The World This Week 18th September 2020 to 25th September 2020

Indian Equity Summary:

·         The Indian market closed negative during last week. Equity market volatility was high as Nifty and Sensex dropped by 3.95 percent and 3.75Ø percent respectively on a WoW basis as it tracked poor global cues ,in the midst of economic recovery uncertainty due to increasing COVID-19 infections and expiry of the September derivatives contract. Talks are on for another round of fiscal measures by the GOI before the festive season which may give necessary impetuous to the consumption side and may prove positive for the equities market. On the other hand the $2.2 trillion coronavirus package that could be voted on next week in US can give a massive boost to the US economy and the world markets. 

·         Going forward, global factors like development on the US -China relationship front , US elections ,IndiaØ & China border issues while domestic factors like FII/DII inflows , inflation trajectory and USD/INR rates ; will continue to dictate the trend of the domestic equity market. We expect the trading range for Nifty between 11800-11,300 in the near term. Markets may consolidate within a wider range, demonstrating clearly that a sideways movement is more probable than an outright reversal.

Indian Debt Market:

·         Government bond prices remained muted as the yield on the 10-year benchmark 5.77% 2030 paper settled at 6.01% on September 25 .Ø 

·         The results of the auctions held by RBI on 25th Sept , was fully subscribed for INR 30,000cr comprising of 5.09% Government Stock, 2022 (INRØ 3000cr), 5.77% Government Stock, 2030 (INR 18000cr), GOI Floating Rate Bond 2033 (INR 4000cr) and 6.80% Government Stock, 2060 (INR 5000cr). 

·         The Centre on September 24 permitted five states to go for additional borrowing of Rs 9,913 crore through Open Market Borrowings (OMBs) toØ meet their expenditure requirements amid falling revenues due to the COVID-19 crisis

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

Domestic News :

·         The Finance Ministry said banks have sanctioned loans of about Rs 1.77 lakh crore to 44.2 lakh business units under the Rs 3 lakh croreØ Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under the slowdown caused by the coronavirus pandemic. 

·         Credit for reform: Centre allows 5 states to borrow Rs 9,913 cr extra. Permission granted on meeting of one-nation-one-ration card reform.Ø 

·         Exchange-traded funds (ETFs) are gaining popularity among retail and high-net-worth individual (HNI) investors. The assets under managementØ (AUM) of ETFs grew annually by 87% and 64% in the past five and 10 years respectively, compared with 18.5% and 14.5% growth in the total AUM of mutual funds. The AUM of ETFs reached a record high of Rs 2.1 lakh crore in August 2020, equivalent to the combined AUM of the largecap and large and midcap categories of equity funds.

International News: 

·         US new home sales jumped by 4.8 percent to an annual rate of 1.011 million in August after skyrocketing by 14.7 percent to an upwardlyØ revised rate of 965,000 in July. 

·         US initial jobless claims inched up to 870,000, an increase of 4,000 from the previous week's revised level of 866,000. The modest increaseØ surprised economists, who had expected jobless claims to drop to 843,000 from the 860,000 originally reported for the previous week. 

·         Indonesia’s economy is set to contract for the first time since the Asian financial crisis more than two decades ago as the country struggles toØ get virus cases under control. Gross domestic product is forecast to decline 0.6% to 1.7% this year 

·         Japan’s all industry activity index rose 1.3 percent month-on-month in July, after a 6.8 percent decline in JuneØ

 

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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.