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NEWS U CAN USE
November 6, 2020
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The Week that was…
2
nd
Nov to 6
th
Nov
2
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Indian Economy
Data from a private survey showed that the headline seasonally adjusted IHS Markit India
Manufacturing Purchasing Managers’ Index (PMI) rose from 56.8 in Sep 2020 to 58.9 in Oct
2020. The growth was led by the intermediate goods category, but significant expansions
was also witnessed in the consumer and investment goods sub-sectors.
Data from a private survey showed that the seasonally adjusted India Services Business
Activity Index rose from 49.8 in Sep 2020 to 54.1 in Oct 2020. The rise can be attributed to
improved market conditions and relaxation of restrictions on COVID-19 induced
lockdowns. The Composite PMI Output Index also rose from 54.6 in Sep 2020 to 58.0 in
Oct 2020, indicating the strongest increase in private sector output in close to nine years.
Data from capital market regulator Securities and Exchange Board of India (SEBI) showed
that companies raised Rs. 4.42 lakh crore through issuance of bonds on private placement
basis for the first seven months for the period from Apr to Oct of 2020. This corresponds
to an increase of 28% compared to the same period of the previous year when companies
raised Rs. 3.45 lakh crore.
Preliminary data from the government showed that India’s merchandise exports fell 5.4%
on a yearly basis to $ 24.82 billion in Oct 2020 from $ 26.23 billion in the same period of
the previous year. India’s merchandise imports fell 11.56% on a yearly basis to $ 33.60
billion in Oct 2020 from $ 37.99 billion in the same period of the previous year. India thus
remained a net importer with the trade deficit narrowing by 25.34% to $ 8.78 billion in Oct
2020 from $ 11.76 billion in the same period of the previous year.
3
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4
Domestic Equity Market Indices
Indices 06-Nov-20 1 Week Return YTD Return
S&P BSE Sensex
41,893.06 5.75% 1.55%
Nifty 50
12,263.55 5.34% 0.78%
S&P BSE Mid-Cap
15,404.76 3.36% 2.92%
S&P BSE Small-Cap
15,218.01 2.22% 11.09%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
02-Nov-20 699 1,153 0.61
03-Nov-20 988 864 1.14
04-Nov-20 966 872 1.11
05-Nov-20 1,340 531 2.52
06-Nov-20 1,132 719 1.57
Source: NSE
Indian equity markets ended the first
week of Nov in the green with investors
tracking the close contest in the U.S.
Presidential election. The tough
contest for U.S. Presidency and a
Republican majority in U.S. Senate has
reduced the chances of critical
decisions like higher tax incidence in
the U.S. Additionally, hopes of more
stimulus in India around Diwali have
boosted the risk appetite of market
participants.
Investors also took positive cues after
the Indian manufacturing sector PMI
rose to the highest level in more than a
decade in Oct 2020. Better than
expected Q2FY21 results by major
banking stocks and encouraging
Chinese data helped offset concerns
arising from new lockdowns in Europe.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
29.26 33.09 58.01 -1589.28
P/B
2.84 3.47 2.39 2.09
Dividend Yield
0.96 1.29 1.16 1.09
Source: BSE, NSE Va
lue as on Nov 6, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
18,066.2 3.13% -0.76%
S&P BSE Bankex
30,744.2 12.25% 18.47%
S&P BSE CD
25,313.2 5.14% 5.01%
S&P BSE CG
14,807.1 4.52% 7.02%
S&P BSE FMCG
11,152.2 2.10% 0.15%
S&P BSE HC
19,653.3 2.05% -2.77%
S&P BSE IT
21,707.5 3.08% 2.90%
S&P BSE Metal
8,714.6 6.18% 2.41%
S&P BSE Oil & Gas
12,347.8 1.83% 1.02%
Source:
Refinitiv *Value as on Nov 6, 2020
On the BSE sectoral front, barring S&P BSE
Realty, all the major indices closed in the
green. S&P BSE Bankex was the top gainer, up
12.25%, followed by S&P BSE Metal and S&P
BSE Consumer Durables, which went up 6.18%
and 5.14%, respectively. Banking sector rose
on the back of robust earning numbers
reported by some of the major lenders.
Indian Derivatives Market Review
Nifty Nov 2020 Futures stood at 12,261.45, a discount of 2.10 points below the spot closing
of 12,263.55. The total turnover on NSE’s Futures and Options segment for the week stood
at Rs. 114.94 lakh crore as against Rs. 135.82 lakh crore for the week to Oct 30.
The Put-Call ratio stood at 0.88 compared with the previous session’s close of 0.99.
The Nifty Put-Call ratio stood at 1.77 compared with the previous session’s close of 1.46.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.20 3.25 3.43 3.88
91 Day T-Bill
3.16 3.23 3.32 3.55
05.22% 2025, (5 Yr GOI)
5.11 5.17 5.29 4.96
05.77% 2030, (10 Yr GOI)
5.87 5.88 6.03 --
Source: Refinitiv Value as on Nov 6, 2020
Bond yields initially rose as market
participant’s appetite remained tepid,
while the market awaited fresh
positive triggers as well as the
outcome of the U.S. presidential
elections.
However, losses reversed tracking
decline in U.S. Treasury yields.
Moreover, market participants expects
more open market purchases (OMO)
from the Reserve Bank of India (RBI).
Yield on the 10-year benchmark paper
(5.77% GS 2030) eased 1 bps to close
at 5.87% from the previous week’s
close of 5.88%.
According to the RBI’s scheduled
banks’ statement of position in India,
bank credit grew 5.06% while bank
deposits grew 10.13% as on Oct 23,
2020.
Domestic Debt Market
5.84
5.88
5.92
2-Nov 3-Nov 4-Nov 5-Nov 6-Nov
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.46 4.93 147
3 Year 4.60 5.38 78
5 Year 5.20 6.48 128
10 Year 5.96 7.05 109
Source: Refinitiv Value as on
Nov 6, 2020
Yields on gilt securities fell across maturities
by up 8 bps barring 2-, 19- and 30-year papers
that rose by up to 5 bps and 7-year paper that
stood steady.
Corporate bond yields fell across maturities
in the range of 2 bps to 5 bps barring 4- to 6-
and 15-year paper that rose by up to 4 bps.
Difference in spread between AAA corporate
bond and gilt expanded across maturities in
the range of 2 bps to 7 bps barring 7- and 10-
year papers that contracted by up to 2 bps.
Domestic Debt Market (Spread Analysis)
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-1
6
2.00
5.00
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 06-Nov-20 30-Oct-20
Yield in %
Change in bps
Source: Refinitiv
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8
SEBI gave approval to unlisted infrastructure investment trusts to raise funds through right
issues. The objective of the move is to make the process easier for raising funds. The rights
issue will remain open for a period of at least three working days and up to 15 days. The
minimum allotment to any investor shall be Rs. 1 crore. On a separate note, SEBI restored
the normal cut off timings for mutual funds that had been revised during the lockdown due
to the COVID-19 pandemic.
SEBI, in consultation with Mutual Fund Advisory Committee, has introduced a new category
named “Flexi Cap Fund” under equity schemes with a view to give more flexibility to the
mutual fund industry. The flexi cap category is characterized with minimum investment of
65% of the total net assets in equity and equity related instruments. The category shall
consist of open-ended dynamic equity schemes investing across large cap, mid cap, small cap
stocks. For the ease of identification by the investors, the relevant scheme name shall be
same as the scheme category. The AMC shall ensure that a suitable benchmark is adopted
for the Flexi Cap Fund.
According to media reports, SEBI has raised the overseas investment limit of individual
mutual fund house from U.S. $300 million to U.S. $600 million. The overall industry limit for
the industry remained unchanged at U.S. $7 billion. The move comes after asset
management companies sent a representation to SEBI to increase the limits wherever
possible.
Regulatory Updates in India
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9
RBI came out with a Co-Lending Model (CLM) scheme under which banks and non-banking
financial companies (NBFCs) can provide loans to borrowers who are operating under the
priority sector on the basis of a prior agreement. However, NBFCs need to retain a
minimum of 20% of the individual loans on their books. The objective of the move is to
improve the flow of credit to the unserved and underserved sector of the economy.
According to media reports, the RBI urged the Supreme Court to lift its interim order
under which it stated that accounts which were not declared as non-performing assets
(NPAs) till Aug 31, 2020 are not to be declared NPAs till further orders. RBI added that it is
facing difficulty in its operations due to the directive.
The government simplified the Other Service Provider (OSP) guidelines in order to
improve the ease of doing business within the country for those operating under Business
Process Outsourcing (BPO) and IT Enabled Services sector. The new guidelines are
expected to reduce the burden of compliance of the BPO industry. Several other
requirements which prevented companies from adopting ‘Work from Home and ‘Work
from Anywhere’ policies have also been removed. In addition, dispensations which will
bring about flexibility in operation have been allowed.
Regulatory Updates in India (contd..)
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Data from the U.S. Labour Department showed that non-farm payroll employment in U.S.
jumped by 638,000 jobs in Oct 2020 after surging up by a revised 672,000 jobs in Sep 2020
(661,000 jobs originally reported for the previous month). The unemployment rate
dropped to 6.9% in Oct 2020 from 7.9% in Sep 2020.
As widely expected, the U.S Federal Reserve (Fed) in its monetary policy review kept the
target range for the federal funds rate at 0 to 0.25%. The Fed expects the rates to remain
unchanged until labor market conditions have reached levels consistent with the Central
Bank 's assessment of full jobs and inflation have risen to 2% and are on track to slightly
exceed 2% for some time. The Fed also announced that it expects to increase its holdings
of treasury securities and mortgage-backed securities, at least at the current rate, in order
to preserve the smooth functioning of the market and to help foster accommodative
financial conditions.
According to payroll processor ADP, U.S. private sector employment increased by 365,000
jobs in Oct 2020, slower than upwardly revised rise of 753,000 jobs (surge of 749,000 jobs
originally reported) in Sep 2020.
Survey results from IHS Markit showed, China’s Caixin manufacturing Purchasing Managers'
Index (PMI) rose to 53.6 in Oct 2020 from 53.0 in Sep 2020. The index reached the highest
reading since Jan 2011 on robust output and new work.
10
Global News/Economy
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11
Global Indices
Indices
6-Nov-20
1-Week
Return
YTD
Return
Russell 3000 1,842.41 9.36% 29.20%
Nasdaq 100 12,091.35 9.39% 38.45%
FTSE 100 5,910.02 5.97% -21.64%
DAX Index 12,480.02 7.99% -5.80%
Nikkei Average 24,325.23 5.87% 2.83%
Straits Times 2,578.68 6.39% -19.99%
Source: Refinitiv Value as on Nov 6, 2020
U.S.
U.S. markets traded higher as market
participants reacted to the results of
the U.S. elections, which is yet to reach a
definitive conclusion. The Democratic
candidate is currently in the lead in the
race for the presidency. Acceleration in
ISM based U.S. manufacturing activity in
Oct 2020, also pushed up the markets.
Europe
European markets rose on robust manufacturing data from euro zone, the U.S. and China.
Anticipation of a clear outcome in the U.S. presidential election and optimism about a
massive U.S. fiscal stimulus measures contributed to the upside.
Asia
Asian markets rose as upbeat manufacturing activity data from the U.S, Europe and China
eased concerns over COVID-19. Investors also took positive cues from reports of U.S.
Democrat candidate inching closer to the count of 270 electoral votes needed to win the
presidential election.
Global Equity Markets
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12
Yields on the 10-year U.S. Treasury fell 4
bps to close at 0.82% compared to the
previous week’s close of 0.86%.
U.S. Treasury prices rose initially amid
uncertainty regarding the outcome of
the U.S. Presidential election results.
Gains were extended as U.S. Treasury
prices rose further on growing
possibility that the outcome of the U.S.
Presidential elections may lead to a
divided government which increased
the likelihood for a smaller stimulus plan
even though it eased concerns of major
policy changes.
However, further gains were capped as
the safe-haven appeal of the U.S.
Treasuries came down to some extent
after the U.S. non-farm payroll
employment report for Oct 2020 came
better than market expectations.
Global Debt (U.S.)
0.73
0.82
0.91
2-Nov 3-Nov 4-Nov 5-Nov 6-Nov
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)
37.81 35.76
Gold ($/Oz)
1,951.51 1,877.95
Gold (Rs/10 gm)
52,192 50,645
Silver ($/Oz)
25.59 23.63
Silver (Rs/Kg)
65,753 60,471
Source: Refinitiv *Value as on Nov 6, 2020
Gold
Gold prices rose as market participants
awaited the outcome of the U.S.
Presidential elections. Persisting
concerns over COVID-19 pandemic
added to the gains.
Brent Crude
Brent crude prices rose after data from
the American Petroleum Institute
showed that crude oil inventories in U.S.
fell by 8 million barrels in the week
ended Oct 30 to about 487 million
barrels. Optimism regarding the
outcome of the U.S. Presidential
elections contributed to the upside.
Baltic Dry Index
The index fell due to sluggish capesize
and panamax activities.
Commodities Market
8.30
9.80
11.30
6-Oct-20 16-Oct-20 26-Oct-20 5-Nov-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
8.31%
5.73%
3.92%
06-Nov-20
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14
Movement of Rupee vs Other Currencies
Currency Last Closing* 1-Wk Ago
US Dollar
74.05 73.97
Pound Sterling
97.20 96.33
EURO
87.52 86.97
100 Yen
71.52 70.87
Source: Refinitiv Figures in INR , *Value as on Nov 6, 2020
Rupee
The rupee weakened against the
greenback as market participants
awaited the outcome of the U.S.
Presidential elections.
Euro
The euro rose against the greenback on
hopes that the outcome of the U.S.
Presidential elections might not result in
major policy changes.
Pound
The pound rose against the greenback
on hopes that the outcome of the U.S.
Presidential elections might not result in
major policy changes.
Yen
The yen rose against the on growing
possibility that the outcome of the U.S.
Presidential elections may lead to a
divided government .
Currencies Markets
9.90
10.00
10.10
10.20
10.30
6-Oct-20 16-Oct-20 26-Oct-20 5-Nov-20
USD GBP Euro JPY
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
Source: Refinitiv
06-Nov-20
0.91%
0.11%
0.92%
0.63%
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15
The Week that was…
2
nd
Nov to 6
th
Nov
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16
The Week that was (Nov 2 Nov 6)
Date Events Present Value Previous Value
Monday,
Nov 02, 2020
• India Markit Manufacturing PMI (Oct) 58.9 56.8
• U.S. Markit Manufacturing PMI Final (Oct) 53.4 53.2
• U.S. ISM Manufacturing PMI (Oct) 59.3 55.4
• Germany Markit Manufacturing PMI Final (Oct) 58.2 56.4
• U.K. Markit/CIPS Manufacturing PMI Final (Oct) 53.7 54.1
• Eurozone Markit Manufacturing PMI Final (Oct) 54.8 53.7
Tuesday,
Nov 03, 2020
• U.S. Factory Orders MoM (Sep) 1.1% 0.6%
Wednesday,
Nov 04, 2020
• China Caixin Composite PMI (Oct) 55.7 54.5
• Germany Markit Composite PMI Final (Oct) 55.0 54.7
• Eurozone Markit Composite PMI Final (Oct) 50.0 50.4
• U.K. Markit/CIPS Composite PMI Final (Oct) 52.1 56.5
• U.S. ADP Employment Change (Oct) 365K 753K
• U.S. ISM Non-Manufacturing PMI (Oct) 56.6 57.8
Thursday,
Nov 05, 2020
• Bank of England Interest Rate Decision 0.1% 0.1%
• U.S. Initial Jobless Claims (31 Oct) 751K 758K
• Eurozone Retail Sales YoY (Sep) 2.2% 4.4%
Friday,
Nov 06, 2020
• U.S. Fed Interest Rate Decision 0.25% 0.25%
• U.S. Non-Farm Payrolls (Oct) 638K 661K
• U.S. Unemployment Rate (Oct) 6.9% 7.9%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
9
th
Nov to 13
th
Nov
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18
Day Event
Monday,
November 9, 2020
Japan Leading Economic Index P (Sep)
Germany Balance of Trade (Sep)
Tuesday,
November 10, 2020
China Inflation Rate YoY (Oct)
U.K. Employment Change (Aug)
Eurozone ZEW Economic Sentiment Index (Nov)
Wednesday,
November 11, 2020
Japan Machine Tool Orders YoY (Oct)
U.S. MBA Mortgage Applications (Nov 06)
Thursday,
November 12, 2020
U.K. GDP Growth Rate YoY P (Q3)
U.K. Industrial Production YoY (Sep)
Eurozone Industrial Production YoY (Sep)
India Industrial Production YoY (Sep)
U.K. Inflation Rate YoY (Oct)
Friday,
November 13, 2020
China New Yuan Loans (Oct)
Eurozone GDP Growth Rate YoY 2nd Est (Q3)
India Balance of Trade Final (Oct)
U.S. Michigan Consumer Sentiment P (Nov)
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
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authenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data and information has been
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19
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