Indian Equity Summary
· The BFSI sector staged a sharp recovery last week; the BSE Bankex was up ~10% on wow basis which lent support to the benchmark indicesØ Sensex /Nifty to close in green for 2nd consecutive week by ~2.5%. The market sentiment remained positive on the back of US Fed Chairman speech that lower interest rate trajectory may continue for longer time, thus a higher probability of inflows in the emerging markets, coupled with RBI Governors statement the central bank has not exhausted its ammunition to deal with the pandemic-induced stress.
· Going forward, global factors like development on the US -China relationship front , IndiaØ & China border issues and domestic factors like the monsoon trajectory and 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 moved northward as the yield on the 10-year benchmark 5.79% 2030 paper settled at 6.10% on August 28 comparedØ with 6.14% on August 21.
· The Reserve Bank of India on last week announced that it will conduct open market operations or OMO of government t securities worth ₹20,000Ø crore in two tranches.
· India's GDP contracts 23.9% in Q1FY21 as lockdowns, restrictions bludgeon economy. From manufacturing to real estate, from hospitality toØ mining, all segments except agriculture in deep red as economy records sharpest drop in 41 years.
· We expect the 10 year benchmark yield to trade between 5.90-6.25% in near term.Ø
Domestic News
· Moody’s retained its earlier India growth forecast at -3.1% for current fiscal and 6.9% for next fiscal .Ø The RBI’s balance sheet expanded by 30.02% to Rs 533.47 lakh crore in fiscal 2020, thanks to the growth in foreign exchange reservesØ
· The gross domestic product (GDP) growth for the April-June quarter contracted 23.9 percent against a growth of 5.2 percent in the same periodØ last fiscal.
· In its annual report, the Reserve Bank Of India (RBI) stated that India’s growth for the year 2020-21 is projected at minus (-) 4.5 percent.Ø
International News
· Eurozone money supply and private sector credit growth accelerated in July. The monetary aggregate M3 expanded 10.2 percent on yearØ versus a 9.2 percent rise in June.The rate was expected to remain unchanged at 9.2 percent.
· US real gross domestic product plummeted by 31.7 percent in the second quarter compared to the previously reported 32.9 percent nosedive. Economists had expected the plunge in GDP to be revised to 32.5 percent.
· China’s Industrial profits advanced 19.6 percent on a yearly basis in July, following a 11.5 percent rise in June. During January to July, industrialØ profits fell 8.1 percent from the same period last year.
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