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NEWS U CAN USE
May 08, 2020
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The Week that was…
04
th
May to 08
th
May
2
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Indian Economy
• Data from a private survey showed that the seasonally adjusted IHS Markit India
Manufacturing Purchasing Managers’ Index fell to 27.4 in Apr 2020 from 51.8 in Mar 2020.
The unprecedented contraction can be attributed to the nationwide lockdown imposed by
the government to combat the COVID-19 pandemic. The latest reading depicts the
sharpest deterioration in business conditions across the sector since data collection began
over 15 years ago. A reading above 50 indicates expansion while below it indicates
contraction.
• Data from a private survey showed that India's services sector collapsed in Apr 2020 which
can be attributed to the nationwide lockdown imposed by the government to combat the
COVID-19 pandemic. The IHS Markit India Services Business Activity Index plummeted to
5.4 in Apr 2020 from 49.3 in Mar 2020 on the back of a sharp drop in new orders during
the month under review. This marks an unprecedented fall since the survey began 14 years
ago. The IHS Markit India Composite Purchasing Managers' Index (PMI) which takes into
account both the manufacturing output and the services output also plunged to a new
record low of 7.2 in Apr 2020 from 50.6 in Mar 2020.
• The Central government raised the excise duty on petrol by Rs. 10 per litre and on diesel
by Rs. 13 per litre. The move comes after several state government increased the value
added tax (VAT) on petrol and diesel to take benefit of the lower price regime. The
government aims to gain close to around Rs. 1.6 lakh crore from the record excise duty
hike.
3
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4
Domestic Equity Market Indices
Indices
08
-May-
20
1 Week Return
YTD Return
S&P BSE Sensex
31,642.70 -6.15% -23.30%
Nifty 50
9,251.50 -6.17% -23.97%
S&P BSE Mid
-Cap
11,423.81 -4.91% -23.68%
S&P BSE Small
-Cap
10,638.70 -4.17% -22.34%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
04-May-20 412 1,439 0.29
05-May-20 597 1,217 0.49
06-May-20 821 981 0.84
07-May-20 794 995 0.80
08-May-20 724 1,084 0.67
Source: NSE
• Indian equity markets ended the week
in the red. Investors remained
concerned over U.S.- China tension as
media reports stated that U.S.
intelligence documents accused China
of concealing the severity of the
coronavirus outbreak to hoard medical
supplies. Back home, another extension
of the nation-wide lockdown weighed
on investor sentiment.
• Rising cases of COVID-19 in India too
dented market sentiments. Global cues
continued to play spoilsport as Bank of
England stated that Britain could be
headed for its biggest economic slump
in over 300 years due to the
coronavirus lockdown.
• However, the fall was restricted to
some extent by value buying in recent
beaten down stocks.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
19.77 23.93 22.10 163.21
P/B
2.41 2.47 1.87 1.56
Dividend Yield
1.20 1.58 1.53 1.56
Source: BSE, NSE Va
lue as on May 08, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last Returns (in %)
Closing* 1-Wk 1-Mth
S&P BSE Auto
12,344.73 -7.53% 7.70%
S&P BSE
Bankex
22,211.18
-10.17%
2.37%
S&P BSE CD
18,107.06
-11.78%
-7.01%
S&P BSE CG
11,155.53 -8.46% 1.12%
S&P BSE FMCG
10,061.63 -6.58% -7.19%
S&P BSE HC
15,271.29 -0.40% 8.90%
S&P BSE IT
13,534.12 -4.92% 8.00%
S&P BSE Metal
6,070.48
-10.01%
3.53%
S&P BSE Oil & Gas
11,524.50 -4.49% 6.84%
Source: Thomson Reuters Eikon
*Value as on May 08, 2020
• On the BSE sectoral front, the indices closed in
the red. S&P BSE Consumer Durables was the
major loser, down 11.78%, followed by S&P
BSE Bankex and S&P BSE Metal which slipped
10.17% and 10.01%, respectively.
• Consumer sector was weighed down by weak
corporate earning results from one of the
industry heavyweights.
Indian Derivatives Market Review
• Nifty May 2020 Futures stood at 9,236.65, a discount of 14.85 points below the spot closing
of 9,251.50. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 60.49 lakh crore as against Rs. 54.71 lakh crore for the week to May 1.
• The Put-Call ratio stood at 0.92 compared with the previous session’s close of 0.87.
• The Nifty Put-Call ratio stood at 1.32 compared with the previous session’s close of 1.78.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
3.98 4.19 4.24 5.02
91 Day T
-Bill
3.54 3.64 4.10 5.08
07.32% 2024, (5 Yr GOI)
4.92 5.10 5.84 6.27
06.45% 2029, (10
Yr GOI)
5.97 6.11 6.44 6.56
Source: Thomson Reuters Eikon
Value as on May 08, 2020
• Bond yields declined following buying
by state-run banks and after the
central bank announced the auction of
a new 10-year paper.
• Yields declined further as a hike in
special additional excise duty on petrol
and diesel by Rs. 2 and 5 per litre,
respectively eased concerns on rise in
fiscal deficit. At the end, sentiments
remained positive on aggressive
demand for the new 10-year gilt paper
at the weekly auction.
• Yield on the 10-year benchmark paper
(6.45% GS 2029) plunged 14 bps to
close at 5.97% compared with the
previous week’s close of 6.11% after
trading in a range of 5.97% to 6.14%.
Domestic Debt Market
5.80
5.95
6.10
4-May 5-May 6-May 8-May
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year
3.90 5.87 197
3 Year
4.68 6.49 182
5 Year
5.58 6.85 128
10 Year
6.06 7.34 128
Source: Thomson Reuters
Eikon
Value as on
May 08
, 2020
• Yields on gilt securities fell across
maturities in the range of 7 bps to 24 bps
barring 2-, 5- and 30-year papers that rose
by 1 bps, 36 bps and 17 bps, respectively.
• Corporate bond yields fell across
maturities in the range of 4 bps to 19 bps
barring 1-, 2- and 15-year papers that rose
in the range of 5 bps to 15 bps.
• Spread between AAA corporate bond and
gilt expanded across by up to 22 bps
barring 5- and 10-year papers that
contracted by 40 bps and 1 bps,
respectively.
Domestic Debt Market (Spread Analysis)
-30
0
30
60
0.00
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 08-May-20 30-Apr-20
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
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8
• International exchange arms of NSE and BSE, NSE IFSC and India INX, respectively,
introduced rupee derivatives that is expected to bring capital in the country and augment
investment options for their customers. With this overseas participation will also improve
due to extended trading hours and USD settlement at the IFSC. The exchanges are situated
in GIFT (Gujarat International Finance Tech) City and are permitted to offer trading in
securities in any currency other than the Indian rupee.
• The Central Board of Direct taxes (CBDT) has amended a rule for settling tax disputes
expeditiously under mutual agreement procedure (MAP). MAP is a dispute resolution
process under tax treaties. Subsequently, CBDT has also revised form 34F which is used for
making application for invoking MAP.
• According to media reports, the central government is planning to merge Coal Mines
Provident Fund Organisation (CMPFO) with the Employees’ Provident Fund Organisation
(EPFO). The move comes on growing possibility of a large asset-liability mismatch in the
CMPFO’s pension fund.
• According to the Minister for MSME and Road Transport and Highways, the government is
considering introducing a policy on import substitution. The minster also urged India Inc. to
upgrade itself through adoption of technology and come up with cost-effective substitutes
to reduce the country's dependency on imports.
Regulatory Updates in India
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9
• According to media reports, the ministry of commerce has suggested to continue with the
anti-dumping duty on a Chinese chemical that is used in food and pharma industry. The
objective of the move is to protect domestic players from cheap imports.
• According to the ministry of finance, the government has provided financial assistance to
the tune of Rs. 34,800 crore to about 39 crore beneficiaries under the Pradhan Mantri
Garib Kalyan Package (PMGKP) using the digital payment infrastructure. The assistance
was provided to protect the vulnerable sections of the society from the COVID-19
pandemic.
• As per media reports, the government will announce guidelines to regulate the Rs. 1,500
crore bio-stimulant market providing farmers with higher yields, efficiency and other
benefits from the use of different compounds and micro-organisms. These products are
not regulated and sold without certification of their effectiveness unlike fertilizers and
pesticides. Thus, the government will set up a regulatory body for such products.
Regulatory Updates in India (contd..)
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• According to the Labor Department, U.S. non-farm payroll employment plunged by 20.5
million jobs in Apr 2020 after falling by a revised 870,000 jobs (loss of 701,000 jobs
originally reported) in Mar 2020. The numbers reflect the effects of the coronavirus
pandemic and efforts to contain it. Unemployment rate surged to touch post-World War II
record high and stood at 14.7% in Apr 2020 higher than 4.4% in Mar 2020.
• According to a report released by the Institute for Supply Management (ISM) purchasing
managers index (PMI) fell to 41.5 in Apr 2020 from 49.1 in Mar 2020. The index fell to its
lowest level since April 2009. New orders slumped to 27.1 in Apr 2020 from 42.2 in Mar
2020 and the production index plunged to 27.5 from 47.7.
• The Bank of England maintained its Bank Rate at 0.1%, which is at a record low and
refrained from unveiling additional quantitative easing, but Governor kept the door open
for further easing. The bank had altogether lowered the rate by 65 bps at two
unscheduled meetings in Mar 2020 to combat risks posed by coronavirus to the economy.
• Data from the General Administration of Customs showed, China's exports (dollar terms)
surprisingly grew 3.5% YoY in Apr 2020 better than market forecast despite the global
outbreak of coronavirus. In Mar 2020, exports declined 6.6%. Imports plunged 14.2% YoY,
worse than 0.9% fall in Mar 2020. Trade balance showed a surplus of $45.34 billion in Apr
2020 much better than $19.9 billion in Mar 2020.
10
Global News/Economy
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11
Global Indices
Indices
08-May-20
1-Week
Return
YTD
Return
Russell 3000
1,420.33 5.19% -0.40%
Nasdaq 100
9,220.35 5.76% 5.58%
FTSE 100*
5,935.98 3.00% -21.30%
DAX Index
10,904.48 0.39% -17.70%
Nikkei Average
20,179.09 2.85% -14.70%
Straits Times
2,591.88 -1.23% -19.58%
Source: Thomson Reuters Eikon
Value as on
May 08, 2020; * as on
May 07, 2020
U.S.
• U.S. markets remained positive with
New York Governor commenting that
the daily count of hospitalizations and
new deaths from COVID-19 are
declining.
• However, he added that officials are not
seeing as steep of a decline as they
hoped. Investors remained optimistic
that the U.S. economy can at least
partially reopen soon.
Europe
• European markets largely remained weak amid rising U.S.-China tensions around the
source of the coronavirus outbreak. Meanwhile, private survey showed that euro zone’s
manufacturing sector contracted in Apr with COVID-19 related measures weighed on
demand and production.
Asia
• Asian markets witnessed mixed trend during the week. Positive cues generated by
optimism over easing of COVID-19 lockdown restrictions in several countries across the
world, coupled with upbeat Chinese trade data for Apr was overshadowed to some extent
by recent tension between U.S. and China over the origin of coronavirus.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury went
up for the second consecutive week and
rose 4 bps to close at 0.68% compared
to the previous week’s close of 0.64%.
• U.S. Treasury prices fell initially during
the week under review after the U.S.
Treasury Department announced it
would borrow a record amount of
almost $3 trillion this quarter and
sharply increased the size of its long-
dated debt auctions to help finance its
rapidly expanding deficit.
• However, the trend reversed
temporarily as U.S. Treasury prices rose
after a section of market participants
priced in the possibility of negative
rates in Dec 2020.
• U.S. Treasury prices continued to fell
towards the end of the week after U.S.
nonfarm payroll data for Apr 2020 came
better than market expectations.
Global Debt (U.S.)
0.55
0.65
0.75
4-May 5-May 6-May 7-May 8-May
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
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13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)^
21.96 14.85
Gold ($/Oz)
1,700.65 1,699.12
Gold (Rs/10 gm)
40,989 40,989
Silver ($/Oz)
15.45 14.94
Silver (Rs/Kg)
36,871 36,871
Source: Thomson Reuters Eikon *
Value as on May 08
, 2020; ^ as on May 07, 2020
Gold
• Gold prices rose after labour
productivity in U.S. slumped 2.5% in the
first quarter of 2020. Concerns over a
global economic downturned also
boosted the safe haven appeal of the
bullion.
Brent Crude
• Brent Crude surged after data from the
Energy Information Administration
showed that oil production in U.S.
declined by 200,000 barrels per day in
the week to May 1. Gains were extended
after Saudi Arabia raised its official oil
selling prices.
Baltic Dry Index
• Baltic Dry Index fell to weak capesize
and panamax activities.
Commodities Market
0.00
5.00
10.00
15.00
8-Apr-20 23-Apr-20 8-May-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
3.41%
47.88%
0.09%
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
75.44 75.12
Pound Sterling
93.50 93.59
EURO
81.80 81.62
100 Yen
70.93 70.48
Source: RBI Figures in INR , *
Value as on May 08
, 2020
Rupee
• The rupee weakened against the
greenback following losses in the
domestic equity market.
Euro
• Euro weakened against greenback amid
uncertainty over the European Central
Bank’s bond purchase program following
a directive by a constitutional court in
Germany.
Pound
• Pound weakened against the greenback
after U.K. construction activity
plummeted to all-time low in Apr 2020.
Yen
• Yen rose against greenback as its safe
haven appeal improved after a slew of
dismal global macroeconomic data
fueled concerns over impact of COVID-
19 pandemic on the global economy.
Currencies Markets
9.50
9.75
10.00
10.25
10.50
8-Apr-20 18-Apr-20 28-Apr-20 8-May-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
0.22%
-0.10%
0.43%
0.64%
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15
The Week that was…
04
th
May to 08
th
May
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16
The Week that was (May 04– May 08)
Date Events
Present
Value
Previous
Value
Monday,
May 04, 2020
• U.S. Factory Orders MM Mar 2020
-10.3% -10.0%
• Euro Zone Sentix Index May 2020
-41.8 -42.9
• India IHS Markit Manufacturing PMI Apr 2020
27.4 51.8
• Germany Markit/BME Manufacturing PMI Apr 2020
34.5 45.4
• Euro Zone Markit Manufacturing Final PMI Apr 2020
33.4 44.5
Tuesday,
May 05, 2020
• U.K. Composite PMI Apr 2020
13.8 36.0
• U.S. Markit Services PMI Final Apr 2020
26.7 27.0
• Euro Zone Producer Prices YY Mar 2020
-2.8% -1.4%
Wednesday,
May 06, 2020
• India IHS Markit Services PMI Apr 2020
5.4 49.3
• Euro Zone Markit Comp Final PMI Apr 2020
13.6 13.5
• Germany Industrial Orders MM Mar 2020
-16.0% 1.9%
• U.S. ADP National Employment Apr 2020
-20236K -149 K
Thursday,
May 07, 2020
• Germany Industrial Output MM Mar 2020
-11.6% -1.8%
• Bank of England Monetary Policy Review
0.0% 0.0%
Friday,
May 08, 2020
• U.S. Non
-Farm Payrolls Apr 2020 -20500 K -870 K
• U.S. Average Earnings YY Apr 2020
7.9% 3.3%
• U.S. Wholesale Inventories MoM Mar 2020
-0.8% -0.6%
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17
The Week Ahead
11
th
May to 15
th
May
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18
Day Event
Monday,
May 11, 2020
•
China New Loans (Apr)
•
India Trade Deficit (Apr)
Tuesday,
May 12, 2020
•
India Industrial Output (YoY) (Mar)
•
India Consumer Price Index (YoY) (Apr 2020)
•
U.S. Consumer Price Index (YoY) (Apr)
•
U.K. Gross Domestic Product (YoY) (Q1) P
•
China Consumer Price Index (YoY) (Apr)
Wednesday,
May 13, 2020
•
U.S. Producer Price Index (YoY) (Apr)
•
Eurozone Industrial Production (YoY) (Mar)
Thursday,
May 14, 2020
•
India Wholesale Price Index Inflation (YoY) (Apr)
•
U.S. Initial Jobless Claims (May 8)
Friday,
May 15, 2020
•
U.S. Retail Sales (MoM) (Apr)
•
U.S. Michigan Consumer Sentiment Index (May) P
•
U.S. Industrial Production (MoM) (Apr)
•
Eurozone Gross Domestic Product (YoY) (Q1) P
•
Eurozone Employment Change (YoY) (Q1) P
•
China Industrial Production (YoY) (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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