The World This Week – 14th August 2020 to 21st August 2020

Indian Equity Summary -  

·        The domestic equities outperformed global peers, as the broader (small cap) markets outperformed the benchmark indices for the secondØ week in a row. The Sensex / Nifty benchmark index grew by ~1.5 percent/1.7 percent(wow) whereas the BSE small grew by ~5.5(wow) percent in green on the back of broad based buying, though volatility continued to decrease. Positive global signals in the form of stimulus measures announced by China's central bank and excitement about the GOIs additional spending plans boosted sentiment among investors. A rally in power, realty, metal and consumer durables counters buoyed the market.  

·        Going forward, global factors like development on the US -China relationship front , and domestic factors like the monsoon trajectory andØ 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 sharply as the yield of the 10-year benchmark 5.79% 2030 paper settled at 6.14% on August 21 compared withØ 5.97% on August 14.  

·        The yield of the new 10-year 5.77% 2030 paper settled at 6.09% on August 21 compared with 5.95% on August 14Ø  

·        Expectations of interest rate cuts from the RBI in the near future faded , as the MPC's minutes revealed concerns about retail inflation, which inØ recent months remained persistently high.

·        We expect the 10 year benchmark yield to trade between 5.90-6.20% in near term.Ø

 

Domestic News -

·        The World Bank said it is likely to project a steeper contraction of India's economy than its previous forecast of 3.2% for the current financial yearØ due to the increasing number of Covid-19 cases and the resultant regional lockdowns .  

·        India’s trade deficit stood at $4.83 billion in July, compared with $0.8 billion surplus in June and a shortfall of $13.43 billion in July 2019. In July,Ø exports stood at $23.64 billion, while imports reached $28.47 billion.  

·        Prime Minister (PM) Narendra Modi said that Rs 100 lakh crore will be spent on the National Infrastructure Pipeline project and also launchedØ the National Digital Health Mission, under which every Indian will get a health ID

International News -

·        US initial jobless claims climbed to 1.106 million, an increase of 135,000 from the previous week's revised level of 971,000Ø  

·        The euro area private sector composite output index fell unexpectedly to 51.6 in August, while the score was expected to remainØ unchanged at 54.9  UK retail sales rose more-than-expected in July driven by non-food store turnover.

·        Retail sales grew 3.6 percent month-on-month inØ July, but slower than the sharp 13.9 percent rise in June and 12.2 percent increase in May. Economists had forecast sales to rise 2 percent.

 

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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.