The World This Week – 31st July 2020 to 7th August 2020

 Indian Equity Summary-  

·        Reflection of the global volatility was visible in the domestic equity markets .The nifty small cap (+5%) indices outperformed the benchmarkØ indices, Nifty (+1.5%) on WoW basis. The overall market closed with strong market breadth, and lower volatility while the INR marginally weakened. Top gaining sectoral indices includes Bse Metals ,BSE Auto and BSE CD while BSE Bankex and BSE IT were laggards.

·        In the recently conducted MPC meeting RBI maintained status quo on the rates.Ø  

·        Going forward, global factors like development on the US -China relationship front , and domestic factors like the monsoon trajectory andØ remaining earnings season ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 10900-11,400 in the near term.

Indian Debt Market-  

·        Government bond prices fell marginally as the yield of the 10-year benchmark 5.79% 2030 paper settled at 5.89% on August 7 as against 5.84%Ø on July 31 .  

·        The Reserve Bank of India (RBI) left the key interest rates unchanged and allowed banks to restructure certain loans as part of efforts to reviveØ the economy.  

·        We expect the 10 year benchmark yield to trade between 5.80-6.05% in near term.Ø

Domestic News  

·        India Manufacturing Purchasing Managers’ Index (PMI) PMI stood at 46 in July, down from 47.2 in June.Ø

·        India posted a trade surplus of $790 million in June, its first in over 18 years, with imports plunging as the coronavirus pandemic depressedØ domestic demand for crude oil, gold and other industrial products, reflecting a slowing economy.  

·        Mutual funds that invest in equity showed a net outflow of 24.80 billion rupees ($331.02 million) in July compared with an inflow of 2.41 billionØ rupees in June, data published on Monday by the Association of Mutual Funds in India (AMFI) showed.

International News  

·        US initial jobless claims tumbled to 1.186 million, a decrease of 249,000 from the previous week's revised level of 1.435 million.Ø

·        Japan first-quarter GDP unchanged at 2.2% annualised contraction after 2nd revision.Ø  

·        Fitch Ratings has affirmed United States' Long-Term Foreign-Currency (LTFC) and Local-Currency (LC) Issuer Default Ratings (IDRs) at 'AAA' andØ revised the Outlooks to Negative from Stable.  

·        SOUTH Korea's manufacturing activity shrank at a much slower pace in July, signalling that a gradual recovery in demand is gaining momentumØ on easing lockdowns, although the resurgence in infections remained a risk.

 

Disclaimer :

The information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock Broking Limited) or other Karvy Group companies. The information contained herein is based upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. Karvy Private Wealth is only a distributor of securities and financial market products.

Link - http://www.karvywealth.com/data/sites/1/skins/karvywealth/Download_media_report.aspx?FileName=AB63EFA6-DEF3-4036-992B-89E9F2612B9C|5253518

The World This Week – 24th July 2020 to 31st July 2020

 Indian Equity Summary- 

·         SØ&P BSE Sensex and Nifty 50 fell by 1.4% and 1% respectively on a WoW basis, and the six-week positive trend in Indian equities came to a pause as negative feelings prevailed among market participants, on the back of rising Covid-19 cases as well as a decline in US GDP at an annualized rate of 32.9% in 2Q 2020. Healthcare and IT were the best-performing sectors, while oil & gas and banks were the worst-performing ones on a weekly basis. 

·         Going forward, global factors like development on the US -China relationship front , and domestic factors like the outcome of the RBI MPCØ meeting ( we expect a pause in Repo rate cut in the August RBI MPC meeting) and the monsoon trajectory ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 10700-11,100 in the near term.

Indian Debt Market- 

·         Government bond prices fell marginally as the yield of the 10-year benchmark 5.79% 2030 paper settled at 5.84% on July 31 as against 5.82% onØ July 24 .

·         India’s fiscal deficit during the first quarter of this fiscal widened to Rs 6.62 lakh crore or 83.2% of the budget estimates, mainly on account of poorØ tax collections due to the lockdown; fiscal deficit during the corresponding period of last year was 61.4% of the budget estimates. 

·         RBI introduced new 5.77% GS 2030 last week.Ø 

·         We expect the 10 year benchmark yield to trade between 5.80-6.05% in near term.Ø

Domestic News 

·         Deposit growth in the banking system continued to grow at 10.1 per cent on a year-on-year basis, even though banks have reduced their depositØ rates sharply in the absence of credit growth and liquidity induced by RBI due to Covid-19. 

·         India’s factory slump deepened in July as renewed lockdown measures to contain surging coronavirus cases weighed on demand and output,Ø raising the chances of a sharper economic contraction, a private business survey showed on Monday. 

·         Indian power plants used the most gas in at least 3-1/2 years in the June quarter, as operators along the west coast snapped up cheap liquefiedØ natural gas (LNG) imports that have become competitive against coal, government data showed.

International News 

·         US real gross domestic product plummeted at a record annual rate of 32.9% in the second quarter of 2020 following a 5% decline in the firstØ quarter 

·         U.S. manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July as orders increased despite a resurgence in new COVID-Ø 19 infections 

·         Tens of millions of people in and around the Philippine capital will go back to a strict lockdown from Tuesday, threatening incomes and hopesØ for reviving a once dynamic economy as authorities take drastic measures to halt surging virus cases.

 

Link -  http://www.karvywealth.com/data/sites/1/skins/karvywealth/Download_media_report.aspx?FileName=C008C18F-7DA4-4A92-A64F-50DE73ECD819|5248508

ADVICE FOR THE WISE - AUGUST 2020

 FROM THE CEO’s DESK

Dear Investors, “Behind every dark cloud there is an every-shining sun. Just wait. In time, the cloud will pass.” Marianne Williamson. All inclusive, economies are seeing recuperation with pointers, for example, PMI showing an improvement in spite of infection resurgence in a couple of nations. U.S., Euro, and China manufacturing activities have picked up pace, with July numbers in these three regions crossing 50 mark, indicating expansion. Financial and monetary policies remain exceptionally accommodative, and liquidity remains buoyant, which should provide continued support for further economic recovery. Equity market declines provide opportunities to buy better stocks at lower valuations. We foresee this slowdown and the year 2020 from an investment opportunity viewpoint rather than worrying, as the risk-reward ratio in the current scenario is in favour of equity investments. The current positive outlook on the global markets is well backed by negative real rates, expansion of the central bank balance sheet along with growth recovery and medical progress on COVID-19 While there is a growing increase in the number of COVID cases on the domestic front, there has been an improvement in the recovery rate; in India it is about 68.41 percent while 64.05 percent globally. Early signs of pent-up demand are visible in the economy as indicated by high frequency indicators. Expected normal monsoon and higher sowing of Kharif crops YoY gives us the solace that the rural economy will play a major part in the future economic growth. Other macro factors such as low oil prices and stable currency, high forex reserves and current-account surplus will act as tailwinds for the domestic equity market. Expectations of the Q1 FY21 earnings to bottom out by FY21, while the economy and earnings are expected to normalize by FY23 keeping in mind the current low interest rate scenario and high liquidity, supports valuations. With the declining dollar index and humongous global liquidity we expect the money to flow into EMs. In July, the domestic equity market kept witnessing strong FII inflows coupled with steady SIP flows in mutual funds.

 

Know more - http://www.karvywealth.com/data/sites/1/skins/karvywealth/Download_media_report.aspx?FileName=35269F8C-8C0A-4624-9FED-793AD0998167|5252655

The World This Week 10th July 2020 – 17th July 2020

Indian Equity Summary-  

·        Sensex ended higher by 1.2 percent as the bullish trend persisted for the fifth consecutive week in the domestic equity market ,on the back ofØ positive global cues and optimism over the development of Covid-19 vaccine .The focus is now turning to Q1FY21 earning season and more importantly for guidance and viewpoints of management.

·        Going forward, global factors like development on the US -China relationship front , any resurgence of Covid-19 cases globally, as economiesØ have started opening up ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 10800-11200 in the near term.

Indian Debt Market-  

·        The bond prices fell as the yield on the latest 10-year benchmark 5.79% 2030 paper settled at 5.80% on Jul 17 compared with 5.76% on Jul 10.Ø  

·        Reserve Bank of India announces the auction of three Government of India 91day, 182 day and 364 day Treasury Bills for an aggregate amount ofØ ₹35,000, to be conducted on 22nd July 2020.  

·        State Governments announced to sell securities by way of an auction to be conducted on 21th July 2020, for an aggregate face value of ₹ 9,000 Cr.Ø  

·        We expect that RBI will be in wait and watch mood before taking any major decision of rate cut on the back of recent inflation print.Ø  

·        We expect the 10 year benchmark yield to trade between 5.80-6.05% in near term.Ø

Domestic News

·        India’s retail trade has suffered a business loss of about Rs 15.5 lakh crore in past 100 days due to the COVID-19 pandemic as per theØ Confederation of All India Traders (CAIT).  

·        The Foreign Direct Investment (FDI) from the US to India has crossed the $40 billion mark as on year to date, reflecting the growing confidence ofØ American companies in the country.

·        Forex reserves rose by $3.1 billion on a WoW basis to hit a record high of $516.36 billion for the week ended July 10, according to Reserve BankØ of India (RBI).  

·        According to the latest data released by the Ministry of StatisticsØ & Programme Implementation (MoSPI), India’s retail inflation(CPI) grew to 6.09% in the month of June as against the prior released figure of 5.84 in April for the month of March.

International News  

·        Hong Kong's April-June unemployment rises to 6.2%, being the highest in over 15 years.Ø

·        Japan’s exports plunged 26.2% in June while Imports fell by 14.4% in June on a year on year basis , as per the data released byØ Ministry of Finance (MOF).  

·        Foreign direct investment (FDI) into China fell 1.3% in the first half of this year from a year earlier to 472.18 billion yuan ($67.47Ø billion)as per China’s commerce ministry.  

·        Gross domestic product (GDP) of China rose to 3.2% in the second-quarter from a year earlier as per the National Bureau ofØ Statistics, faster than the 2.5% forecast by analysts in a Reuters poll, with the easing of lockdown measures and ramping up of stimulus by policymakers to combat the virus-led downturn.  

·        US GDP is expected to contract by an annualised rate of 37% in the Q2 2020 and by 6.6%for 2020 as a whole as per theØ International Monetary Fund (IMF) staff.

Link - http://www.karvywealth.com/data/sites/1/skins/karvywealth/Download_media_report.aspx?FileName=B98EB615-C7D5-409D-AFF1-05C92C06DBE4|5234282