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NEWS U CAN USE
June 5, 2020
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The Week that was…
01
st
June to 05
th
June
2
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Indian Economy
• Survey by the IHS Markit showed, India’s Services Business Activity Index rose to 12.6 in
May 2020 from 5.4 in Apr 2020. Output plunged due to extended business shutdowns and
very weak demand conditions. Also there was substantial decline in new work intakes by
Indian service providers.
• IHS Markit survey showed, India’s manufacturing Purchasing Managers’ Index (PMI) rose to
30.8 in May 2020 from 27.4 in Apr 2020. Amid the ongoing coronavirus lockdown, Indian
manufacturers recorded another sharp deterioration in business conditions. Weaker
demand drove output lower following record decline in Apr 2020. Consequently, firms cut
staff numbers at the quickest pace since data collection began over 15 years ago.
• Global rating agency, Moody's Investors Service downgraded India's local-currency senior
unsecured rating from Baa2 to BAA3 and maintained the negative outlook. Also lowered
India’s short-term local-currency rating from P-2 from P-3 with negative outlook. The
rationale for downgrade reflects Moody's view that the country's policymaking institutions
will be challenged in enacting and implementing policies which effectively mitigate the
risks of a sustained period.
• As per the data released by the Centre for Monitoring Indian Economy (CMIE), India's
unemployment rate increased to 23.48% in May 2020, slightly lower than 23.52% in Apr
2020, reflecting the impact of covid-19.
3
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4
Domestic Equity Market Indices
Indices
05-Jun-20
1 Week Return
YTD Return
S&P BSE Sensex
34,287.24 5.75% -16.89%
Nifty 50
10,142.15 5.86% -16.65%
S&P BSE Mid
-Cap
12,554.16 6.00% -16.13%
S&P BSE Small
-Cap
11,855.17 8.84% -13.46%
Source:
MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
01-Jun-20 1,506 349 4.32
02-Jun-20 1,382 459 3.01
03-Jun-20 1,279 586 2.18
04-Jun-20 943 889 1.06
05-Jun-20 1,588 312 5.09
Source: NSE
• Indian equity markets ended the week
in green. Investors took positive cues
from government’s announcement to
ease lockdown in phased manner
across the country after almost two
months of strict measures.
• Market participants even shrugged off
the downgrade of the long-term
sovereign rating by a global rating
agency. Buying interest found support
from positive global cues and
reassurance by Prime Minister that
India will return to growth.
• Investor sentiments were buoyed by
reports that a major state-owned
lender posted net profit for the March
quarter of FY20.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
21.74 23.91 23.30 101.69
P/B
2.58 2.89 1.99 1.74
Dividend Yield
1.11 1.50 1.41 1.38
Source: BSE, NSE
Value as on Jun 05, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
15,010.47 6.50% 21.44%
S&P BSE
Bankex
24,077.99 8.77% 8.74%
S&P BSE CD
20,868.40
10.03%
10.62%
S&P BSE CG
12,904.09 4.62% 13.08%
S&P BSE FMCG
11,034.87 1.26% 8.06%
S&P BSE HC
16,158.68 3.27% 6.87%
S&P BSE IT
14,572.65 3.59% 7.72%
S&P BSE Metal
7,435.91 9.27% 21.42%
S&P BSE Oil & Gas
12,535.96 5.91% 7.85%
S&P BSE Realty
1,568.37
11.12%
19.71%
Source: Thomson Reuters Eikon
*Value as on Jun 05, 2020
• On the BSE sectoral front, almost all the
sectors closed in the green. S&P BSE Realty
was the major gainer, up 11.12%, followed by
S&P BSE Consumer Durables and S&P BSE
Metal, which rose 10.03% and 9.27%,
respectively.
• The sectors rose on the likelihood of increase
in profitability of the firms in the second half
of the current fiscal. Consumer sector rose on
hopes of a favorable monsoon. In the metal
sector, the lockdown impacted business in the
last few months, but production volumes of
many steel companies have started to inch up.
Indian Derivatives Market Review
• Nifty Jun 2020 Futures stood at 10,145.50, a premium of 3.35 points above the spot closing
of 10,142.15. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 71.10 lakh crore as against Rs. 63.68 lakh crore for the week to May 29.
• The Put-Call ratio stood at 0.81 compared with the previous session’s close of 0.79.
• The Nifty Put-Call ratio stood at 1.50 compared with the previous session’s close of 1.61.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
3.64 3.62 3.95 5.03
91 Day T
-Bill
3.49 3.27 3.65 5.06
07.32% 2024, (5 Yr GOI)
5.01 4.97 5.02 6.39
06.45%
2029, (10 Yr GOI)
6.02 6.01 6.07 6.61
Source: Thomson Reuters Eikon
Value as on Jun 05, 2020
• Bond yields rose during the week
under review as RBI did not announce
any open market operations which
weighed on the market sentiment.
Worries over another round of
additional borrowing in the 2nd half of
the fiscal by the government and fears
that other two credit rating agencies
may downgrade India’s credit rating
also contributed to the downside.
• Yield on the new 10-year benchmark
paper (5.79% GS 2030) rose 4 bps to
close at 5.82% compared to the
previous week’s close of 5.78% after
moving in a range of 5.79% to 5.88%.
• Yield on the old 10-year benchmark
paper (6.45% GS 2029) inched up 1 bps
to close at 6.02% compared to the
previous week’s close of 6.01% after
trading in a range of 6.00% to 6.09%.
Domestic Debt Market
5.00
5.60
6.20
1-Jun 2-Jun 3-Jun 4-Jun 5-Jun
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year
3.83 6.00 217
3 Year
4.62 6.44 181
5 Year
5.51 6.86 135
10 Year
5.91 7.34 143
Source: Thomson Reuters
Eikon
Value as on
Jun 05,
2020
• Yields on gilt securities rose across the
maturities by up to 18 bps, barring 3-, 6-,
10- & 12-year papers that fell by up to 20
bps. Yield on 30-year paper was flat.
• Corporate bond yields went up across the
curve by up to 38 bps, leaving 9- & 10-year
papers that stood unchanged. Highest rise
was seen on 1-year.
• Spread between AAA corporate bond and
gilt expanded by up to 24 bps across the
segments barring 4-, 5- & 15-year papers
that contracted by up to 2 bps. Spread
rose the most on 2-year paper.
Domestic Debt Market (Spread Analysis)
-20
7
34
61
2.00
4.00
6.00
8.00
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 29-May-20 22-May-20
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
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8
• The Cabinet approved 'The Farming Produce Trade and Commerce (Promotion and
Facilitation) Ordinance, 2020' to ensure barrier free trade in agriculture produce. The
government also approved 'The Farmers (Empowerment and Protection) Agreement on
Price Assurance and Farm Services Ordinance, 2020' to empower farmers to engage with
processors, aggregators, wholesalers, large retailers and exporters. This move is likely to
transform the farm sector and help raise farmers' income. Both these proposals were part
of the Rs. 20 lakh crore economic package.
• The Ministry of Electronics and Information Technology has announced three schemes to
promote the manufacturing of electronics not for domestic consumption but also for
export. Schemes are Production Linked Incentive Scheme for large-scale electronics
manufacturing, Promotion of Manufacturing of Electronic Components and Semiconductors
and Modified Electronics Manufacturing Clusters Scheme.
• The defence ministry’s procurement chief said they are contemplating to reserve
procurement of defence goods worth less than Rs. 50 crore per year for micro, small and
medium enterprises (MSMEs) to promote indigenization.
Regulatory Updates in India
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9
• Market regulator Securities and Exchange Board of India (Sebi) has formed a15-member
expert panel following a Union Budget proposal in Jul 2020 to form social stock exchange
(SSE). SSEs are used globally for making impact investments with an objective to achieve
certain social goals. The committee has recommended for tax concessions, such as
exemption of securities transaction tax (STT) and capital gains tax (CGT), to ensure SSEs
take off in the country.
• Post the nation-wide lockdown in Mar 2020, Government for the first time has relaxed the
visa and travel restrictions for certain categories of foreign nationals like businessmen,
healthcare professionals and engineers who need to come to India. However, they will
have to obtain fresh visas.
• In a bid to boost indigenous manufacturing and the Make-in-India programme, the Ministry
of Chemicals and Fertilisers has fixed 60% (for FY20-21) of local content in public
procurement of 55 chemical and pesticide products. For 2021-23, percentage will enhance
to 70% and 80% during FY23-25.
Regulatory Updates in India (contd..)
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• According to the Labor Department, U.S. non-farm payroll employment rose by 2.51
million jobs in May 2020 after plummeting by a revised 20.69 million jobs in Apr 2020.
Employment rose sharply in leisure and hospitality, construction, education and health
services, and retail trade.
• The European Central Bank (ECB) left its key interest rates unchanged as expected,
however, ECB increased the size of its emergency asset purchase programme. ECB also
maintained its commitment to ease policy stance further if needed as eurozone is facing its
worst recession in decades due to the impact of the coronavirus.
• European Central Bank has projected 8.7% contraction in eurozone’s growth in the year
2020 as against 0.8% growth in the previous year. However, the Central Bank increased
growth outlook for 2021 to 5.2% from 1.3% and the forecast for 2022 was raised to 3.3%
from 1.4%.
• According to data from the Cabinet Office, Japan’s leading index, which measures the
future economic activity, fell to 76.2 in Apr 2020 from 85.1 in Mar 2020. The coincident
index that reflects the current economic activity fell to 81.5 in Apr from 88.8 a month ago.
• According to survey results from IHS Markit, China’s manufacturing Purchasing Managers'
Index (PMI) rose to 50.7 in May 2020 from 49.4 in Apr 2020. It returned to expansion zone
in May driven by the easing of restrictions related to the coronavirus.
10
Global News/Economy
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11
Global Indices
Indices
05-Jun-20
1-Week
Return
YTD
Return
Russell 3000
1,532.39 3.36% 7.46%
Nasdaq 100
9,824.39 2.81% 12.50%
FTSE 100
6,484.30 6.71% -14.03%
DAX
Index 12,758.61 10.11% -3.70%
Nikkei Average
22,863.73 4.51% -3.35%
Straits Times
2,751.50 9.59% -14.62%
Source: Thomson Reuters
Eikon
Value as on
Jun 05, 2020
U.S.
• U.S. markets traded up during the week
with investor sentiments buoyed by
report from the Institute for Supply
Management showed U.S.
manufacturing activity contracted at a
slower rate in May. Optimism over quick
economic recovery following easing of
the lockdown measures., outweighed
concerns about the global pandemic,
U.S.-China trade tensions and
nationwide protests.
Europe
• European markets too witnessed buying interest led by continued optimism over
economic recovery following gradual reopening of business coupled with hopes of
additional support from the European policymakers.
Asia
• Asian markets too joined the global rally as optimism over an economic recovery following
the easing of the coronavirus pandemic infused lockdown helped offset jitters over social
unrest in the U.S. and rising U.S.-China tensions.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury surged
17 bps to close at 0.91% compared to the
previous week’s close of 0.64%.
• U.S. Treasury prices fell initially during the
week on hopes of a quick post-pandemic
recovery after the U.S. manufacturing
activity came off an 11-year low in May as
businesses in the region reopened.
• U.S. Treasury prices fell further as the
investor risk sentiment improved after
private sector employment in U.S. fell
much less than expected in May 2020 and
the European Central Bank increased the
size of its Pandemic Emergency Purchase
Program.
• U.S. Treasury prices continued with its
downward trend after jobless claims for
the week ended May 30 dropped below 2
million while the U.S. nonfarm payroll data
for May 2020 came above market
expectations.
Global Debt (U.S.)
0.00
0.40
0.80
1.20
1-Jun 2-Jun 3-Jun 4-Jun 5-Jun
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($/Barrel)
40.93 33.60
Gold ($/Oz)
1,685.23 1726.30
Gold (
Rs/10 gm) 46,525 40989
Silver ($/Oz)
17.37 17.84
Silver (
Rs/Kg) 47,781 36871
Source: Thomson Reuters
Eikon *Value as on Jun 05, 2020
Gold
• Gold prices fell as the investor risk
sentiment improved on hopes of a
recovery from the slump caused due to
the COVID-19 pandemic. However, civil
unrest in U.S. and renewed concerns
over escalating tensions between U.S.
and China restricted further losses
Brent Crude
• Brent crude prices rose on reports that
that the Organization of the Petroleum
Exporting Countries and Russia were
moving closer to a compromise on the
duration for extending oil output cuts.
Baltic Dry Index
• Baltic Dry Index rose due to improved
capesize and panamax activities.
Commodities Market
0.00
10.00
20.00
30.00
6-May-20 16-May-20 26-May-20 5-Jun-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
-2.63%
21.82%
-2.38%
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
75.47 75.64
Pound Sterling
95.47 93.31
EURO
85.84 83.91
100 Yen
69.03 70.56
Source: RBI
Figures in INR , *Value as on Jun 05,
2020
Rupee
• The rupee rose against the greenback
following gains in the domestic equity
market after government announced a
phased re-opening of the economy.
Euro
• The euro rose against the greenback
after the European Central Bank
increased the size of its Pandemic
Emergency Purchase Program.
Pound
• The pound rose against the greenback
on hopes of a global economic recovery.
Yen
• The yen weakened against the
greenback as its safe haven appeal
dwindled on hopes of a global economic
recovery. Better than expected U.S.
nonfarm payroll data for May 2020
added to the losses.
Currencies Markets
9.20
9.60
10.00
10.40
10.80
5-May-20 15-May-20 25-May-20 4-Jun-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
2.30%
2.31%
-2.17%
-0.23%
5-Jun-20
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15
The Week that was…
01
st
June to 05
th
June
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16
The Week that was (Jun 01– Jun 05)
Date Events Present Value
Previous Value
Monday,
Jun 1, 2020
• India Nikkei Manufacturing PMI (May)
30.8 27.4
• Japan Jibun Bank Manufacturing PMI (May)
38.4 38.4
• China Caixin Manufacturing PMI (May)
50.7 49.4
• Eurozone Markit Manufacturing PMI (May)
39.4 39.5
• U.S. ISM Manufacturing PMI (May)
43.1 41.5
• Germany Markit Manufacturing PMI (May)
36.6 36.8
Tuesday,
Jun 2, 2020
• U.K. Mortgage Approvals (Apr)
15.8K 56.1K
• U.K. Nationwide Housing Prices (YoY)(May)
1.8% 3.7%
Wednesday,
Jun 3, 2020
• India Nikkei Services PMI (May)
12.6 5.4
• U.S. ADP Employment Change (May)
-2760K 19557K
• U.S. ISM Non
-Manufacturing (May) 45.4 41.8
• Eurozone Unemployment Rate (Apr)
7.3% 7.1%
• Japan Jibun Bank Services PMI (May)
26.5 21.5
• China Caixin Services PMI (May)
55.0 44.4
• Eurozone Markit Services PMI (May)
30.5 28.7
• U.K. Markit Services PMI (May)
29.0 27.8
Thursday,
Jun 4, 2020
• U.K. Markit Construction PMI (May)
28.9 8.2
• Eurozone Retail Sales (YoY)(Apr)
-19.6% -8.8%
• U.S. Trade Balance(Apr)
-$49.4B -$42.3B
• U.S. Nonfarm Productivity(Q1)
-0.9% -2.5%
Friday,
Jun 5, 2020
• U.S. Nonfarm Payrolls(May)
2509K -20687K
• U.S. Unemployment Rate(May)
13.3% 14.7%
• U.K. Halifax House Prices (YoY/3m)(May)
2.6% 2.7%
• Germany Factory Orders (YoY)(Apr)
-36.6% -15.4%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
08
th
June to 12
th
June
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
18
Day Event
Monday,
June 08, 2020
•
Germany Industrial Production (MoM)(Apr)
•
Japan Eco Watchers Survey: Outlook (May)
•
Eurozone Sentix Investor Confidence (Jun)
•
U.K. BRC Like-For-Like Retail Sales (YoY)(May)
Tuesday,
June 09, 2020
•
Eurozone Gross Domestic Product (QoQ)(Q1)
•
Eurozone Employment Change (YoY)(Q1)
•
Japan Machinery Orders (YoY)(Apr)
Wednesday,
June 10, 2020
•
U.S. Federal Reserve Rate Decision
•
China Consumer Price Index (YoY)(May)
•
U.S. Consumer Price Index (YoY)(May)
Thursday,
June 11, 2020
•
U.S. Producer Price Index (YoY)(May)
•
U.S. Initial Jobless Claims (Jun 5)
Friday,
June 12, 2020
•
U.K. Gross Domestic Product (MoM)(Apr)
•
U.S. Michigan Consumer Sentiment Index (Jun) P
•
Eurozone Industrial Production (YoY)(Apr)
•
Japan Industrial Production (YoY)(Apr)
•
U.K. Industrial Production (MoM)(Apr)
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 Company 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
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