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NEWS U CAN USE
September 4, 2020
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The Week that was…
31
st
Aug to 4
th
Sep
2
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Indian Economy
• Government data showed that India’s Gross Domestic Product (GDP) for the quarter from
Apr to Jun of 2020 contracted by a massive 23.9% as compared to a growth of 3.10% in
the previous quarter and a growth of 5.20% in the same period of the previous fiscal. As
per media reports, this was the first contraction in more than 40 years. The gross value
added (GVA) at basic prices in the first quarter of FY21 contracted 22.8%.
• India’s fiscal deficit surpassed its full year budgeted target in just four months. India’s fiscal
deficit during the period from Apr to Jul of 2020 stood at 103.1% of the budgeted target
for the current fiscal. India’s fiscal deficit widened due to lower tax collections and front
loading expenditure by the government on account of COVID-19 pandemic. Net tax
receipts stood at Rs. 2.03 lakh crore while the total expenditure stood at Rs. 10.5 lakh
crore indicating that the government has stepped up spending to combat the COVID-19
pandemic.
• India’s eight core sectors contracted for the fifth consecutive month in Jul 2020. Growth
of India’s eight core sectors contracted 9.6% in Jul 2020 compared to a contraction of
12.9% in the previous month and a growth of 2.6% in the same period of the previous
year.
• Results of a private survey showed that the headline seasonally adjusted IHS Markit India
Manufacturing Purchasing Managers’ Index (PMI) rose from 46.0 in Jul 2020 to 52.0 in Aug
2020. The expansion comes on account of improvement in operating conditions across the
domestic manufacturing sector.
3
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4
Domestic Equity Market Indices
Indices 04-Sep-20 1 Week Return YTD Return
S&P BSE Sensex
38,357.18 -2.81% -7.02%
Nifty 50
11,333.85 -2.69% -6.86%
S&P BSE Mid-Cap
14,817.06 -2.76% -1.01%
S&P BSE Small-Cap
14,602.97 -2.59% 6.60%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
31-Aug-20 283 1661 0.17
01-Sep-20 780 1081 0.72
02-Sep-20 1232 649 1.90
03-Sep-20 1024 847 1.21
04-Sep-20 553 1342 0.41
Source: NSE
• Indian equity markets settled in the red
for the week amid escalation in geo-
political tensions between India and
China.
• Speculations over first quarter GDP of
the current fiscal dominated market
sentiments, which was released post
market hours on Aug 31. The sharp fall
in the first-quarter GDP is higher than
expected, given that majority of the
economy was on a standstill in the first
two months of the first quarter.
• The fall was cushioned by IHS Markit
India manufacturing PMI for Aug which
signalled growth and rebound in
production volumes for the first time in
five months.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
28.21 32.49 33.46 -151.55
P/B
2.90 3.18 2.36 2.29
Dividend Yield
1.00 1.48 1.07 1.02
Source: BSE, NSE Va
lue as on Sep 04, 2020
Indian Equity Market
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5
Sectoral Indices
Indices
Last
Closing*
Returns (in %)
1-Wk 1-Mth
S&P BSE Auto
18,050.7 -1.32% 8.41%
S&P BSE Bankex
26,133.5 -6.30% 7.16%
S&P BSE CD
23,360.3 -0.52% 6.63%
S&P BSE CG
13,988.7 -2.01% 8.46%
S&P BSE FMCG
11,383.0 -1.76% -0.76%
S&P BSE HC
18,734.1 -2.83% 0.56%
S&P BSE IT
18,129.4 -0.28% 0.71%
S&P BSE Metal
8,911.5 -2.61% 11.99%
S&P BSE Oil & Gas
12,935.5 -3.11% -1.51%
Source:
Refinitiv *Value as on Sep 4, 2020
• On the BSE sectoral front, almost all the
sectors closed in the red. S&P BSE Bankex was
the major loser, down 6.30%, followed by S&P
BSE Realty and S&P BSE Oil & Gas, which
slipped 6.14% and 3.11%, respectively.
• Majority of the sectors went down as investors
preferred to cash in the recent gains in the
markets.
Indian Derivatives Market Review
• Nifty Sep 2020 Futures stood at 11,351.75, a premium of 17.90 points above the spot
closing of 11,333.85. The total turnover on NSE’s Futures and Options segment for the
week stood at Rs. 112.71 lakh crore as against Rs. 98.42 lakh crore for the week to Aug 28.
• The Put-Call ratio stood at 0.88 compared with the previous session’s close of 0.75.
• The Nifty Put-Call ratio stood at 1.22 compared with the previous session’s close of 1.64.
Indian Equity Market (contd.)
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6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
3.43 3.43 3.39 4.96
91 Day T-Bill
3.27 3.31 3.30 5.02
05.22% 2025, (5 Yr GOI)
5.23 5.53 5.00
05.79% 2030, (10 YrGOI)
5.95 6.10 5.83
Source: Refinitiv Value as on Sep 04, 2020
• Bond yields plunged after the Reserve
Bank of India (RBI) announced a slew
of measures aimed at reviving investor
appetite. RBI announced to conduct
more special open market operations
for Rs. 20,000 crore in Sep 2020 and
raised banks’ held-to-maturity limit to
22% of net demand and time liabilities
for bond purchases between Sep 1,
2020 and Mar 31, 2021.
• Securities held under held-to-maturity
need not be marked to market,
protecting banks from adverse yield
movements.
• However, gains were restricted during
the last day of the week as primary
auction cut-offs suggested yields
might not fall sharply amid RBI's bond-
supporting measures.
Domestic Debt Market
5.88
6.00
6.12
31-Aug 1-Sep 2-Sep 3-Sep 4-Sep
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
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7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 3.73 5.05 132
3 Year 4.82 5.80 98
5 Year 5.25 6.67 143
10 Year 5.98 7.01 102
Source: Refinitiv Value as on
Sep 04, 2020
• Yields on gilt securities fell across the
maturities in the range of 15 bps to 30 bps
barring 19-year paper which increased 14
bps.
• Corporate bond yields fell across the
maturities by up to 46 bps barring 1-year
paper which increased 3 bps.
• Difference in spread between AAA
corporate bond and gilt expanded across 1
to 3-year maturities and contracted across
the remaining maturities.
Domestic Debt Market (Spread Analysis)
-34
-9
16
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 04-Sep-20 28-Aug-20
Yield in %
Change in bps
Source: Thomson Reuters Eikon
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8
• The Reserve Bank of India (RBI) gave approval to banks to consider fresh government
securities that it has acquired from Sep 1, 2020 under the held to maturity bracket up to an
overall limit of 22% of its net demand and time liabilities till Mar 31, 2021. The objective of
the move is to increase the demand of government securities among banks without
worrying about mark-to-market losses due to adverse fluctuation in bond yields.
• RBI announced that it will conduct term repo operations for an aggregate amount of Rs.
100,000 crore at floating rates (prevailing repo rate) in the middle of Sep 2020. The
objective of the move is to ensure that there is sufficient liquidity in the system amid
advance tax outflows. RBI also mandated that banks who had availed funds under the long
term repo operations may consider refinancing their borrowings via these term repo
auctions at lower costs. The objective of the move is to reduce the cost of funds for banks.
• RBI announced that it will conduct additional special open market operation which will
include the simultaneous purchase and sale of Government securities for an aggregate
amount of Rs. 20,000 crore in two tranches of Rs. 10,000 crore each. The auction will be
conducted on Sep 10, 2020 and Sep 17, 2020.
• Capital market regulator SEBI mandated that entities will not be required to make
disclosures about shares encumbered with trading and clearing members by way of pledge
or re-pledge in the depository system. The objective of the move is to improve the ease of
doing business within the country.
Regulatory Updates in India
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9
• SEBI has extended the relaxations provided to foreign portfolio investors (FPIs) and
custodians for processing documents related to new investor registrations till the time the
lockdown is lifted. This will be applicable for those entities that belong to jurisdiction that
are still under lockdown. On a separate note SEBI asked credit rating agencies not to
consider as default the restructuring of debt done on account of stress bought about by
the COVID-19 pandemic. SEBI also declined to extend the deadline of implementing the
new norms of margin pledge beyond Sep 1, 2020.
• According to the Minister of Heavy Industries and Public Enterprises, the government is
examining the suggestion given by the automobile industry for a temporary reduction in
Goods and Services Tax across all categories of vehicles and the details of the proposal are
being worked out by the finance minister.
• According to the Directorate General of Trade Remedies (DGTR), the Indian government is
considering imposing anti-dumping duty on a certain type of fibre imported from
European Union, Belarus, Ukraine and Peru.
• According to media reports, IRDAI has set up a six-member working group to look at
various aspects of index linked products. The insurance regulator has received requests
from life insurers to allow them to offer index linked products along with ULIPs to their
customers. IRDAI has asked the working group to submit its report within two months.
Regulatory Updates in India (contd..)
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• The Institute for Supply Management showed, U.S. Purchasing Managers Index (PMI) rose
to 56.0 in Aug 2020 from 54.2 in Jul 2020. Index rose as the new orders index surged to
67.6 in Aug 2020 from 61.5 in Jul 2020. The production index also increased to 63.3 in Aug
2020 from 62.1 in Jul 2020.
• The Labor Department report showed U.S. non-farm payroll employment surged by 1.371
million jobs in Aug 2020, slower than a downwardly revised 1.734 million jobs (1.763
million jobs originally reported) in Jul 2020. Growth was partially due to the hiring of
238,000 temporary 2020 Census workers, which contributed to a significant increase in
government employment. Unemployment rate fell to 8.4% in Aug 2020 from 10.2% in Jul
2020.
• Preliminary data from Eurostat showed, Eurozone consumer prices contracted 0.2% YoY in
Aug 2020 compared with a 0.4% rise in Jul 2020. Inflation turned negative for the first time
in more than four years in Aug 2020. Core inflation barring energy, food, alcohol and
tobacco, slows to 0.4% in Aug 2020 from 1.2% in Jul 2020.
• Survey data from IHS Markit showed China’s Caixin manufacturing Purchasing Managers'
Index (PMI) rose to 53.1 in Aug 2020 from 52.8 in Jul 2020. Index moved the most since Jan
2011. Manufacturing new orders expanded at the sharpest rate since the start of 2011.
• The Ministry of Economy, Trade and Industry said, Japan’s industrial output rose 8.0%
(seasonally adjusted) MoM in Jul 2020, better than 1.9% rise in Jun 2020. Rise in output
was contributed by motor vehicles, other manufacturing and non-ferrous metals.
10
Global News/Economy
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11
Global Indices
Indices
04-Sep-20
1-Week
Return
YTD
Return
Russell 3000 1,752.61 -3.45% 22.90%
Nasdaq 100 11,622.13 -3.12% 33.08%
FTSE 100 5,799.08 -2.76% -23.11%
DAX Index 12,842.66 -1.46% -3.07%
Nikkei Average 23,205.43 1.41% -1.91%
Straits Times 2,509.64 -1.18% -22.13%
Source: Refinitiv Value as on Sep 04, 2020
U.S.
• U.S. markets traded lower as investors
continued to weigh the likely impact of
the coronavirus pandemic on the
economy despite recent comments
from U.S. Federal Reserve Chairman
that said interest rates will likely remain
lower for a long time.
• However, downturn was restricted by
private survey results showing
manufacturing activity in the U.S.
expanded at a faster rate in Aug 2020.
Europe
• European markets closed lower amid worries about rising new coronavirus cases and
possibility of further quarantine restrictions in the U.K. Absence of any significantly
positive news too pushed market participants to book profits.
Asia
• Asian markets largely closed lower with investors closely tracking the developments on
the persisting U.S. – China trade tensions. Investor sentiments dented further following
comments from U.S. House Speaker suggesting serious differences over a coronavirus aid
package.
Global Equity Markets
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12
• Yields on the 10-year U.S. Treasury
inched down 1 bps to close at 0.72%
compared with the previous week’s
close of 0.73%.
• U.S. Treasury prices rose initially during
the week under review after a Federal
Reserve governor called for new
accommodative efforts to help the U.S.
economy tide over the COVID-19
pandemic.
• U.S. Treasury prices rose further as
market participants remained on the
sidelines and awaited the U.S. nonfarm
payroll employment data for Aug 2020.
• However, most of the gains were wiped
out after data showed that U.S.
nonfarm payroll employment grew in
Aug 2020 and the U.S. unemployment
rate fell to 8.4% in Aug 2020 from
10.2% in Jul 2020.
Global Debt (U.S.)
0.50
0.60
0.70
0.80
31-Aug 1-Sep 2-Sep 3-Sep 4-Sep
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($/Barrel)
40.71 45.84
Gold ($/Oz)
1932.45 1964.49
Gold (Rs/10 gm)
50,940 50,981
Silver ($/Oz)
26.88 27.49
Silver (Rs/Kg)
64,098 64,613
Source: Refinitiv *Value as on Sep 04, 2020
Gold
• Gold prices traded lower as better than
expected U.S manufacturing data for Aug
2020 lowered the safe haven appeal of the
bullion. Nonetheless, ongoing tensions
between U.S. and China provided
underlying support to the precious metal
prices.
Brent Crude
• Brent Crude prices slipped as data from
U.S. Energy Information Administration
showed domestic gasoline demand fell to
8.78 million barrels per day (bpd) for the
week ended Aug 28 from 9.16 million bpd
a week earlier.
Baltic Dry Index
• The index fell due to sluggish capesize and
panamax activities.
Commodities Market
9.00
10.30
11.60
4-Aug-20 20-Aug-20
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Refinitiv
-2.22%
-11.19 %
-1.63%
4-Sep-20
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14
Movement of Rupee vs Other Currencies
Currency
Last Closing* 1-Wk Ago
US Dollar
73.34 73.35
Pound Sterling
97.35 97.28
EURO
86.85 87.07
100 Yen
69.07 69.03
Source:
Refinitiv Figures in INR , *Value as on Sep 04, 2020
Rupee
• The India rupee inched up amid high
volatility against the U.S. dollar after the
RBI said the recent rise in the domestic
currency had helped contain inflation.
Euro
• Euro declined against the U.S. dollar on
profit booking after rising strongly in the
previous week.
Pound
• Pound fell against the greenback as Bank of
England policymakers warned that Britain's
economy could suffer more damage than
anticipated by the central bank.
Yen
• Yen dropped against the strong greenback
on the view that Japan's next leader will
stay the course on the 'Abenomics'
economic revival program.
Currencies Markets
9.65
9.90
10.15
4-Aug-20 20-Aug-20
USD GBP Euro JPY
Source: Thomson Reuters Eikon
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
4-Sep-20
-0.25%
0.06%
-0.02%
0.07%
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15
The Week that was…
31
st
Aug to 4
th
Sep
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16
The Week that was (Aug 31 – Sep 4)
Date Events Present Value Previous Value
Monday,
Aug 31, 2020
• Japan Retail Sales YoY (Jul)
-2.8% 3.9%
• India Fiscal Deficit (Aug)
8213.49 B 6623.63 B
• Germany Inflation Rate YoY
Prel (Aug) 0.0% -0.1%
• India GDP Growth Rate YoY (Q2)
-23.9% 3.1%
Tuesday,
Sep 01, 2020
• China Caixin Manufacturing PMI (Aug)
53.1 52.8
• India Markit Manufacturing PMI (Aug)
52.0 46.0
• Germany Unemployment Rate (Aug)
6.4% 6.4%
• Eurozone Inflation Rate YoY Flash (Aug)
-0.2% 0.4%
• U.S. Markit Manufacturing PMI Final (Aug)
53.1 50.9
• U.S. ISM Manufacturing PMI (Aug)
56.0 54.2
Wednesday,
Sep 02, 2020
• Germany Retail Sales YoY (Jul)
4.2%
• U.S. ADP Employment Change (Aug)
428K 212K
Thursday,
Sep 03, 2020
• China Caixin Composite PMI (Aug)
55.1 54.5
• Germany Markit Composite PMI Final (Aug)
54.4 55.3
• India
Markit Services PMI (Aug) 41.8 34.2
• Eurozone Markit Composite PMI Final (Aug)
51.9 54.9
• U.K. Markit/CIPS Composite PMI Final (Aug)
59.1 57.0
• Eurozone Retail Sales YoY (Jul)
0.4% 1.3%
Friday,
Sep 04, 2020
• U.S. Non Farm Payrolls (Aug)
1371K 1734K
• U.S. Unemployment Rate (Aug)
8.4% 10.2%
• U.K. Construction PMI (
Aug) 54.6 58.1
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17
The Week Ahead
7
th
Sep to 11
th
Sep
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18
Day Event
Monday,
Sep 7, 2020
• China Balance of Trade (Aug)
• Japan Leading Economic Index Prel (Jul)
• Germany Industrial Production n.s.a. w.d.a. (YoY) (Jul)
Tuesday,
Sep 8, 2020
• Japan Gross Domestic Product Annualized (Q2)
• Japan Eco Watchers Survey Outlook (Aug)
• Germany Balance of Trade (Jul)
• Eurozone GDP Growth Rate YoY 3rd Est (Q2)
Wednesday,
Sep 9, 2020
• China Consumer Price Index (YoY) (Aug)
• China Producer Price Index (YoY)(Aug)
• U.S. Consumer Credit Change (Jul)
Thursday,
Sep 10, 2020
• Eurozone ECB Interest Rate Decision
• U.S. Initial Jobless Claims (Sep 4)
Friday,
Sep 11, 2020
• U.K. Industrial Production (YoY) (Jul)
• U.K. Gross Domestic Product (MoM) (Jul)
• Germany Consumer Price Index (YoY) (Aug)
• India Industrial Output (Jul)
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
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