Mutual Fund News of 18 September 2020 – Nippon India Mutual Fund

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NEWS U CAN USE

September 18, 2020

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The Week that was…

Sep to 18

Sep

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Indian Economy

• Consumer price index-based inflation rose to 6.69% in Aug 2020 from 6.73% in the

previous month. The Consumer Food Price Index also rose to 9.05% in Aug 2020 from

9.27% in the previous month. Under the segment of food and beverages, meat and fish

witnessed a maximum inflation of 16.50% in Aug 2020 followed by pulses and products,

oils and fats, spices and vegetables for which retail inflation stood at 14.44%, 12.45%,

12.34% and 11.41% respectively.

• Wholesale price index (WPI) based inflation rose 0.16% in Aug 2020 as compared to a

contraction of 0.58% in the previous month and a growth of 1.17% in the same month of

the previous year. WPI turned positive in Aug 2020 for the first time since Mar 2020

reflecting a recovery in producers’ pricing power. WPI Food Index however grew 3.84% in

Aug 2020 from 4.08% in the previous month and 7.80% in Aug 2019.

• India’s trade deficit narrowed to $ 6.77 billion in Aug 2020 from $ 13.86 billion in the same

month of the previous year. Exports contracted 12.66% to $ 22.70 billion in Aug 2020

while imports contracted 26.04% to $ 29.47 billion in the same month. Gold imports rose $

3.7 billion in Aug 2020 as against $ 1.36 billion in Aug 2019.

• The government has sought Parliament 's approval to infuse Rs 20,000 crore in public

sector banks in FY 21 to meet regulatory requirements. This is part of the first batch of

2020-21 Supplementary Grants Demands moved in the Lok Sabha by Finance Minister.

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Domestic Equity Market Indices

Indices 18-Sep-20 1 Week Return YTD Return

S&P BSE Sensex

38,845.82 -0.02% -5.84%

Nifty 50

11,504.95 0.35% -5.45%

S&P BSE Mid-Cap

15,047.8 2.65% 0.53%

S&P BSE Small-Cap

15,299.98 5.09% 11.68%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines Advance/Decline Ratio

14-Sep-20 1320 561 2.35

15-Sep-20 1111 770 1.44

16-Sep-20 966 864 1.12

17-Sep-20 675 1190 0.57

18-Sep-20 798 1050 0.76

Source: NSE

• Indian equity markets settled on a

flattish note with Nifty recording

muted gains for the week. Initial

positive cues supported buying interest

as mid and small cap stocks rose stocks

following SEBI mandate for multi cap

funds to invest at least 25% each in

small-cap and midcaps besides large-

cap stocks.

• However, most of the gains were

erased by weak global cues following

the outcome of the U.S. Federal

Reserve’s latest monetary policy

announcements. The U.S. central bank,

in its latest policy decision, kept the key

interest rates on hold as widely

expected but stopped short of offering

concrete signals on further stimulus.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

28.56 32.98 36.57 -117.01

P/B

2.94 3.20 2.39 2.40

Dividend Yield

0.99 1.42 1.02 0.95

Source: BSE, NSE Value as on Sep 18, 2020

Indian Equity Market

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Sectoral Indices

Indices

Last

Closing*

Returns (in %)

1-Wk 1-Mth

S&P BSE Auto

18,445 2.63% 3.08%

S&P BSE Bankex

25,035.9 -1.84% -0.61%

S&P BSE CD

24,081.9 3.13% 5.21%

S&P BSE CG

13,930.9 0.82% -0.66%

S&P BSE FMCG

11,288 -1.27% -4.10%

S&P BSE HC

20,404.8 8.34% 6.87%

S&P BSE IT

19,852.3 6.19% 7.56%

S&P BSE Metal

8,646.9 -1.32% -5.05%

S&P BSE Oil & Gas

13,162.8 -0.91% -0.77%

S&P BSE Realty

18,445 2.63% 3.08%

S&P BSE Teck

25,035.9 -1.84% -0.61%

Source: Refinitiv *Value as on Sep 18, 2020

• On the BSE sectoral front, majority of the

sectors closed in the green. S&P BSE

Healthcare was the top gainer, up 8.34%,

followed by S&P BSE IT and S&P BSE Realty,

which rose 6.19% and 5.76%, respectively.

• Meanwhile, S&P BSE Bankex was the major

loser, down 1.84%, followed by S&P BSE Metal

and S&P BSE FMCG which slipped 1.32% and

1.27%, respectively.

Indian Derivatives Market Review

• Nifty Sep 2020 Futures stood at 11,515.25, a premium of 10.30 points above the spot

closing of 11,504.95. The total turnover on NSE’s Futures and Options segment for the

week stood at Rs. 102.59 lakh crore as against Rs. 106.59 lakh crore for the week to Sep 11.

• The Put-Call ratio stood at 0.91 compared with the previous session’s close of 0.93.

• The Nifty Put-Call ratio stood at 1.37 compared with the previous session’s close of 1.49.

Indian Equity Market (contd.)

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Debt Indicators

(%)

Current

Value

1-Wk

Ago

1-Mth

Ago

6-Mth

Ago

Call Rate

3.41 3.41 3.42 4.98

91 Day T-Bill

3.35 3.34 3.29 4.88

05.22% 2025, (5 Yr GOI)

5.41 5.51 5.26 -

05.79% 2030, (10 Yr GOI)

6.03 6.00 5.99 -

Source: Refinitiv Value as on Sep 18, 2020

• Bond yields fell supported by the

Reserve Bank of India governor's

prediction of a gradual economic

recovery and as consumer inflation in

Aug 2020 came below market

expectations. Special open market

operation of Rs. 10,000 crore conducted

on Thursday, further supported the

market. However, gains were limited on

fresh weekly auction of government

securities conducted on Friday.

• RBI conducted the auction of open

market operations (OMO) purchase and

sale of Rs. 10,000 crore each, which were

completely accepted. Sale consists of

shorter end securities- 182- T Bill

(22/10/2020) and 182- T Bill (29/10/2020)

and purchase consists of longer end

securities- 7.37% GS 2023, 7.72% GS

2025 and 5.79% GS 2030.

Domestic Debt Market

5.90

5.98

6.06

14-Sep 15-Sep 16-Sep 17-Sep 18-Sep

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

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Maturity

G-Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 3.70 5.07 137

3 Year 5.03 5.85 82

5 Year 5.49 6.76 128

10 Year 6.10 7.09 98

Source: Refinitiv

Valueason

Sep 18, 2020

• Yields on gilt securities rose across maturities

by up to 16 bps, barring 3- to 7-, 10- and 19-

year papers that fell in the range of 3 to 13

bps and 12- and 15-year papers stood steady.

• Corporate bond yields fell across maturities

in the range of 2 to 6 bps barring 5- to 7-year

papers that rose by up to 3 bps and 8-year

paper that stood steady.

Domestic Debt Market (Spread Analysis)

-14

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 18-Sep-20 11-Sep-20

Yield in %

Change in bps

Source: Thomson Reuters Eikon

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

• SEBI has issued a circular dealing with a host of trading criteria for asset management

companies including uniform applicability of NAV across various schemes upon realisation of

funds, trade execution and allocation. The capital market regulator has decided that in

respect of purchase of units of mutual fund schemes (except liquid and overnight schemes),

closing NAV of the day shall be applicable on which the funds are available for utilization

irrespective of the size and time of receipt of such application.

• In respect of trade execution, SEBI has decided that AMCs shall put in place a written down

policy which inter-alia detail the specific activities, role and responsibilities of various teams

engaged in fund management, dealing, compliance, risk management, back-office, etc., with

regard to order placement, execution of order, trade allocation amongst various schemes

and other related matters.

• Regarding orders pertaining to equity and equity related instruments, SEBI has directed

AMCs to use an automated Order Management System, wherein the orders for equity and

equity related instruments of each scheme shall be placed by the fund manager of the

respective schemes. In case a fund manager is managing multiple schemes, the fund

manager shall necessarily place scheme wise order.

Regulatory Updates in India

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• According to the Reserve Bank of India (RBI) Governor, RBI is more concerned about the

interest of depositors and the protection of financial stability than with giving the industry

doles. Banks have an important role to play in stimulating economic growth in an

emerging market economy like India, as they are at the forefront of credit provision. And

thus, the principal considerations for the RBI will be the security of depositors, as well as

the protection of financial stability.

• The Reserve Bank of India (RBI) has agreed to give its workers an option to move from

contributory provident fund (CPF) to pension facility. The decision has been taken in

consultation with the government. This benefit will come to all current workers who

entered RBI before Jan 1, 2012. The cut-off date for retirees is Nov 1, 1990, the day the

pension scheme was launched at RBI.

• Securities and Exchange Board of India (SEBI) allowed emerging investment vehicles to be

listed on stock exchanges operating in the International Financial Services Center (IFSC)

with Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (Invits).

SEBI has also asked bourses in the IFSC to develop a detailed framework prescribing the

initial and continuous listing requirements for InvITs and REITs whose units are proposed

to be listed.

Regulatory Updates in India (contd..)

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• The U.S. Federal Reserve in its monetary policy review kept interest rates unchanged and

indicated that interest rates may remain at near-zero levels for years to come. The U.S.

central bank indicated that interest rates may remain at zero through 2023, and at the

same time it does not see inflation rising to its 2% target until 2023. The U.S. Federal

Reserve also upgraded its economic outlook for this year as it expects the U.S. economy to

contract 3.7% in 2020 compared to its earlier estimation in Jun 2020 where it projected

the U.S. economy to contract 6.5% in the same year. For 2021, 2022 and 2023 the U.S.

Federal Reserve projected the growth of the U.S. economy at 4%, 3% and 2.5%

respectively.

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

policymakers also unanimously decided to retain the size of the asset purchase program at

£745 billion. However, Bank of England warned that the outlook for the U.K. economy

remains “unusually uncertain.” In addition, Bank of England revealed that policymakers are

exploring as to how a negative bank rate could be implemented effectively. The move

comes amid concerns that Britain may exit the European Union without any trade

agreement, worries over increase in coronavirus infection cases and the rising risk of

elevated unemployment.

• 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.

Global News/Economy

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Global Indices

Indices

18-Sep-20

1-Week

Return

YTD

Return

Russell 3000 1,682.35 -0.64% 17.97%

Nasdaq 100 10,936.98 -1.36% 25.24%

FTSE 100 6,007.05 -0.42% -20.36%

DAX Index 13,116.25 -0.66% -1.00%

Nikkei Average 23,360.30 -0.20% -1.25%

Straits Times 2,497.71 0.31% -22.50%

Source: Refinitiv Value as on Sep 18, 2020

U.S.

• U.S. markets largely fell by the outcome

of the U.S. Fed’s latest monetary policy

meeting.

• There was lingering disappointment

that the U.S. central banks merely

affirmed their monetary support,

without promising new stimulus, which

kept investors wary.

Europe

• European markets fell weighed down by warnings from the Fed and the Bank of England

about the outlook for the economy. Persisting worries about the surge in coronavirus

cases, including in France, the U.K. and the U.S, and fears about a no-deal Brexit hurt as

well.

Asia

• Asian markets witnessed a mixed trend during the week. Positive vibes generated from

renewed optimism over coronavirus vaccines coupled with upbeat economic data from

China were neutralised by the U.S. Fed’s latest policy decision wherein it cautioned that

the pace of economic recovery is expected to remain slow.

Global Equity Markets

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• Yields on the 10-year U.S. Treasury rose 2

bps to close at 0.69% compared with the

previous week’s close of 0.67%.

• U.S. Treasury prices fell earlier during the

week under review as market participants

preferred to exercise caution and remain

on the sidelines as they awaited the

outcome of the U.S. Federal Reserve

monetary policy review which was due on

Sep 16, 2020.

• Losses were extended with market

participants remaining skeptical post

monetary policy review as to whether the

U.S. Federal Reserve would announce

further stimulus measures to provide

support to the U.S. economy which has

been adversely affected by the COVID-19

pandemic.

Global Debt (U.S.)

0.66

0.68

0.70

14-Sep 15-Sep 16-Sep 17-Sep 18-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) 41.97 38.92

Gold ($/Oz) 1,949.69 1941.50

Gold (Rs/10 gm) 51,619 51350

Silver ($/Oz) 26.77 26.74

Silver (Rs/Kg) 65,454 65200

Source: Refinitiv *Value as on Sep 18, 2020

Gold

• Gold prices inched up after the U.S. Federal

Reserve in its monetary policy review

pledged to keep interest rates low until at

least 2023.

Brent Crude

• Brent Crude prices gained strength after

data from the U.S. Energy Information

Administration showed that crude

inventories in U.S. fell to their lowest since

Apr at 496 million barrels in the week

ended Sep 11. Meanwhile, hurricane Sally

resulted to closure of U.S. offshore oil and

gas production.

Baltic Dry Index

• The index rose following improving

capesize and panamax activities.

Commodities Market

8.00

8.50

9.00

9.50

10.00

10.50

18-Aug-20 3-Sep-20

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

Source: Thomson Reuters Eikon

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

18-Sep-20

0.09%

0.42%

7.84%

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

Movement of Rupee vs Other Currencies

Currency Last Closing* 1-Wk Ago

US Dollar

73.30 73.47

Pound Sterling

95.06 94.17

EURO

86.88 86.97

100 Yen

69.93 69.19

Source: Refinitiv Figures in INR , *Value as on Sep 18, 2020

Rupee

• The Indian rupee gained against the U.S. dollar

following regional currencies but gains were

limited as review from the U.S. Federal Reserve

(Fed) turned out to be less dovish than

expected.

Euro

• Euro was little changed against the greenback

as review from the U.S. Federal Reserve (Fed)

turned out to be less dovish than expected.

Pound

• Sterling rose against the week U.S. dollar after

better-than-expected U.K. jobs data but gains

were restricted as the Bank of England

signalled it is examining negative interest rates.

Yen

• Yen rose against the U.S. dollar on overall

uncertainty about the U.S. economic outlook,

supporting the U.S. Fed’s concern about the

pace of recovery.

Currencies Markets

9.50

9.60

9.70

9.80

9.90

10.00

10.10

18-Aug-20 3-Sep-20

USD GBP Euro JPY

Source: Thomson Reuters Eikon

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

18-Sep-20

-0.10%

0.95%

-0.24%

1.07%

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

The Week that was…

Sep to 18

Sep

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The Week that was (Sep 14 – Sep 18)

Date Events Present Value Previous Value

Monday,

Sep 14, 2020

• Japan Industrial Production (YoY)(Jul) -15.5% -16.1%

• Japan Capacity Utilization (Jul) 9.6% 6.2%

• Euro Zone Industrial Production w.d.a. (YoY)(Jul) -7.7% -12 %

• Japan Tertiary Industry Index (MoM) (Jul) -0.5% 7.9%

Tuesday,

Sep 15, 2020

• China Fixed Asset Investment (YTD) (YoY) (Aug) -0.3% -1.6%

• China Industrial Production (YoY)(Aug) 5.6% 4.8%

• U.K. ILO Unemployment Rate (3M)(Jul) 4.1% 3.9%

• Germany ZEW Survey – Economic Sentiment (Sep) 77.40 71.50

• U.S. Industrial Production (MoM) (Aug) 0.4% 3.5%

• U.S. Capacity Utilization (Aug) 71.4% 71.1%

Wednesday,

Sep 16, 2020

• U.S. Business Inventories (Jul) 0.1% -1.1 %

• U.S. Fed Interest Rate Decision 0.25% 0.25%

Thursday,

Sep 17, 2020

• Bank of England Interest Rate Decision 0.1% 0.1%

• Bank of Japan Interest Rate Decision -0.1% -0.1%

• Euro Zone Construction Output w.d.a (YoY) (Jul) -3.8% -4.8%

• U.S. Initial Jobless Claims (Sep 11) 860 K 893 K

• U.S. Philadelphia Fed Manufacturing Survey (Sep) 15.00 17.20

Friday,

Sep 18, 2020

• Japan Core Inflation Rate YoY (Aug) -0.40% 0.00%

• U.K. Retail Sales MoM (Aug) 0.8% 3.7%

• U.S. Michigan Consumer Sentiment Prel (Sep) 78.9 74.1

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The Week Ahead

Sep to 25

Sep

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Day Event

Monday,

Sep 22, 2020

• U.S. Chicago Fed National Activity Index (Aug)

Tuesday,

Sep 23, 2020

• U.K. CBI Industrial Trends Survey – Orders (MoM)(Sep)

• U.S. Richmond Fed Manufacturing Index (Sep)

Wednesday,

Sep 24, 2020

• Japan Jibun Bank Manufacturing PMI (Sep) (P)

• Japan All Industry Activity Index (MoM) (Jul)

• Germany Markit Manufacturing PMI (Sep) (P)

• Euro Zone Markit Manufacturing PMI (Sep) (P)

• U.K. Markit Manufacturing PMI (Sep) (P)

• U.S. Markit Manufacturing PMI (Sep) (P)

Thursday,

Sep 25, 2020

• Germany IFO – Business Climate (Sep)

• U.S. Initial Jobless Claims (Sep 18)

• U.S. Continuing Jobless Claims (Sep 11)

• U.S. Kansas Fed Manufacturing Activity(Sep)

Friday,

Sep 26, 2020

• U.S. Durable Goods Orders ex Transportation (Aug)

• U.S. Durable Goods Orders (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 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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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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