Mutual Fund News of 23 October 2020 – Nippon India Mutual Fund

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October 23, 2020

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The Week that was…

Oct to 23

Oct

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Indian Economy

• As per media reports, the finance minister has asked officials to ensure that, by the end of

Dec 2020, 14 state-owned companies would invest 75% of their capital expenditure for

the year 2020. This is because the government looks to sustain the pace of capital and

infrastructure projects in a bid to soften the economic blow from the pandemic. For the 14

central public sector enterprises (CPSEs) for FY21, the combined capex target is Rs 1.15

trillion. These PSUs invested about Rs 37,423 crore, which was just 32 per cent, before the

first half of the year (H1).

• According to Ministry of Statistics and Programme Implementation (MoSPI), the

unemployment rate in urban areas dropped to 8.4% in Jul-Sep quarter of 2019, compared

to 9.7% in the same period in 2018 and 8.9% in Apr-Jun 2019. The decline in the

unemployment rate was largely the result of an increase in the number of people

employed in the labour force. According to the quarterly Periodic Labour Force Survey

(PLFS), the labor force participation rate in urban areas increased by 0.6% point to 36.8%

in Sep quarter of 2019 as against 36.1% in the year ago period and 36.2% in the Jun

quarter of 2019.

• Labour and Employment Minister introduced a new series of consumer price index for

industrial workers (CPI-IW), which is used by policymakers to set dearness allowance of

employees. The CPI-IW for Sep 2020, under the new series, stood at 118. According to the

Labour Bureau, the linking factor for the conversion of new series to the old one is 2.88.

The CPI base year is being revised from 2001.

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Domestic Equity Market Indices

Indices 23-Oct-20 1 Week Return YTD Return

S&P BSE Sensex

40,685.50 1.76% -1.38%

Nifty 50

11,930.35 1.43% -1.96%

S&P BSE Mid-Cap

14,976.10 2.43% 0.06%

S&P BSE Small-Cap

15,134.59 2.35% 10.48%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines Advance/Decline Ratio

19-Oct-20 1077 798 1.35

20-Oct-20 976 883 1.11

21-Oct-20 936 927 1.01

22-Oct-20 984 869 1.13

23-Oct-20 1234 661 1.87

Source: NSE

• Indian equity markets witnessed

modest gains during the week. Positive

cues were generated from upbeat

quarterly earning number reported by

one of the major private sector lenders.

Investor sentiment was also lifted by

hopes of a U.S. stimulus package before

the Presidential election and

expectations of a COVID-19 vaccine by

year-end. Market participants also

cheered reports of decline in COVID-19

infections in India after a peak in mid-

Sep.

• However, gains were largely erased as

investors booked profits post the

recent rally. Although, the Q2FY21

corporate earnings result are largely

positive, nonetheless a lot is factored

in.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

29.54 34.37 525.44 -920.01

P/B

2.97 3.38 2.34 2.12

Dividend Yield

0.99 1.33 1.18 1.09

Source: BSE, NSE Value as on Oct 23, 2020

Indian Equity Market

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Sectoral Indices

Indices

Last

Closing*

Returns (in %)

1-Wk 1-Mth

S&P BSE Auto

18,265.7 1.44% 5.04%

S&P BSE Bankex

27,785.9 4.14% 15.36%

S&P BSE CD

24,823.7 2.10% 7.03%

S&P BSE CG

14,145.9 3.85% 7.20%

S&P BSE FMCG

11,044.7 0.54% 1.75%

S&P BSE HC

19,637.3 -1.40% 1.33%

S&P BSE IT

21,737.9 -0.46% 8.78%

S&P BSE Metal

8,645.93 5.37% 6.11%

S&P BSE Oil & Gas

12,228.5 2.72% -1.47%

S&P BSE Realty

18,265.7 1.44% 5.04%

S&P BSE Teck

27,785.9 4.14% 15.36%

Source: Refinitiv *Value as on Oct 23, 2020

• On the BSE sectoral front, majority of the

indices closed in the green. S&P BSE Realty

was the top gainer, up 9.34%, followed by S&P

BSE Metal and S&P BSE Power, which rose

5.37% and 4.73%, respectively.

• Realty sector went up, led by one of the major

real estate deals, wherein a Bengaluru based

privately-held realty firm sold 12.5 million sq ft

of commercial assets to a fund managed by an

offshore alternative asset management

company for USD 2 billion. Meanwhile, S&P

BSE Healthcare and S&P BSE IT were the only

losers, down 1.40% and 0.46%, respectively.

Indian Derivatives Market Review

• Nifty Oct 2020 Futures stood at 11,934.35, a premium of 4.00 points above the spot closing

of 11,930.35. The total turnover on NSE’s Futures and Options segment for the week stood

at Rs. 130.62 lakh crore as against Rs. 126.91 lakh crore for the week to Oct 16.

• The Put-Call ratio stood at 0.88 compared with the previous session’s close of 0.87.

• The Nifty Put-Call ratio stood at 1.47 compared with the previous session’s close of 1.31.

Indian Equity Market (contd.)

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Debt Indicators

(%)

Current

Value

1-Wk

Ago

1-Mth

Ago

6-Mth

Ago

Call Rate

3.22 3.36 3.42 4.15

91 Day T-Bill

3.21 3.24 3.38 3.66

05.22% 2025, (5 Yr GOI)

5.21 5.27 5.36 -

05.77% 2030, (10 Yr GOI)

5.84 5.94 5.99 -

Source: Refinitiv Value as on Oct 23, 2020

• Bond yields plunged as the Reserve Bank

of India provided continuous support by

purchasing government securities

through open market operations which

eased concerns over excessive supply of

sovereign debt in the market.

• Yield on the 10-year benchmark paper

(5.77% GS 2030) plummeted 10 bps to

close at 5.84% from the previous week’s

close of 5.94% This was the biggest

weekly fall in bond yields in as many as 7

weeks.

• RBI on Oct 23, 2020 conducted the

auction of four government securities

namely 5.09% GS 2022, 5.22% GS 2025,

5.77% GS 2030, and 6.80% GS 2060 for a

notified amount of Rs. 31,000 crore for

which the full amount was accepted.

Domestic Debt Market

5.83

5.89

5.95

19-Oct 20-Oct 21-Oct 22-Oct 23-Oct

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

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Maturity

G-Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 3.47 5.04 158

3 Year 4.68 5.44 76

5 Year 5.20 6.49 129

10 Year 5.93 6.98 105

Source: Refinitiv

Valueason

Oct 23, 2020

• Yields on gilt securities fell across maturities

in the range of 3 bps to 20 bps barring 2-year

paper that rose by 1 bps.

• Corporate bond yields fell across maturities

in the range of 2 bps to 28 bps.

• Difference in spread between AAA corporate

bond and gilt expanded in 3- to 5-, 10- and 15-

year papers by up to 24 bps while, 1-, 2-, 6-

and 7-year papers contracted by up to 19 bps.

Domestic Debt Market (Spread Analysis)

-18

-9

2.80

5.00

7.20

3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs

India Yield Curve Shift (%) (W-o-W)

Change in bps 23-Oct-20 16-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.

• The Reserve Bank of India (RBI) said that by Mar 31, 2022, payment system operators (PSOs)

that use proprietary QR codes would switch to one or more interoperable QR codes. It also

said that PSOs would, henceforth, not give any new proprietary QR codes for transactions.

At present, there are two interoperable QR codes: UPI QR and Bharat QR. RBI said it will

continue consultations on the standardisation and enhancement of these interoperable QR

codes to allow the Phatak Committee to recognise beneficial features. RBI further said that

it is anticipated that the steps will strengthen the acceptance infrastructure, provide better

user convenience due to interoperability and boost device performance.

• The Securities and Exchange Board of India (Sebi) is awaiting the approval of the Ministry of

Finance and the RBI to allow foreigners to join the Indian private equity and venture capital

funds investment management committee. Sebi reported that they have approached the

government and RBI seeking clarification on the applicability of the investment by

alternative investment funds exchange control framework, whose Investment committee

approves investment decisions and consists of international external members.

• The Securities and Exchange Board of India (Sebi) said that issuers of debt securities listed or

proposed to be listed would have to deposit 0.01% of the size of the issue or a maximum of

Rs. 25 lakh to create a fund for recovery expenses. In order to allow debenture trustees to

take prompt security compliance action in the event of default on the debt securities listed,

a 'Recovery Expense Fund' shall be formed which shall be used in the manner agreed at the

meeting of debt securities holders.

Regulatory Updates in India

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• A system for processing applications for the registration of Alternative Investment Funds

(AIFs) has been developed by Sebi. It has been observed during the processing of

applications and the introduction of new schemes that the manager of the AIF frequently

proposes to set up an investment committee with the mandate to provide the manager

with investment recommendations.

• The Reserve Bank of India (RBI) fixed the minimum Net Owned Fund (NOF) size for

housing finance companies at Rs. 25 crore. The housing finance companies (HFCs) holding

a Certificate of Registration (CoR) and having an NOF of less than Rs. 25 crore will be

required to achieve NOF of Rs. 15 crore by Mar 31, 2022 and Rs. 25 crore by Mar 31, 2023.

The RBI has issued the revised regulatory framework for HFCs.

• The government has simplified the patent rules and allowed patentees to mention

approximate value and revenue accrued instead of providing exact details of quantum and

value of manufacturing and imports into India. The Patent (Amendment) Rules 2020 now

also require the filing of a declaration on the commercial functioning of the patent within

six months rather than three months as previously prescribed.

Regulatory Updates in India (contd..)

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• China's Gross Domestic Product (GDP) grew 4.9% YoY in the Sep quarter of 2020 better

than 3.2% rise in the previous quarter. GDP growth slowed down to 2.7% QoQ, from 11.5%

rise in the previous quarter.

• UK’s consumer price inflation accelerated to 0.5% YoY after touching 5-year low of 0.2% in

Aug 2020. The end of the government's food discount scheme boosted restaurant and

cafe prices. The main upward contributions were made by shipping costs, and restaurant

and cafe rates.

• Survey data from the market research group Gfk showed, German consumer confidence

index dropped to -3.1 in Nov 2020 from -1.7 in Oct 2020. In Oct 2020, all three sub-

components, namely economic and income perceptions and purchasing tendency,

dropped.

• The Bank of Japan kept interest rates on hold in its monetary policy review. The interest

rate was thus retained at -0.1% on current accounts that financial institutions maintain at

the central bank.

• China's central bank kept its benchmark lending rates steady for the sixth consecutive

month. The one-year loan prime rate was maintained at 3.85% and the 5-year loan prime

rate was retained at 4.65%.

• Japan’s consumer prices fell 0.1% (seasonally adjusted) MoM in Sep 2020, compared with

unchanged from the Aug 2020 figure. Prices for furniture, clothing and education were up,

while power, communication and leisure were down.

Global News/Economy

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Global Indices

Indices

23-Oct-20

1-Week

Return

YTD

Return

Russell 3000 1,790.25 -1.20% 25.54%

Nasdaq 100 11,692.57 -1.35% 33.89%

FTSE 100 5,860.28 -1.00% -22.30%

DAX Index 12,645.75 -2.04% -4.55%

Nikkei Average 23,516.59 0.45% -0.59%

Straits Times 2,537.39 0.17% -21.27%

Source: Refinitiv Value as on Oct 23, 2020

U.S.

• U.S. markets traded lower amid

uncertainty about whether U.S.

policymakers will reach an agreement

on a new stimulus bill.

• Markets were further hit after the

International Monetary Fund

downgraded its growth forecast for

Asia-Pacific in 2020 to -2.2%.

Europe

• European markets dipped as market participants reacted to uncertainty over U.S.

coronavirus stimulus, persisting worries about rising coronavirus cases and worries over a

Brexit deal. A slower than expected pace of China's economic growth in the third quarter

too played spoilsport.

Asia

• Asian markets edged higher amid hopes for a new U.S. stimulus package before the U.S.

Presidential election and expectations of a COVID-19 vaccine by year-end.

Global Equity Markets

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• Yields on the 10-year U.S. Treasury rose

10 bps to close at 0.84% compared with

the previous week’s close of 0.74%.

• U.S. Treasury prices fell continuously as

anticipation grew that U.S. lawmakers will

reach a deal to pass new fiscal stimulus in

the near term.

• U.S. House Speaker said it was still

possible before the Nov 3 election to get

another round of COVID-19 help. It was

up to President Donald Trump, however,

to act, including taking along hesitant

Republicans from the Senate.

Global Debt (U.S.)

0.74

0.81

0.88

19-Oct 20-Oct 21-Oct 22-Oct 23-Oct

US 10-Year Treasury Yield Movement

Source: Thomson Reuters Eikon

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Performance of various commodities

Commodities Last Closing* 1-Week Ago

Brent Crude($/Barrel) 40.85 40.84

Gold ($/Oz) 1,900.79 1,898.97

Gold (Rs/10 gm) 51,044 50,796

Silver ($/Oz) 24.58 24.17

Silver (Rs/Kg) 62,578 61,330

Source: Refinitiv *Value as on Oct 23, 2020

Gold

• Gold prices traded higher on optimism over

a new U.S. stimulus agreement before the

U.S. presidential election, which weakened

the greenback. However, such hopes

waned later during the week, which in turn

restricted gains.

Brent Crude

• Brent crude prices rose with data from the

U.S. Energy Information Administration

showing a crude oil inventory decline of 1

million barrels for the week to Oct 16.

However, persisting concerns over COVID-

19 pandemic erased most of the gains.

Baltic Dry Index

• The index fell due to sluggish capesize and

panamax activities.

Commodities Market

9.00

10.20

11.40

23-Sep-20 8-Oct-20 23-Oct-20

Global Commodity Movement

Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)

Global Commodity Prices

Rebased to 10

Source: Thomson Reuters Eikon

1.70%

0.02%

0.10%

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Movement of Rupee vs Other Currencies

Currency Last Closing* 1-Wk Ago

US Dollar

73.58 73.38

Pound Sterling

96.06 94.56

EURO

86.78 85.84

100 Yen

70.26 69.70

Source: Refinitiv Figures in INR , *Value as on Oct 23, 2020

Rupee

• The rupee weakened against the greenback

following persistent dollar purchases by state-

run banks.

Euro

• The euro rose against the greenback on hopes

that an agreement on a fiscal stimulus package

in U.S. could be reached before the upcoming

U.S. Presidential elections on Nov 3.

Pound

• The pound strengthened against the greenback

on hopes that Britain would reach a trade deal

with the European Union by the end of the

year.

Yen

• The yen strengthened against the greenback as

the latter remained under pressure on hopes

that an agreement on a fiscal stimulus package

in U.S. could be reached before the upcoming

U.S. Presidential elections on Nov 3.

Currencies Markets

9.80

9.90

10.00

10.10

10.20

10.30

10.40

23-Sep-20 8-Oct-20 23-Oct-20

USD GBP Euro JPY

Source: Thomson Reuters Eikon

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

1.09%

1.58%

0.27%

0.80%

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The Week that was…

Oct to 23

Oct

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The Week that was (Oct 19 – Oct 23)

Date Events Present Value Previous Value

Monday,

Oct 19, 2020

• China Gross Domestic Product (YoY) (Q3) 4.9% 3.2%

• China Retail Sales (YoY) (Sep) 3.3% 0.5%

Tuesday,

Oct 20, 2020

• People’s Bank of China Interest Rate Decision 3.85% 3.85%

• Germany Producer Price Index (MoM) (Sep) 0.4% 0.0%

• U.S. Housing Starts (MoM) (Sep) 1.9% -6.7%

Wednesday,

Oct 21, 2020

• U.K. Consumer Price Index (YoY) (Sep) 0.5% 0.2%

• U.K. Retail Price Index (YoY) (Sep) 1.1% 0.5%

Thursday,

Oct 22, 2020

• Japan National Consumer Price Index (YoY) (Sep) 0.0% 0.2%

• Germany Consumer Confidence Survey (Nov) -3.1 -1.7

• U.S. Existing Home Sales (MoM) (Sep) 6.54 M 5.98 M

• Eurozone Consumer Confidence (Oct) P -15.5 -13.9

• U.K. GfK Consumer Confidence (Oct) -31.0 -25.0

Friday,

Oct 23, 2020

• Germany Markit Composite PMI (Oct) P 54.5 54.7

• U.K. Retail Sales (YoY) (Sep) 4.70% 2.70%

• Eurozone Markit PMI Composite (Oct) P 49.4 50.4

• U.K. Markit Services PMI (Oct) P 52.3 56.1

• U.S. Markit PMI Composite (Oct) P 55.5 54.3

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

The Week Ahead

Oct to 30

Oct

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Day Event

Monday,

Oct 26, 2020

• Japan Leading Economic Index Final (Aug)

• U.S. New Home Sales MoM (Sep)

• Germany Ifo Business Climate (Oct)

Tuesday,

Oct 27, 2020

• U.S. Durable Goods Orders MoM (Sep)

• U.S. House Price Index MoM (Aug)

• U.S. CB Consumer Confidence (Oct)

Wednesday,

Oct 28, 2020

• U.S. Goods Trade Balance Adv (Sep)

• U.S. Wholesale Inventories (Sep) P

• Japan Large Retailers' Sales (Sep)

Thursday,

Oct 29, 2020

• Bank of Japan Interest Rate Decision

• Germany Unemployment Change (Oct)

• Eurozone Economic Sentiment (Oct)

• U.S. GDP Growth Rate QoQ Adv (Q3)

• European Central Bank Interest Rate Decision

• Germany Inflation Rate YoY P (Oct)

Friday,

Oct 30, 2020

• Germany GDP Growth Rate YoY Flash (Q3)

• Eurozone GDP Growth Rate YoY Flash (Q3)

• U .S. Michigan Consumer Sentiment Final (Oct)

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 guideforthereaders.ItmaybenotedthatsinceNipponLifeIndiaAsset

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

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