Indian Equity Summary -
· The SØ&P BSE Sensex and Nifty 50 jumped 3.5 percent and 3.3 percent , respectively as the domestic stock market bounced back on the back of a broad-based rally. Robust domestic factory activity and GST collection figures and more government relaxation on Covid-19-related constraints boosted market sentiments, while optimistic global signals, including China's bullish economic data and expectations of fresh US stimulus steps, led to more market buying.
· The central government, in an affidavit filed in the Supreme Court, has supported waiving compound interest or ‘interest on interest’ for smallØ ticket loans up to Rs 2 crore which may have some negative impact on the banking stocks going forward.
· 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 11900-11,200 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 ended higher. The yield on the 10-year benchmark 5.77% 2030 paper settled at 6.00% on October 1 compared withØ 6.04% on September 25.
· The sentiment in the fixed income market improved following Governments indication of sticking to its original borrowing plan and would beØ sticking to the Rs 12 lakh crore borrowing figure for the current fiscal and RBI will sell Gsecs for a total notified Rs 4.34 lakh crore over the remaining fiscal. We expect the 10 year benchmark yield to trade between 5.80-6.05% in near term with a downward basis
Domestic News -
· India's trade deficit narrowed sharply to USD 2.9 billion in September 2020 from USD 10.9 billion in the same period of the previousØ year, a preliminary estimate showed. Exports jumped 5.3 percent driven by sales of engineering goods, petroleum, pharmaceuticals and readymade garments. Meanwhile, imports slumped 19.6 percent.
· India’s eight key infrastructure industries contracted for the sixth consecutive month at 8.5% on-year in August from 8% in July,Ø indicating that economic recovery has slowed on a sequential basis.
· India's rupee touched the 73 per USD mark for the first time since September 4th, before cutting some of the gains to trade aroundØ 73.4 against the greenback. Investors cheered an upbeat PMI survey that showed India's manufacturing sector grew in September at the fastest pace since January 2012 as the economy recovers from the pandemic shock.
International News
· US Gross Domestic Product (GDP), the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter,Ø only slightly changed from the 31.7% drop estimated one month ago.
· UK GDP declined 21.5% on-year in the second quarter of 2020, compared with a 2.1% decline in the first quarterØ
· China’s official manufacturing Purchasing Managers Index (PMI) came in at 51.5 in September, up from 51.0 in August.Ø Brent crude futures fell 4.5% to $39.1 a barrel on Friday, the lowest close since June 12th after President Trump tested positive forØ COVID-19, raising worries about the outcome of the US presidential election
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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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