 30, 2020
• Germany Gross Domestic Product (YoY)(Q2) P -0.12 -2.30
• Eurozone Consumer Confidence (Jul) -15 -15
• Eurozone Unemployment Rate (Jun) 7.8% 7.7%
• Germany Harmonized Index of Consumer Prices (YoY) (Jul) P 0.0% 0.8%
• Germany Unemployment Rate (Jul) 6.4% 6.4%
• U.S. Gross Domestic Product Price Index(Q2) P -32.9% -5.0%
Friday,
July 31, 2020
• China Non-Manufacturing PMI (Jul) 54.2 54.4
• Eurozone Retail Sales (YoY) (Jun) 5.9% 3.8%
• Euozone Gross Domestic Product (QoQ) (Q2) P -15.0% -3.1%
• Eurozone Consumer Price Index (YoY)(Jul) P 1.2% 0.8%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
3
rd
Aug to 7
th
Aug
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18
Day Event
Monday,
August 3, 2020
• Japan GDP Growth Annualized Final (Q1)
• China Caixin Manufacturing PMI (Jul)
• U.S. ISM Manufacturing PMI (Jul)
• Eurozone Markit Manufacturing PMI Final (Jul)
• U.K. Markit/CIPS Manufacturing PMI Final (Jul)
Tuesday,
August 4, 2020
• U.S. Factory Orders MoM (Jun)
Wednesday,
August 5, 2020
• Bank of England Interest Rate Decision
• Reserve Bank of India Interest Rate Decision
• U.S. Initial Jobless Claims (Aug 01)
Thursday,
August 6, 2020
• China Consumer Price Index (YoY) (Jun)
• U.S. Initial Jobless Claims (Jul 3)
• U.S. Wholesale Inventories (May)
Friday,
August 7, 2020
• China Balance of Trade (Jul)
• U.S. Non-Farm Payrolls (Jul)
• U.S. Unemployment Rate (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) (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
statements & assertions contained in these materials may reflect NAM India’s views or opinions, which in turn may have been formed on the basis of
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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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19
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