Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
NEWS U CAN USE
October 9, 2020
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
The Week that was…
05
th
Oct to 9
th
Oct
2
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Indian Economy
India Services Business Activity Index (the seasonally adjusted) improved from 41.8 in Aug
2020 to 49.8 in Sep 2020. Activity rose for the fifth consecutive month led by the
reopening of business units and loosening of lockdown rules. However, the contraction
continued to affect the businesses. Companies were optimistic about the year-ahead
outlook for business activity for the first time since Apr 2020.
The Monetary Policy Committee (MPC) in its monetary policy review kept key policy repo
rate unchanged at 4.0%. The reverse repo rate thus remained unchanged at 3.35% and the
marginal standing facility rate and the bank rate also stood unchanged at 4.25%. The MPC
also decided to continue with its accommodative stance as long as necessary ( at least
during the current financial year and into the next financial year )to revive growth of the
Indian economy on a durable basis and mitigate the impact of COVID-19 pandemic on the
economy, while ensuring that inflation remains within the target going forward.
MPC noted that the retail inflation has been above the upper tolerance level of 6% for the
past few months. However, MPC is of the view that the underlying factors which has
contributed to high inflation are essentially supply shocks which are expected to ease over
the next few months as the domestic economy unlocks gradually and economic activity
returns to normalcy. Thus, the MPC decided to keep key policy repo rate unchanged for
the time being and await the easing of domestic inflationary pressures in the coming
months.
3
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
4
Domestic Equity Market Indices
Indices
09-Oct-20
1 Week Return
YTD Return
S&P BSE Sensex
40,509.49 4.68% -1.80%
Nifty 50
11,914.20 4.36% -2.09%
S&P BSE Mid
-Cap
14,765.55 -0.32% -1.35%
S&P BSE Small
-Cap
14,966.21 -0.03% 9.25%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
05-Oct-20 1,041 862 1.21
06-Oct-20 1,106 783 1.41
07-Oct-20 723 1,182 0.61
08-Oct-20 828 1,061 0.78
09-Oct-20 865 1,014 0.85
Source: NSE
Indian equity settled for the week in the
green led by a host of domestic and
global cues. Investor sentiments were
buoyed by news of health improvement
of the U.S. President, which eased some
of the political uncertainty caused by his
coronavirus infection. Investors also took
positive cues from private survey results
showing improvement in the domestic
service sector.
Buying interest found underlying support
after national recovery rate from COVID-
19 has jumped past 85% with the
continuous streak of high number of
recovered cases being reported in the
past few weeks.
On the last trading session of the week,
investors cheered a slew of liquidity
measures announced by RBI in its latest
policy meeting to support the economy.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
29.77 34.71 503.59 -283.86
P/B
3.04 3.37 2.32 2.12
Dividend Yield
0.96 1.33 1.18 1.09
Source: BSE, NSE Va
lue as on Oct 09, 2020
Indian Equity Market
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
18,437.54 2.37% 3.20%
S&P BSE Bankex
26,964.37 6.73% 6.69%
S&P BSE CD
24,554.13 1.35% 6.02%
S&P BSE CG
13,804.18 -0.34% 1.15%
S&P BSE FMCG
11,083.21 -0.24% -2.04%
S&P BSE HC
20,301.40 2.09% 8.44%
S&P BSE IT
22,007.73 9.17% 19.88%
S&P BSE Metal
8,225.25 -1.68% -6.29%
S&P BSE Oil & Gas
12,172.75 -0.69% -4.97%
S&P BSE Power
1,629.16 -2.05% -2.75%
S&P BSE Teck
10,037.81 7.67% 13.70%
Refinitiv *Value as on Oct 9, 2020
On the BSE sectoral front, majority of the
sectors closed in the green. S&P BSE IT was the
top gainer, up 9.17%, followed by S&P BSE
Teck and S&P BSE Bankex, which rose 7.67%
and 6.73%, respectively.
Meanwhile, S&P BSE Power was the major
loser, down 2.05%, followed by S&P BSE Metal
and S&P BSE Oil & Gas which slipped 1.68%
and 0.69%, respectively.
Indian Derivatives Market Review
Nifty Oct 2020 Futures stood at 11,929.80, a premium of 15.60 points above the spot
closing of 11,914.20. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 117.04 lakh crore as against Rs. 97.12 lakh crore for the week to Oct 1.
The Put-Call ratio stood at 0.82 compared with the previous session’s close of 0.83.
The Nifty Put-Call ratio stood at 1.60 compared with the previous session’s close of 1.57.
Indian Equity Market (contd.)
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
6
Debt Indicators
(%)
Current
Value
1-
Wk
Ago
1-
Mth
Ago
6-
Mth
Ago
Call Rate
3.39 3.44 3.43 4.34
91 Day T
-Bill
3.29 3.26 3.26 4.25
05.22% 2025, (5
Yr GOI)
5.24 5.30 5.44
05.79% 2030, (10
YrGOI)
5.90 6.00 5.95
Source:
Refinitiv Value as on Oct 09, 2020
Bond yields fell after the Reserve Bank
of India (RBI) announced open market
bond purchases for an aggregate
amount of Rs. 20,000 crores on Oct 15,
2020. Further, RBI has extended banks’
higher held-to-maturity (HTM) limit of
22% by one year until Mar. 31, 2022.
Securities held under HTM are free from
marked-to-market risks.
Yield on the 10-year benchmark paper
(5.77% GS 2030) fell 6 bps to close at
5.94% compared to the previous week’s
close of 6.00% after moving in a range
of 5.92% to 6.04%.
The RBI has announced to conduct
purchases of 6.97% GS 2026, 7.17% GS
2028, 5.79% GS 2030 and 7.57% GS
2033 under Open Market Operations
(OMOs) for an aggregate amount of Rs.
20,000 crores on Oct 15, 2020.
Domestic Debt Market
5.85
5.95
6.05
5-Oct 6-Oct 7-Oct 8-Oct 9-Oct
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
7
Maturity
G-
Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.60 5.48 187
3 Year 4.82 5.60 78
5 Year 5.27 6.68 141
10 Year 6.03 7.16 113
Source:
Refinitiv
Value as on
Oct 09, 2020
Yields on gilt securities fell across the
maturities in the range of 3 bps to 15 bps
barring 1-year paper which closed steady.
Corporate bond yields fell across 1 to 5-year
maturities in the range of 3 bps to 25 bps,
closed steady on 6-year paper and increased
across 7 to 15-year maturities in the range of
2 bps to 34 bps.
Difference in spread between AAA corporate
bond and gilt contracted across 1 to 3-year
paper in the range of 4 bps to 16 bps and
expanded across the remaining maturities in
the range of 5 bps to 37 bps.
Domestic Debt Market (Spread Analysis)
-14
-4
6
3.00
5.00
7.00
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 09-Oct-20 01-Oct-20
Yield
in %
Change
in bps
Source: Thomson Reuters Eikon
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
8
The Reserve Bank of India (RBI) has decided to conduct on tap TLTRO with tenors of up to
three years for a total amount of up to Rs. 1 lakh crore at a floating rate which will be linked
to the key policy repo rate. The scheme will be reviewed and if required the total amount
may be enhanced later. The scheme will be available till Mar 31, 2021. Liquidity availed by
the banks under the scheme need to be invested in corporate bonds, commercial papers,
and non-convertible debentures (that are issued by entities operating in specific sectors)
over and above the outstanding level of their investments in such instruments as on Sep 30,
2020. The liquidity can also be used for giving loans and advances to these sectors.
Investment made by banks under this facility will be classified as held to maturity (HTM)
even in excess of 25% of total investment permitted to be included in the HTM portfolio
and the same will also be exempted from being considered under the large exposure
framework (LEF). The objective of the move is to ensure that liquidity in the system remains
comfortable and enable banks to carry out their operations smoothly.
RBI extended the statutory liquidity ratio (SLR) holdings under the HTM category to Mar
2022 which earlier in Sep 2020 it extended to Mar 2021. RBI earlier on Sep 1, 2020 increased
the limits under HTM category from 19.5% to 22% of NDTL to foster favourable financing
costs and stability in market conditions. The HTM limits would be restored in a phased
manner from Jun 30, 2022. The objective of the move is to help banks plan their
investments in SLR securities in a phased manner.
Regulatory Updates in India
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
9
RBI has decided to conduct open market operations (OMOs) in state development loans as
a special case during the current fiscal. The objective of the move is to improve liquidity
and foster efficient pricing.
RBI in order to make the system more congenial to exporters has decided to do away with
the Export Data Processing and Monitoring System (EDPMS) under which exporters were
caution-listed automatically, if any shipping bill remained outstanding against them for
more than 2 years. Instead RBI will continue with the caution-listing on the basis of case
specific recommendations made by the authorised dealer bank.
RBI after taking into account the importance of the real estate sector towards the
recovery of the Indian economy and its role in employment generation decided to
rationalise the risk weights by linking them only with loan-to-value ratio (LTV) ratios for all
new housing loans sanctioned up to Mar 31, 2022. Earlier the risk weights used to be
linked with both the loan size as well as the loan to value ratio (LTV). The move will make
more credit available for the borrowers which is expected to give a fillip to the real estate
sector moving forward.
RBI expanded the scope of the ‘co-origination model' as it decided to extend the scheme
to all Non-Banking Financial Companies (NBFCs). This implies that moving ahead housing
finance companies (HFCs) can also collaborate with banks and undertake priority sector
lending. The objective of the move is to improve the flow of credit to the unserved and
underserved sector of the economy.
Regulatory Updates in India (contd..)
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
The World Trade Organization (WTO) warned of downside risks from the resurgence of
COVID-19 pandemic over the coming months. According to WTO, the volume of world
merchandise trade is set to decline 9.2% this year which is much less than the earlier
estimation of a 12.9% slump. The merchandise trade volume is expected to grow 7.2%
next year which will be well below the pre-crisis level.
Data from the Institute for Supply Management showed that activity in the U.S. service
sector unexpectedly grew at a faster rate in Sep 2020. The services PMI rose inched up to
57.8 in Sep 2020 from 56.9 in Aug 2020.
Data from Destatis showed that Germany's industrial output declined unexpectedly in Aug
2020. Industrial production fell 0.2% on a monthly basis in Aug 2020 following a 1.4% rise
in Jul 2020. On a yearly basis, industrial production fell 9.6% in Aug 2020 following a 10%
drop in Jul 2020.
Final data from IHS Markit showed that the U.K. services sector witnessed strong growth in
Sep 2020. The IHS Markit/Chartered Institute of Procurement & Supply services Purchasing
Managers' Index came in at 56.1 as compared to 58.8 a month ago.
Survey data from IHS Markit showed, China's Caixin composite services Purchasing
Managers' Index (PMI) improved to 54.8 in Sep 2020 from 54.0 in Aug 2020. Index rose for
the fifth consecutive month. Expansion was supported by a sustained rise in total new
business.
10
Global News/Economy
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
11
Global Indices
Indices
09-Oct-20
1-Week
Return
YTD
Return
Russell 3000
1,803.19 4.37% 26.45%
Nasdaq 100
11,725.85 4.18% 34.27%
FTSE 100
6,016.65 1.94% -20.23%
DAX Index
13,051.23 2.85% -1.49%
Nikkei Average
23,619.69 2.56% -0.16%
Straits Times
2,532.96 1.48% -21.41%
Source:
Refinitiv
Value as on Oct 09, 2020
U.S.
U.S. markets traded higher as concern
over the fate of the coronavirus stimulus
bill, triggered by U.S. President’s decision
to halt the discussion with Democrats
until after the Presidential election was
eased subsequently amid optimism
following President’s comments on small
aid package. Improvement in the health
of the U.S. President after tested positive
for COVID-19 eased uncertainty over
upcoming Presidential election.
Europe
European markets went up as a series of encouraging economic data from the region
including upbeat German factory order data for Aug buoyed market sentiments.
Optimism about a partial fiscal stimulus in the U.S. too generated positive vibes.
Asia
Asian markets settled for the week in the green amid renewed optimism about small aid
packages after U.S. President said that he would support relief measures for airlines and
small businesses. Return of U.S. President to White House helped reduce uncertainties
surrounding the 2020 Presidential election.
Global Equity Markets
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
12
Yields on the 10-year U.S. Treasury rose
9 bps to close at 0.78% compared with
the previous week’s close of 0.69%.
U.S. Treasury prices fell initially as hopes
increased that a stimulus package could
be completed before the presidential
election in Nov 2020 to tackle the
economic damage caused by the
pandemic.
Treasury prices rose further following
higher-than-expected U.S services
sector data for Sep 2020.
However, the losses were restricted
later after the U.S. President called off
negotiations with Democratic
lawmakers on a coronavirus relief
stimulus package until Nov 2020
elections.
Global Debt (U.S.)
0.71
0.76
0.81
5-Oct 6-Oct 7-Oct 8-Oct 9-Oct
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
13
Performance of various commodities
Commodities
Last Closing*
1-Week Ago
Brent Crude($/Barrel)
41.92 38.49
Gold ($/Oz)
1,929.43 1,898.70
Gold (Rs/10 gm)
50,695 50,249
Silver ($/Oz)
25.12 23.70
Silver (Rs/Kg)
60,813 58,910
Source:
Refinitiv *Value as on Oct 09, 2020
Gold
Gold prices edged higher amid uncertainty
over the upcoming U.S. Presidential
elections. Prospects of high inflation and
weak dollar due to additional stimulus
measures also boosted the prices of the
yellow metal.
Brent Crude
Brent crude prices rose as oil workers
evacuated rigs in the U.S. Gulf of Mexico
ahead of Hurricane Delta, raising supply
concerns. Oil prices found additional
support from news of the discharge of U.S.
President from the hospital where he was
treated for COVID-19.
Baltic Dry Index
The index fell due to sluggish capesize and
panamax activities.
Commodities Market
8.00
9.00
10.00
11.00
9-Sep-20 24-Sep-20 9-Oct-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global
Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
5.99%
8.91%
1.62%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
14
Movement of Rupee vs Other Currencies
Currency
Last Closing*
1-Wk Ago
US Dollar
73.21 73.38
Pound Sterling
94.80 94.99
EURO
86.21 86.22
100 Yen
69.11 69.55
Source:
Refinitiv Figures in INR , *Value as on
Oct 09, 2020
Rupee
Rupee gained against the U.S. dollar due to
dollar sales following rise in domestic equity
market but gains were limited on likely
intervention by RBI through buying of
greenbacks by state-run banks.
Euro
Euro rose against the U.S. dollar on optimism
of a deal for new U.S. stimulus would be
reached.
Pound
Pound rose against the U.S. dollar as market
participants turned more optimistic about
Brexit negotiations ahead of a key European
Union leaders summit next week.
Yen
Yen fell against the U.S. dollar as risk appetite
improved on expectations of at least some
new fiscal stimulus before the U.S.
Presidential election on Nov 3.
Currencies Markets
9.75
9.80
9.85
9.90
9.95
10.00
10.05
10.10
10.15
9-Sep-20 24-Sep-20 9-Oct-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency
Prices (
in terms of INR)
Rebased to 10
Currency Movement
-0.02%
-0.24%
-0.63%
-0.20%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
15
The Week that was…
05
th
Oct to 09
th
Oct
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
16
The Week that was (Oct 5 Oct 9)
Date Events
Present
Value
Previous
Value
Monday,
Oct 05, 2020
• Germany Markit PMI Composite (Sep)
54.7 53.7
• U.S. Markit PMI Composite(Sep)
54.3 54.4
• U.S. ISM Services PMI (Sep)
57.8 56.9
• Eurozone Retail Sales (YoY)(Aug)
3.70% -0.10%
• Eurozone Markit PMI Composite(Sep)
50.4 50.1
Tuesday,
Oct 06, 2020
• India Markit Services PMI (Sep)
49.8 41.8
• Germany Factory Orders (MoM)(Aug)
4.50% 3.30%
• U.S. Trade Balance (USD) (Aug)
-67.1B -63.4B
Wednesday,
Oct 07, 2020
• Japan Leading Economic Index (Aug) PREL
88.8 86.7
• Germany Industrial Production (MoM) (Aug)
-0.20% 1.40%
• Japan Current Account (Yen) (Aug)
2102.8B 1468.3B
Thursday,
Oct 08, 2020
• Germany Trade Balance (Euro) (Aug)
15.7B 18B
• Japan Overall Household Spending (YoY) (Aug)
-6.90% -7.60%
Friday,
Oct 09, 2020
• China Caixin Services PMI (Sep)
54.8 54
• U.K. Industrial Production (MoM) (Aug)
0.30% 5.20%
• U.K. Gross Domestic Product (MoM)(Aug)
2.10% 6.60%
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
17
The Week Ahead
12
th
Oct to 16
th
Oct
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
18
Day Event
Monday,
Oct 12, 2020
India Index of Industrial Production (Aug)
India Consumer Price Inflation (Sep)
China M2 Money Supply (YoY) (Sep)
Tuesday,
Oct 13, 2020
India Wholesale Price Inflation (Sep)
U.K. ILO Unemployment Rate (3M) (Aug)
Germany Harmonized Index of Consumer Prices (YoY) (Sep)
U.S. Consumer Price Index (YoY) (Sep)
Eurozone ZEW Survey Economic Sentiment (Oct)
Wednesday,
Oct 14, 2020
Japan Industrial Production (YoY) (Aug)
Eurozone Industrial Production (MoM) (Aug)
U.S. MBA Mortgage Applications (Oct 9)
Thursday,
Oct 15, 2020
China Consumer Price Index (YoY) (Sep)
Japan Tertiary Industry Index (MoM) (Aug)
U.S. Import Price Index (YoY) (Sep)
Friday,
Oct 16, 2020
U.S. Retail Sales (MoM) (Sep)
U.S. Michigan Consumer Sentiment Index (Oct) PREL
U.S. Industrial Production (MoM) (Sep)
Eurozone Consumer Price Index (MoM) (Sep)
The Week Ahead
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
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) 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 such data or information. The Sponsor(s), the Investment Manager, the
Trustee or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy,
completeness, adequacy and reliability of such data or information. Whilst no action has been solicited based upon the information provided herein,
due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable, to the extent possible. This information is
not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should rely
on information/data arising out of their own investigations. Before making any investments, the readers are advised to seek independent
professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor(s), the Investment Manager, the
Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental,
consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material.
All information contained in this document has been obtained by ICRA Analytics Limited from sources believed by it to be accurate and reliable.
Although reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of
any kind, and ICRA Analytics Limited or its affiliates or group companies and its respective directors, officers, or employees in particular, makes no
representation or warranty, express or implied, as to the accuracy, suitability, reliability, timelines or completeness of any such information. All
information contained herein must be construed solely as statements of opinion, and ICRA Analytics Limited, or its affiliates or group companies and
its respective directors, officers, or employees shall not be liable for any losses or injury, liability or damage of any kind incurred from and arising out
of any use of this document or its contents in any manner, whatsoever. Opinions expressed in this document are not the opinions of our holding
company, ICRA Limited (ICRA), and should not be construed as any indication of credit rating or grading of ICRA for any instruments that have been
issued or are to be issued by any entity.
19
Disclaimer
Thank you for
your time.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Thank you for
your time.