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The World This Week – 7th August 2020 to 14th August 2020

Indian Equity Summary- 

·        The domestic equity market benchmark indices ended mildly in red on the back of weak global cues. The small cap and the midcap indices bucked the trend and managed to close in green ~1.5% thus exhibiting an overall strength of the market and broad based buying. The uncertainty surrounding the additional stimulus package and the caution ahead of the weekend meeting between the US and China added to the cautious market sentiment. Upbeat economic data from the US and China, and positive reports from Russia on registering Covid-19 vaccine will act as tailwinds for the markets going forward. 

·        Going forward, global factors like development on the US -China relationship front , 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 fell as the yield of the 10-year benchmark 5.79% 2030 paper settled at 5.97% on August 14 compared with 5.89% on August 7 , while the yield of the 10-year 5.77% 2030 paper settled at 5.95% on August 14 compared with 5.84% on August 7.

·        India’s industrial production (IIP) contracted 16.6% in June as against 33.9% contraction in May while India’s retail inflation spiked to 6.93% in July on account of higher food prices; retail inflation for June was also revised to 6.23%.

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

 

Domestic News

·        Prime Minister Narendra Modi launched a financing facility of Rs 1 lakh crore under the Agriculture Infrastructure Fund. He also unveiled the Transparent Taxation platform to benefit honest taxpayers. Further, he released Rs 17,000 crore directly into bank accounts of 85 million farmers under the PM Kisan scheme.

·        India’s Consumer price inflation rose unexpectedly to 6.93 percent in July from 6.23 percent in June. Economists had forecast the rate to ease to 6.15 percent. Foodpriceinflationacceleratedto9.62percentfrom8.72percentamonthago.

·        Prime Minister Narendra Modi’s assurance on mass production of COVID-19 vaccines and more infrastructure spending by the government boosted market sentiment.

 

International News 

·        China’s Industrial production grew 4.8 percent on a yearly basis in July, the same rate of growth as seen in June .

·        The US non-farm payrolls jumped by 1.8 million jobs in July after surging by 4.8 million jobs in the previous month; the unemployment rate dropped to 10.2% in July from 11.1% in June.

·        Producer prices in Japan were up 0.6 percent on month in July. That exceeded expectations for an increase of 0.3 percent following the 0.6 percent increase in June.

·        The UK gross domestic product (GDP) contracted by 20.4% sequentially in the second quarter, following a 2.2% drop in the first quarter.

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.

 

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