Mutual Fund News of 11 August 2020 – Nippon India Mutual Fund

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NEWS U CAN USE

September 11, 2020

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The Week that was…

Sep to 11

Sep

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Indian Economy

• India’s Index of Industrial production (IIP) fell sharply by 10.4% YoY in Jul 2020 but slower

than 16.5% decline in Jun 2020. Output contracted for the fifth straight month.

Manufacturing that accounts for 78% of the IIP, output contracted 11% in Jul 2020, better

than 15.9% fall. Mining and electricity generation output fell 13% and 2.5%, respectively.

• India’s domestic crude oil production and consumption contracted 6.1% and 21.4% YoY,

respectively till July of FY21. Crude oil import also fell 23.7% YoY to 419 million barrels of

crude during the similar period. Natural gas production and consumption fell 14.2% and

11.1%, respectively. Meanwhile, natural gas imports in the form of LNG dropped 7.7%.

• India's economic growth would contract 11.5% in FY21 due to the coronavirus pandemic.

For FY22, economy is projected to growth 10.6%, rating agency Moody’s said. India’s credit

profile increasingly constrained by low growth, high debt burden and a weak financial

system, said the agency.

• According to India Meteorological Department (IMD), has predicted near-normal rains for

Sep 2020, potentially saving the kharif crops from any large scale damage, which is lower

than heavy rains seen in Aug 2020.

• According to the Controller General of Accounts, government’s capital expenditure

(capex) in the Jun quarter of 2020 rose 40% YoY to Rs. 88,273 crore. On the other hand,

capex fell 47% YoY to Rs. 23,576 crore.

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Domestic Equity Market Indices

Indices

11-Sep-20

1 Week Return

YTD Return

S&P BSE Sensex

38,854.55 1.30% -5.82%

Nifty 50

11,464.45 1.15% -5.79%

S&P BSE Mid

-Cap

14,659.62 -1.06% -2.06%

S&P BSE Small

-Cap

14,558.27 -0.31% 6.27%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines

Advance/Decline Ratio

07-Sep-20 760 1,126 0.67

08-Sep-20 579 1,288 0.45

09-Sep-20 509 1,373 0.37

10-Sep-20 1,291 566 2.28

11-Sep-20 982 869 1.13

Source: NSE

• Indian equity markets managed to

settle for the week with modest gains.

For major part of the week, investors

remained wary about the

developments on Indo-China Line of

Actual Control (LAC) issue. Markets

were hit following fresh instance of

confrontation between India and China

on their border in the western

Himalayas. This led to further

escalation of military tension between

the nuclear armed nation.

• Situation worsened after media reports

stated that one of the major bio-

pharma company based in U.K. has

voluntarily paused a randomized clinical

trial of its coronavirus vaccine after a

volunteer developed an unexplained

illness. Meanwhile, growing cases of

COVID-19 cases kept investors on

tenterhooks.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

28.45 32.86 33.39 -137.61

P/B

2.92 3.22 2.32 2.27

Dividend Yield

0.99 1.46 1.05 1.00

Source: BSE, NSE Va

lue as on Sep 11, 2020

Indian Equity Market

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Sectoral Indices

Indices

Last

Closing*

Returns (in %)

1-Wk 1-Mth

S&P BSE Auto

17,972.57 -0.43% 4.10%

S&P BSE Bankex

25,505.33 -2.40% 1.08%

S&P BSE CD

23,351.57 -0.04% 6.61%

S&P BSE CG

13,817.23 -1.23% 3.40%

S&P BSE FMCG

11,433.52 0.44% -3.11%

S&P BSE HC

18,833.63 0.53% -2.82%

S&P BSE IT

18,695.66 3.12% 3.02%

S&P BSE Metal

8,762.93 -1.67% 1.29%

S&P BSE Oil & Gas

13,283.56 2.69% -0.54%

S&P BSE Realty

1694.42 -2.16% 3.34%

S&P BSE Teck

8924.41 1.53% 1.59%

Source:

Refinitiv *Value as on Sep 11, 2020

• On the BSE sectoral front, the indices

witnessed a mixed trend. S&P BSE IT was the

top gainer, up 3.12%, followed by S&P BSE Oil

& Gas and S&P BSE Teck, which rose 2.69% and

1.53%, respectively.

• Meanwhile, S&P BSE Bankex was the major

loser, down 2.40%, followed by S&P BSE

Realty and S&P BSE Metal which slipped 2.16%

and 1.67%, respectively.

Indian Derivatives Market Review

• Nifty Sep 2020 Futures stood at 11,467.10, a premium of 2.65 points above the spot closing

of 11,464.45. The total turnover on NSE’s Futures and Options segment for the week stood

at Rs. 106.59 lakh crore as against Rs. 112.71 lakh crore for the week to Sep 4.

• The Put-Call ratio stood at 0.93 compared with the previous session’s close of 0.88.

• The Nifty Put-Call ratio stood at 1.49 compared with the previous session’s close of 1.22.

Indian Equity Market (contd.)

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Debt Indicators

(%)

Current

Value

Ago

Mth

Ago

Mth

Ago

Call Rate

3.41 3.43 3.47 4.95

91 Day T

-Bill

3.34 3.27 3.31 4.85

05.22% 2025, (5

Yr GOI)

5.51 5.23 5.14

05.79% 2030, (10

YrGOI)

6.00 5.95 5.90

Source:

Refinitiv Value as on Sep 11, 2020

• Bond yields rose amid concerns over

excessive supply of sovereign debt in the

market. Renewed tensions at the border

between India and China also

contributed to the downside. Worries

over additional borrowing by the

government in the second half of the

fiscal also weighed on the market

sentiment.

• Data from RBI showed that reserve

money increased at an annualized rate of

15.4% in the week to Sep 4, 2020,

compared with an increase of 13.5% a

year earlier. The currency in circulation

rose 22.6% during the week compared

with an increase of 13.0% a year ago.

• Data from RBI showed that India's

foreign exchange reserves rose for the

third straight week and hit a record high

of $542.01 billion as of the week ended

Sep 4, 2020.

Domestic Debt Market

5.88

5.95

6.02

7-Sep 8-Sep 9-Sep 10-Sep 11-Sep

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

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Maturity

G-

Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 3.54 5.04 150

3 Year 5.16 5.94 78

5 Year 5.58 6.82 123

10 Year 6.13 7.11 98

Source:

Refinitiv

Value as on

Sep 11, 2020

• Yields on gilt securities jumped by up to 30

bps across maturities, barring 1-year paper

that eased 1 bps.

• Corporate bond yields rose in the range of 4

to 17 bps up across the curve, leaving 2-year

papers that fell 4 bps.

• Spread between AAA corporate bond and gilt

contracted in the range of 2 to 19 bps across

maturities, barring 1- & 15-year papers that

expanded 5 & 1 bps, respectively.

Domestic Debt Market (Spread Analysis)

-4

2.90

5.00

7.10

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

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

Change in bps 11-Sep-20 04-Sep-20

Yield

in %

Change

in bps

Source: Thomson Reuters Eikon

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• The Reserve Bank of India (RBI) circular issued new guidelines for the appointment of chief

compliance officer (CCO) in banks. The guidelines to ensure uniform approach with regard

to compliance and risk management culture across the banking industry. The CCO should be

appointed for a minimum fixed period of three years in the rank of a general manager or not

below two levels of the rank of CEO.

• Public sector banks have sanctioned over 90% loans under the PM Street Vendor's

AatmaNirbhar Nidhi scheme launched on June 1 to help registered street vendors restart

their business post the Covid-19 lockdown. Under the scheme, street vendors of urban areas

get collateral-free loan of up to Rs 10,000 for a period of one year.

• The Central Board of Indirect Taxes and Customs said faceless assessment for all imported

goods will be rolled out pan India by the customs department by Oct 31, 2020. It was first

rolled out in Bengaluru and Chennai ports on Jun 8 and extended to Delhi and Mumbai

Customs on Aug 3, 2020.

• The government plans to review crop planting across the country to align agricultural

planning with changes in climate and rainfall patterns. The focus of this exercise is to move

towards precision agriculture with optimum water and nutrient use through drip,

fertigation, conservation agriculture, mechanization.

Regulatory Updates in India

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• The Income Tax Department issued refunds of Rs. 1,01,308 crore to 27.55 lakh taxpayers

between Apr 1 to Sep 8, 2020. It includes personal income tax refunds amounting to Rs.

30,768 crore issued to 25.83 lakh taxpayers and corporate tax refunds amounting to Rs.

70,540 crore issued to over 1.71 lakh taxpayers.

• The Supreme Court has extended loan repayment moratorium till Sep 28, 2020 that ended

on Aug 31, 2020. The Supreme Court in this regard has directed banks not to declare any

loan as non performing asset due to non-payment of instalments during the period.

• The Prime Minister launched Pradhan Mantri Matsya Sampada Yojana (PMMSY) worth Rs.

25,000 crore. The objective of the move is to boost production and exports in the fisheries

sector and double the income of the farmers. This is the highest investment made ever by

the government in the fisheries sector. The Prime Minister also launched a mobile app “e-

Gopala” that will provide solutions to farmers on issues related to livestock.

• The Supreme Court has extended loan repayment moratorium till Sep 28, 2020 that ended

on Aug 31, 2020. The Supreme Court in this regard has directed banks not to declare any

loan as non performing asset due to non-payment of instalments during the period.

Regulatory Updates in India (contd..)

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• According to a report by the Labor Department, U.S. consumer price index rose 0.4%

(MoM) in Aug 2020 after advancing 0.6% for last two straight months. Excluding food and

energy prices, core consumer prices rose 0.4% in Aug 2020 following 0.6% rise in Jul.

• European Central Bank (ECB) has left its key interest rates unchanged as expected - main

refi rate was retained at a record low zero and the deposit rate and lending rate was kept

at -0.50% and 0.25%, respectively. The size of asset purchases was also kept unchanged.

However, the ECB has reiterated its readiness to make changes to its resources when

necessary. The ECB noted that the Governing Council expects key interest rates to remain

at their present or lower levels until the inflation outlook has been robustly converged to a

level sufficiently close to, but below, 2% within its projection horizon, and this convergence

has been consistently reflected in the underlying dynamics of inflation.

• According to Cabinet Office, Japan’s gross domestic product (GDP) fell 7.9% sequentially

as against 7.8% fall estimated initially due to a sharp downward revision in capital

investment. On an annualized basis, GDP fell 28.1% in the second quarter compared to

27.8% decline estimated earlier.

• According to the National Bureau of Statistics, China’s consumer price inflation slowed to

2.4% in Aug 2020 as against 2.7% rise in Jul 2020. On a monthly basis, consumer prices

rose 0.4%. Similarly, producer prices fell 2% YoY in Aug following 2.4% decline in the

previous month.

Global News/Economy

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Global Indices

Indices

11-Sep-20

1-Week

Return

YTD

Return

Russell 3000

1,693.20 -3.39% 18.73%

Nasdaq 100

11,087.40 -4.60% 26.96%

FTSE 100

6,032.09 4.02% -20.02%

DAX Index

13,202.84 2.80% -0.35%

Nikkei Average

23,406.49 0.87% -1.06%

Straits Times

2,490.09 -0.78% -22.74%

Source:

Refinitiv Value as on Sep 11,

2020

U.S.

• U.S. markets remained weak as

investors preferred to cash in the recent

gains.

• Market sentiments dented further after

the Senate Republicans failed to

advance a new coronavirus stimulus bill.

Europe

• European markets went up, led by optimism about coronavirus vaccines, reports showing

a significant improvement in eurozone investor confidence in Sep, and a strong rise in U.K.

house prices in the month of Aug.

Asia

• Asian markets largely remained low amid worries that the testing of a highly anticipated

coronavirus vaccine, being developed by one of the U.K. based drug maker and the

University of Oxford could be delayed.

Global Equity Markets

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• Yields on the 10-year U.S. Treasury fell 5

bps to close at 0.67% compared with the

previous week’s close of 0.72%.

• U.S. Treasury prices rose as decline in

stocks boosted demand for the safe-

haven U.S. debt.

• Strong demand for 30-year bond further

led to rise in U.S. Treasury prices.

• However, gains were restricted following

soft demand for 10-year bond and heavy

supply during the week.

• Investors are now focused on U.S. Federal

Reserve Policy scheduled next week,

where the U.S. central bank will update its

economic projections.

Global Debt (U.S.)

0.66

0.69

0.72

8-Sep 9-Sep 10-Sep 11-Sep

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)

38.92 40.71

Gold ($/Oz)

1,941.50 1,932.45

Gold (Rs/10 gm)

51,350 50,940

Silver ($/Oz)

26.74 26.88

Silver (Rs/Kg)

65,200 64,098

Source:

Refinitiv *Value as on Sep 11, 2020

Gold

• Gold prices rose as concerns over Brexit

uncertainty and persisting concerns over

COVID-19 pandemic prompted investors to

seek refuge in the safe haven metal.

Brent Crude

• Brent Crude fell as increase in coronavirus

infection cases across the globe led to

worries over recovery in demand of the

commodity. Further, data from American

Petroleum Institute showed that U.S. crude

stockpiles rose unexpectedly by 3 million

barrels in the week ended Sep 4, 2020.

Baltic Dry Index

• The index fell due to sluggish capesize and

panamax activities.

Commodities Market

8.50

10.00

11.50

11-Aug-20 27-Aug-20

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

Source: Thomson Reuters Eikon

Currency

Prices (

in terms of INR)

Rebased to 10

Commodity Movement

-0.52%

0.47%

-4.40%

11-Sep-20

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Movement of Rupee vs Other Currencies

Currency

Last Closing*

1-Wk Ago

US Dollar

73.47 73.34

Pound Sterling

94.17 97.35

EURO

86.97 86.85

100 Yen

69.19 69.07

Source:

Refinitiv Figures in INR , *Value as on Sep 11,

2020

Rupee

• Rupee declined following renewed border

tensions between India and China and dollar

demand from state run banks.

Euro

• Euro initially weakened against the greenback

on hopes that policymakers of ECB may

announce more stimulus measures in its

monetary policy review. However, most of the

losses were neutralized after ECB indicated that

it was unlikely to undertake measures to

weaken the euro despite its recent gains.

Pound

• Sterling weakened against the greenback on

growing concerns that Britain may leave

European Union without any trade agreement.

Yen

• Yen inched up against the greenback on

concerns that the roll-out of a vaccine for

coronavirus may be delayed.

Currencies Markets

11-Sep-20

9.20

9.60

10.00

10.40

11-Aug-20 27-Aug-20

USD GBP Euro JPY

Source: Thomson Reuters Eikon

Currency

Prices (

in terms of INR)

Rebased to 10

Currency Movement

0.14%

-3.26%

0.19%

0.17%

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

The Week that was…

Sep to 11

Sep

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The Week that was (Sep 7 – Sep 11)

Date Events

Present

Value

Monday,

Sep 07, 2020

• Japan Gross Domestic Product (QoQ)(Q2)

-7.90% -7.80%

• China Trade Balance USD (Aug)

58.9B 62.33B

• Germany Industrial Production (YoY)(Jul)

-10% -11.40%

• Eurozone Sentix Investor Confidence (Sep)

-8 -13.4

Tuesday,

Sep 08, 2020

• Eurozone Gross Domestic Product (QoQ)(Q2)

-11.80% -12.10%

• Germany Trade Balance (Euro) (Jul)

18B 14.5B

• Japan Eco Watchers Survey: Outlook(Aug)

42.4 36

• Japan Money Supply M2+CD (YoY)(Aug)

8.60% 7.90%

Wednesday,

Sep 09, 2020

• China Consumer Price Index (YoY)(Aug)

2.40% 2.70%

• Japan Machine Tool Orders (YoY)(Aug) PREL

-23.30% -31.10%

• U.S. Redbook Index (YoY)(Sep 4)

-0.10% 4.60%

• U.K. RICS Housing Price Balance(Aug)

44% 13%

Thursday,

Sep 10, 2020

• U.S. Producer Price Index (YoY)(Aug)

-0.20% -0.40%

• U.S. Wholesale Inventories (Jul)

-0.30% -0.10%

Friday,

Sep 11, 2020

• India Index of Industrial Production (YoY) (Jul)

-10.40% -16.60%

• Germany Harmonized Index of Consumer Prices (YoY) (Aug)

-0.10% -0.10%

• U.K. Industrial Production (MoM)(Jul)

5.20% 9.30%

• U.S. Consumer Price Index (MoM)(Aug)

0.40% 0.60%

• U.K. Gross Domestic Product (MoM)(Jul)

6.60% 8.70%

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

The Week Ahead

Sep to 18

Sep

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Day Event

Monday,

Sep 14, 2020

•

India Consumer Price Index (YoY) (Aug)

•

India Wholesale Price Index (YoY) (Aug)

•

Japan Industrial Production (YoY) (Jul)

•

Eurozone Industrial Production (MoM) (Jul)

Tuesday,

Sep 15, 2020

•

China Retail Sales (YoY) (Aug)

•

China Industrial Production (YoY) (Aug)

•

U.K. ILO Unemployment Rate (3M) (Jul)

•

Eurozone ZEW Survey – Economic Sentiment (Sep)

Wednesday,

Sep 16, 2020

•

U.S. Federal Reserve Interest Rate Decision

•

U.K. Consumer Price Index (YoY) (Aug)

•

U.S. Retail Sales (MoM)(Aug)

Thursday,

Sep 17, 2020

•

Bank of Japan Interest Rate Decision

•

Bank of England Interest Rate Decision

•

Japan National Consumer Price Index (YoY) (Aug)

•

Eurozone Consumer Price Index (MoM) (Aug)

Friday,

Sep 18, 2020

•

U.S. Michigan Consumer Sentiment Index (Sep) PREL

•

U.K. Retail Sales (YoY) (Aug)

•

Germany Producer Price Index (MoM) (Aug)

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 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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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

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Disclaimer

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