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NEWS U CAN USE
June 26, 2020
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The Week that was…
22
nd
June to 26
th
June
2
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Indian Economy
• The International Monetary Fund (IMF) in its World Economic Outlook projected the
growth of the Indian economy to contract 4.5% in FY21. This is in sharp contrast to its
projection made in Apr 2020 when the IMF projected the Indian economy to grow 1.9% in
this fiscal. The downgrade comes as the IMF took into account an extended lockdown
period and a slower than anticipated recovery. IMF also downgraded its growth forecast
for the Indian economy to 6.0% for the next fiscal, down 1.4 percentage points from its
projection of a growth of 7.4% it made in Apr 2020. IMF expects the global economy to
contract by 4.9% in 2020 but expects a rebound in 2021 as it projected a growth of 5.4% in
2021.
• According to media reports, the government is discussing with the Reserve Bank of India
for a one time restructuring of loans taken by the companies that have come under stress
due to the COVID-19 pandemic.
• Petrol prices in the national capital surpassed Rs. 80 per litre mark for the first time in two
years as per media reports. The development come as the oil companies continued to raise
prices for petrol and diesel in line with costs.
• According to reports, the Ministry of Finance has informed that banks have sanctioned
loans which are more than Rs. 79,000 crore till Jun 20, 2020 to 1.9 million Micro, Small and
Medium Enterprises (MSMEs) and other businesses. Out of this, Rs 35,000 crore has
already been disbursed by banks.
3
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4
Domestic Equity Market Indices
Indices
26-Jun-20
1 Week Return
YTD Return
S&P BSE Sensex
35,171.27 1.27% -14.74%
Nifty 50
10,383.00 1.35% -14.67%
S&P BSE Mid
-Cap
13,258.44 3.55% -11.42%
S&P BSE Small
-Cap
12,630.28 2.88% -7.80%
Source:
MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
22-Jun-20 1376 561 2.45
23-Jun-20 1388 512 2.71
24-Jun-20 775 1121 0.69
25-Jun-20 1034 850 1.22
26-Jun-20 1116 770 1.45
Source: NSE
• Indian equity markets managed to end
the week on a positive note amid
volatility due to phenomenal rise in the
coronavirus cases worldwide, the
military stand-off between India and
China at the border, and the ongoing
spat between China and the U.S.
• Buying interest found support from
reports on Drugs Controller General of
India's (DCGI) approval to selected
pharma companies to manufacture and
market "potential" covid-19 drugs,
resulting in broad-based buying.
• Investor sentiments were also buoyed
after U.S. government said that the
U.S.-China trade deal remains intact,
thereby clarifying earlier confusing
statements from the White House over
the fate of the deal.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
22.62 26.67 27.83 1451.88
P/B
2.65 2.97 2.13 1.90
Dividend Yield
1.02 1.54 1.25 1.22
Source: BSE, NSE
Value as on June 26, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
15,278.12 1.82% 15.05%
S&P BSE
Bankex
24,465.39 0.92% 22.02%
S&P BSE CD
20,520.75 0.63% 9.99%
S&P BSE CG
13,151.97 4.68% 17.00%
S&P BSE FMCG
11,144.90 3.64% 6.70%
S&P BSE HC
16,490.06 1.74% 6.95%
S&P BSE IT
15,125.00 4.03% 10.12%
S&P BSE Metal
7,390.42 2.24% 16.04%
S&P BSE Oil & Gas
13,072.92 1.43% 16.94%
Source:
Refinitiv *Value as on June 26, 2020
• On the BSE sectoral front, barring S&P BSE
Realty, all the indices closed in the green.
• S&P BSE Capital Goods is the top gainer, up
4.68%, followed by S&P BSE Power and S&P
BSE IT which went up 4.64% and 4.03%,
respectively.
Indian Derivatives Market Review
• Nifty Jun 2020 Futures stood at 10,235.55, a discount of 8.85 points below the spot closing
of 10,244.40. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 90.53 lakh crore as against Rs. 85.89 lakh crore for the week to Jun 12.
• The Put-Call ratio stood at 0.72 compared with the previous session’s close of 0.87.
• The Nifty Put-Call ratio stood at 1.56 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
3.54 3.63 3.61 5.13
91 Day T
-Bill
3.18 3.28 3.05 5.02
07.32% 2024, (5 Yr GOI)
4.85 4.90 4.97 6.43
06.45%
2029, (10 Yr GOI)
6.02 6.00 5.97 6.58
Source:
Refinitiv Value as on June 26, 2020
• Bond yields rose on concerns over
rising debt supply and absence of any
action by the Reserve Bank of India to
support the market. However, value
buying by investors restricted the
losses to some extent.
• Yield on the new 10-year benchmark
paper (5.79% GS 2030) rose 6 bps to
close at 5.91% from the previous
week’s close of 5.85% after moving in
a range of 5.84% to 5.94%.
• Yield on the old 10-year benchmark
paper (6.45% GS 2029) rose 2 bps to
close at 6.02% from the previous
week’s close of 6.00% after trading in
a range of 5.98% to 6.04%.
Domestic Debt Market
5.95
6.00
6.05
22-Jun 23-Jun 24-Jun 25-Jun 26-Jun
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year
3.72 5.44 172
3 Year
4.49 6.08 159
5 Year
5.43 6.67 123
10 Year
6.00 7.13 113
Source:
Refinitiv Value as on
June 26 2020
• Yields on gilt securities rose on 10 to 15-
year papers and 30-year paper in the
range of 2 to 7 bps while it fell on
remaining papers by up to 5 bps barring 7
and 19-year paper which closed steady.
• Corporate bond yields fell across
maturities by up to 20 bps barring 6-year
which rose 1 bps and 7-year closed steady.
• Spread between AAA corporate bond and
gilt expanded on 4 to 7-year papers by up
to 4 bps and contracted on the remaining
maturities in the range of 5 bps to 15 bps.
Domestic Debt Market (Spread Analysis)
-12
-2
8
2.80
4.80
6.80
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 26-Jun-20 19-Jun-20
Yield
in %
Change
in bps
Source: Refinitiv
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8
• Capital market regulator Securities and Exchange Board of India (SEBI) has relaxed rules that
govern raising of funds through preferential allotment of shares. Under the new rules, the
price of the shares that will be allotted pursuant to the preferential issue by the eligible
listed companies having stressed assets will not be less than the average of the weekly high
and low of the volume weighted average prices of the related equity shares during the two
weeks preceding the relevant date. Presently prices for the preferential allotment of shares
are determined over a period of 26 weeks or more for frequently traded shares. The new
rules are expected to put a check on value erosion by bringing down the latency period. SEBI
also mandated that allottees of such preferential issue will be exempted from making an
open offer if the acquisition is beyond the prescribed threshold. The objective of the move is
to protect the interest of shareholders.
• According to reports, the Indian government imposed anti-dumping duty on certain type of
steel products that are imported from China, Vietnam and Korea for a period of five years.
The objective of the move is to safeguard the interest of the domestic manufacturers from
cheap imports. As per global trade norms, a country may decide to impose tariffs on
dumped products in order to provide a level-playing field to the domestic manufacturers.
• The government gave its approval for setting up an infrastructure fund worth Rs. 15,000
crore in order to provide interest subvention of up to 3% to private players for setting up
dairy, poultry and meat processing units. The objective of the move is to increase milk
production in the country, create employment and boost exports of the country.
Regulatory Updates in India
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9
• Capital market regulator Securities and Exchange Board of India made amendments to the
insider trading prohibition rules. The amendments include maintenance of a structured
digital database that will contain the nature of the unpublished price sensitive information
along with the names of those who shared the information. In addition, it will also include
automation of process of making disclosures to the stock exchanges, restriction on trading
window not to be made applicable for transactions as mandated by SEBI and also takes
into account the entities that need to file the non-compliance of code of conduct with the
stock exchanges.
• The Ministry of road transport and highways has come out with a draft document in which
it has advocated for deferment of BS-IV norms to Apr 2021. The norms are applicable for
construction equipment vehicles, tractors, and harvesters. The move comes after the
government took into consideration the crisis brought about by the outbreak of the
COVID-19 pandemic across the country. The proposal is expected to provide some relief to
agricultural and construction equipment manufacturers in the country by easing up their
liquidity issues to some extent.
• According to information and broadcasting minister, the government has decided to
provide 2% interest subvention to borrowers under the 'Shishu' category of the flagship
Pradhan Mantri MUDRA Yojana. Under the 'Shishu' category, the government provides
collateral free loans of up to Rs. 50,000 crore to beneficiaries.
Regulatory Updates in India (contd..)
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• According to the Commerce Department, U.S. real gross domestic product (GDP) fell 5% in
quarter ended Mar 2020, unchanged from the estimate provided last month, as against
2.1% rise in quarter ended Dec 2019. The decrease in GDP Mar 2020 quarter came amid
negative contributions from consumer spending, private inventory investment, exports,
and non-residential fixed investment.
• Germany’s central bank in its monthly report said that German economy is estimated to
contract around 10% in the June quarter of 2020, much more than 2.2% fall recorded in
the Mar quarter of 2020. Bundesbank report said the economic stimulus package
announced by the government should boost the recovery but it will hardly have any effect
in the second quarter
• According to research group GfK, Germany’s forward-looking consumer sentiment index
rose to -9.6 in Jul 2020 from revised -18.6 in Jun 2020. Germany's consumer sentiment is
set to improve next month, reflecting the rapid reopening of the economy following a
lockdown and economic stimulus package related to coronavirus.
• The People's Bank of China kept its benchmark lending rates steady for the second
consecutive month even though the economy was struggling to recover from the impact
of the covid-19 crisis. The 1 year loan prime rate stood at 3.85% and the 5 year loan prime
rate was steady at 4.65%.
10
Global News/Economy
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11
Global Indices
Indices
26-Jun-20
1-Week
Return
YTD
Return
Russell 3000
1,500.02 -1.88% 5.19%
Nasdaq 100
9,849.36 -1.59% 12.78%
FTSE 100
6,159.30 -2.12% -18.34%
DAX
Index 12,089.39 -1.96% -8.75%
Nikkei Average
22,259.79 -0.97% -5.90%
Straits Times
2,604.51 -1.15% -19.19%
Source:
Refinitiv
Value as on
June 26, 2020
U.S.
• U.S. markets fell notably as renewed
concerns over coronavirus infection
resurfaced after Florida and California
reported their single biggest daily
increases in new cases of covid-19.
• Losses increased after the U.S. Federal
Reserve released the results of the
stress tests on banks that showed banks
could suffer up to $700 billion in losses
on soured loans if the economy
languishes.
Europe
• European markets fell on worries over rising covid-19 cases worldwide coupled with
growth concerns after the International Monetary Fund lowered its forecast for the global
economy.
Asia
• Asian markets witnessed a mixed trend as worries over rising coronavirus cases in the U.S.
and other parts of the world, which shrunk hopes of a quick economic recovery, was
neutralised as U.S. government clarified that the U.S.-China trade deal remains intact.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury fell 6
bps during the week under review to
close at 0.64% from the previous week’s
close of 0.70%.
• U.S. Treasury prices fell initially as
investor risk sentiment improved to
some extent on hopes of a swift
economic recovery from the COVID-19
pandemic.
• Positive economic data and assurance
that the trade deal between U.S. and
China was intact also led to a fall in U.S.
Treasury prices.
• However, the trend reversed as the safe
haven appeal of U.S. Treasuries
improved on concerns over rising
coronavirus infection cases in U.S. which
led to worries that the U.S. economy
may take years to recover from the
COVID-19 pandemic.
Global Debt (U.S.)
0.63
0.68
0.73
22-Jun 23-Jun 24-Jun 25-Jun 26-Jun
US 10-Year Treasury Yield Movement
Source: Refinitiv
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13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
41.51 43.48
Gold ($/Oz)
1,770.62 1,742.84
Gold (
Rs/10 gm) 48,117 47,519
Silver ($/Oz)
17.75 17.60
Silver (
Rs/Kg) 48,280 48,069
Source:
Refinitiv *Value as on June 26, 2020
Gold
• Gold prices rose as an increase in
coronavirus infection cases dented the
economic outlook which improved the
safe haven appeal of the bullion. Bullion
prices found additional support after
IMF projected the global growth at -
4.9% in 2020.
Brent Crude
• Brent crude prices dipped amid worries
about a second wave of the coronavirus
pandemic which dented hopes of a rapid
economic recovery, thereby affecting
the demand outlook.
Baltic Dry Index
• 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
26-May-20 11-Jun-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Refinitiv
0.85%
-4.53%
1.59%
26-Jun-20
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
75.48 76.21
Pound Sterling
93.71 94.79
EURO
84.63 85.42
100 Yen
70.47 71.27
Source: RBI
Figures in INR , *Value as on June 26
, 2020
Rupee
• The rupee rose against the greenback in
as many as eight weeks following gains in
the domestic equity market.
Euro
• The euro rose against the greenback on
the back of improving economic data
across the region.
Pound
• The pound fell against the greenback on
concerns over a second wave of the
COVID-19 pandemic and worries over
trade tension between U.S. and
European Union.
Yen
• The yen fell against the U.S. dollar as the
safe haven appeal of the greenback
improved on concerns over rise in
coronavirus infection cases in U.S.
Currencies Markets
9.75
10.00
10.25
10.50
26-May-20 11-Jun-20
USD GBP Euro JPY
Source: Refinitiv
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-1.14%
-0.97%
-1.12%
-0.93%
26-Jun-20
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15
The Week that was…
22
nd
June to 26
th
June
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16
The Week that was (June 22– June 26)
Date Events Present Value Previous Value
Monday,
June 22, 2020
•
U.S. Existing Home Sales (MoM) (May) 3.91M 4.33M
•
Eurozone Consumer Confidence (Jun) P -14.7 -15
Tuesday,
June 23, 2020
•
Germany Markit Composite PMI (Jun) P 45.8 32.3
•
Eurozone Markit Composite PMI (Jun) P 47.5 31.9
•
U.K. Markit Service PMI (Jun) P 47 29
•
U.S Markit Composite PMI (Jun) P 46.8 37
•
U.S. New Home Sales (MoM)(May) 0.676 M 0.58M
Wednesday,
June 24, 2020
•
Japan Leading Economic Index (Apr) 77.7 76.2
•
Germany IFO – Business Climate (Jun) 86.2 79.7
•
U.S. Housing Price Index (MoM) (Apr) 0.20% 0.10%
Thursday,
June 25, 2020
•
Germany GfK Consumer Confidence Survey (Jul) -9.6 -18.6
•
U.S. Gross Domestic Product Annualized (Q1) -5% -5%
Friday,
June 26, 2020
•
U.S. Personal Spending (May) 8.20% -12.60%
•
U.S. Michigan Consumer Sentiment Index (Jun) 78.1 72.3
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17
The Week Ahead
29
th
June to 03
rd
July
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18
Day Event
Monday,
June 29, 2020
•
Germany Consumer Price Index (YoY) (Jun) P
•
U.S. Pending Home Sales (YoY) (May)
•
Japan Unemployment Rate (May)
Tuesday,
June 30, 2020
•
India Infrastructure Output (Jun)
•
U.K. Gross Domestic Product (QoQ) (Q1)
•
Eurozone Consumer Price Index (YoY) (Jun) P
•
U.S. Consumer Confidence (Jun)
Wednesday,
July 01, 2020
•
India Manufacturing PMI (Jun)
•
China Caixin Manufacturing PMI (Jun)
•
U.S. ADP Employment Change (Jun)
Thursday,
July 02, 2020
•
U.S. Nonfarm Payrolls (Jun)
•
U.S. Unemployment Rate (Jun)
•
U.K. GfK Consumer Confidence (Jun)
Friday,
July 03, 2020
•
India Services PMI (Jun)
•
China Caixin Services PMI (Jun)
•
Germany Markit Composite PMI (Jun)
•
Eurozone Markit Composite PMI (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 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
manner assures the accuracy or authenticity of such data and information. Some of the statements & assertions contained in these materials may
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19
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