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 percent 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.
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