NEWS U CAN USE March 19, 2021 - Mutual Fund Investments are subject to market risks, read all scheme related documents carefully - Nippon India ...
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NEWS U CAN USE March 19, 2021 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
The Week that was… 15th Mar to 19th Mar 2 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Indian Economy • The wholesale price index (WPI) based inflation rose 27-month high to 4.17% in Feb 2021 from 2.03% in the previous month and 2.26% in the same month of the previous year. The WPI Food Index rose 3.31% in Feb 2021 from contraction of 0.26% in the previous month and growth of 1.11% in Dec 2020. Under food articles, WPI inflation for vegetables contracted 2.90% in Feb 2021 as compared to contraction of 20.82% in the previous month. WPI inflation for potato contracted 29.78% as compared to contraction of 22.04% in the previous month. WPI inflation for fuel and power rose 0.58% in Feb 2021 after contracting for seven consecutive months. • India’s trade deficit widened to $12.62 billion in Feb 2021 from $10.16 billion in the same period of the previous year. Exports grew to $27.93 billion in Feb 2021 over the year from $27.74 billion in Feb 2020. Imports rose to $40.54 billion in Feb 2021 over the year from $37.90 billion in Feb 2020. For the period from Apr 2020 to Feb of 2021, trade deficit narrowed sharply to $84.62 billion from $151.37 billion in the same period of the previous year. Imports fell 23.11% on a yearly basis during the period from Apr 2020 to Feb 2021 while exports came down 12.23%. Oil imports in Feb 2021 was 16.63% lower in dollar terms compared to the same period of the previous year while non-oil imports in dollar terms rose 16.34% on a yearly basis in Feb 2021. • According to the Union Minister of State for Finance & Corporate Affairs, fiscal deficit for FY22 is estimated at 6.8%. The minister further added that under the restructured fiscal consolidation path the government aims to reach fiscal deficit at 4.5% of GDP by FY26. 3 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Indian Equity Market • Indian equity markets settled for the Domestic Equity Market Indices week with modest losses. Bourses were Indices 19-Mar-21 1 Week Return YTD Return dragged initially by weak S&P BSE Sensex 49,858.24 -1.84% 4.41% macroeconomic data. Besides, elevated Nifty 50 14,744.00 -1.91% 5.45% crude prices weighed on sentiment. S&P BSE Mid-Cap 20,044.50 -2.59% 11.72% • Additionally, rising COVID-19 cases S&P BSE Small-Cap 20,470.54 -3.48% 13.11% increased the risk of a second wave. Source: MFI Explorer Market participants were worried after Gujarat decided to impose night curfew S&P BSE S&P BSE S&P BSE Ratios Sensex Nifty 50 Mid Cap Small Cap in Surat, Rajkot, Ahmedabad, and Vadodara for the next fortnight owing P/E 34.71 40.16 56.58 743.48 P/B 3.36 4.18 2.93 2.77 to rising cases of COVID-19 infection. Dividend Yield 0.72 1.08 0.92 0.87 Source: BSE, NSE Value as on Mar 19, 2021 • Further, elevated U.S. Treasury yield triggered fears regarding outflow of NSE Advance/Decline Ratio foreign money from domestic equities Date Advances Declines Advance/Decline Ratio to U.S. bond market. 15-Mar-21 691 1316 0.53 16-Mar-21 913 1022 0.89 17-Mar-21 382 1582 0.24 18-Mar-21 425 1529 0.28 Source: NSE 4 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Indian Equity Market (contd.) Sectoral Indices Last Returns (in %) • On the BSE sectoral front, majority of the Indices sectors closed in the red. S&P BSE Realty was Closing* 1-Wk 1-Mth S&P BSE Auto 23,000.7 -1.92% -3.34% the major loser, down 5.93%, followed by S&P S&P BSE Bankex 38,468.5 -3.82% -4.62% BSE Capital Goods and S&P BSE Oil & Gas, S&P BSE CD 32,432.4 -2.57% 1.87% which dipped 5.20% and 4.06%, respectively. S&P BSE CG 21,087.9 -5.20% -3.21% • Meanwhile, S&P BSE FMCG, S&P BSE Power S&P BSE FMCG 12,574.6 2.81% 2.37% and S&P BSE Metal were the only gainers, up S&P BSE HC 20,545.1 -3.48% -3.69% 2.81%, 0.64% and 0.06%, respectively. S&P BSE IT 25,995.5 -1.10% 2.17% S&P BSE Metal 13,879.3 0.06% 8.38% S&P BSE Oil & Gas 15,246.5 -4.06% -1.21% Source: Refinitiv *Value as on Mar 19, 2021 Indian Derivatives Market Review • Nifty Mar 2021 Futures stood at 14,756.45, a premium of 12.45 points above the spot closing of 14,744.00. The total turnover on NSE’s Futures and Options segment for the week stood at Rs. 233.22 lakh crore as against Rs. 181.40 lakh crore for the week to Mar 12. • The Put-Call ratio stood at 0.88 compared with the previous week’s close of 0.99. • The Nifty Put-Call ratio stood at 1.20 compared with the previous week’s close of 1.02. 5 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Domestic Debt Market • Bond yields fell as market participants Debt Indicators Current 1-Wk 1-Mth 6-Mth expect open market operations (OMO) (%) Value Ago Ago Ago purchases by the Reserve Bank of India Call Rate 3.25 3.22 3.21 3.41 (RBI) to continue till the current fiscal 91 Day T-Bill 3.33 3.30 3.23 3.35 year end. Yields further fell on expectations that RBI will cancel the last 05.22% 2025, (5 Yr GOI) 5.66 5.77 5.56 5.41 scheduled weekly government securities 05.85% 2030, (10 Yr GOI) 6.19 6.23 6.13 6.01 auction for the current financial year. Source: Refinitiv Value as on Mar 19, 2021 • Yield on the 10-year benchmark paper (5.85% GS 2030) fell 4 bps to close at 10 -Yr Benchmark Bond ( % ) 6.22 6.19% from the previous week’s close of 6.23% after moving in a range of 6.17% Yield in % to 6.25%. 6.18 • RBI conducted the auction of four government securities- 5.15% GS 2025, 6.14 5.85% GS 2030 and 6.76% GS 2061 for a 15-Mar 16-Mar 17-Mar 18-Mar 19-Mar cumulative amount of Rs. 33,000 crore, Source: CCIL which was oversubscribed. 6 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Domestic Debt Market (Spread Analysis) • Yields on gilt securities fell by up to 12 bps G-Sec Yield Corporate Yield Spread across maturities, barring 2-year paper that Maturity (%) (%) bps rose 5 bps and 30-year paper was steady. Yield fell the most on 6-year paper. 1 Year 4.17 4.48 31 • Corporate bond yields rose in the range of 3 to 35 bps across the curve, leaving 10- & 15- 3 Year 5.10 5.71 61 year papers that fell 4 & 22 bps, respectively. 5 Year 5.85 6.62 77 • Spread between AAA corporate bond and gilt 10 Year 6.29 7.49 120 expanded in the range of 14 to 46 bps across the segments, except 15-year paper that Source: Refinitiv Value as on Mar 19, 2021 contracted 12 bps and 10-year paper was steady. India Yield Curve Shift (%) (W-o-W) Change in bps 8.00 6 Yield in % 5.00 -4 2.00 -14 3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs Source: Refinitiv Change in bps 19-Mar-21 12-Mar-21 7 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Regulatory Updates in India • The Union Minister for Road Transport and Highways unveiled the vehicle scrapping policy, stating that vehicle owners who scrap their old vehicles are likely to receive financial incentives. The Union Government proposed to offer a road-tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles. Vehicle manufacturers are also encouraged to offer a 5% discount on the purchase of a new vehicle in exchange for the scrapping certificate. In addition, if a new vehicle is purchased with a scrapping certificate, the registration fee may be waived. • The Reserve Bank of India (RBI) has maintained its stance on cryptocurrencies, informing the government of its decision to pursue a ban on such instruments after previously expressing serious concerns. While stating that blockchain technology should be promoted, the central bank has challenged the utility of cryptocurrencies being classified as a currency. The central bank has also raised security concerns about cryptocurrencies, claiming that the anonymity of the transactions could lead to money laundering and terror financing. The regulator believes that allowing cryptocurrency into the economy will undo the current government's efforts to restrict black money movement, as a large amount of illicit cash stashed abroad might return through this path. • According to media reports, The Reserve Bank of India will have to postpone the start of monetary policy normalisation by three months due to an increase in COVID-19 cases, but there is no major threat to the economy's recovery unless stringent lockdowns are reinstated. 8 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Regulatory Updates in India (contd..) • Finance Minister introduced a Bill in Rajya Sabha to amend the Insurance Act, allowing for 74% foreign direct investment (FDI) in the sector. Amendments to the Insurance Amendment Bill 2021 have been approved by the Union Cabinet. Currently, the maximum amount of foreign direct investment (FDI) allowed in life and general insurance is 49%, with Indian ownership and management control. Increased FDI would aid in the country's life insurance penetration. The country's life insurance premiums are 3.6% of GDP, well below the global average of 7.13%, and general insurance premiums are even worse, at 0.94% of GDP, well below the global average of 2.88%. • The Securities and Exchange Board of India (Sebi) has proposed to streamline the initial public offering (IPO) process with unified payment interface (UPI) in application supported by blocked amount (ASBA) and redressal of investor grievances. • Government has formed an expert advisory committee that will oversee the Startup India Seed Fund Scheme's overall execution and monitoring. According to an office memorandum from the Department for Promotion of Industry and Internal Trade (DPIIT), the committee will evaluate and select incubators for allotment of funds under the scheme, track progress, and take all appropriate steps for efficient utilisation of funds against the scheme's objectives 9 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Global News/Economy • The U.S. Federal Reserve (Fed) kept interest rates unchanged in its monetary policy review. The U.S. Central Bank also decided to continue with its asset purchase program in which it buys at least $120 billion of bonds a month. The U.S. Federal Reserve indicated no rate hikes likely through 2023 despite an improving outlook and higher inflation. In addition, the U.S. Central Bank now expects the U.S. economy to grow by 6.5% in 2021 as compared to its earlier projection of 4.2% in Dec 2020. • A global rating agency has affirmed the sovereign ratings of the U.S. at 'AA+' with 'stable' outlook. The agency retained the ratings because of the country's strong institutions, dynamic and resilient economy, monetary policy stability, and unique position as the world's leading reserve currency issuer. However, the agency mentioned that the ratings were hindered by high general government debt and fiscal deficits, all of which deteriorated last year because of the pandemic's economic shock. • According to data of Commerce Department, U.S. retail sales fell 3% in Feb 2021 after rising by an upwardly revised 7.6% in Jan 2021. • Bank of England policymakers unanimously agreed to keep the benchmark rate unchanged at 0.10% and quantitative easing unchanged at GBP 895 billion. The committee stated that it would not tighten monetary policy until clear proof of substantial progress in removing spare capacity and achieving the 2% inflation goal on a long-term basis. It also stated that if the outlook for inflation deteriorated the committee would be prepared to take whatever additional steps were required to fulfil its mandate. 10 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Global Equity Markets Global Indices U.S. • U.S. markets largely remained under 1-Week YTD Indices 19-Mar-21 Return Return pressure as recent spike in treasury Russell 3000 1,941.82 -1.00% -0.55% yields renewed concerns about the Nasdaq 100 12,866.99 -0.54% -0.17% outlook for high-growth companies. FTSE 100 6,708.71 -0.78% 3.84% • The downturn was restricted by U.S. DAX Index 14,621.00 0.82% 6.58% Fed’s forecast on stronger economic Nikkei Average 29,792.05 0.25% 8.56% growth and higher inflation this year Straits Times 3,134.54 1.27% 10.22% although it expects to keep interest Source: Refinitiv Value as on Mar 19, 2021 rates at near-zero levels through 2023. Europe • European markets largely went up during the week with investors cheering the Fed's pledge to continue its accommodative policy and taking positive cues from the Bank of England's monetary policy announcement. Asia • Majority of the Asian markets rose during the week after U.S. Fed reiterated its accommodative monetary policy and projected the U.S. economy to grow 6.5% this year. Nonetheless, rise in U.S. Treasury yield kept investors wary. 11 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Global Debt (U.S.) US 10-Year Treasury Yield Movement • Yields on the 10-year U.S. Treasury rose 9 1.76 bps to close at 1.73%, from the previous week’s close of 1.64%. Yield rose to its highest level in 14 months. 1.67 • U.S. Treasury prices fell despite strong demand for a 20-year bond auction. Prices declined further after the U.S. Federal Reserve projected a sharp rise in 1.58 economic growth with no interest rate 15-Mar 16-Mar 17-Mar 18-Mar 19-Mar Source: Refinitiv hikes through 2023. • The fall in treasury prices accentuated by the end of week as market participants expect higher inflation as the economic recovery in the U.S. gathers steam. 12 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Commodities Market Global Commodity Movement Gold 11.00 Rebased to 10 • Gold prices went up after U.S. Federal Global Commodity Prices 10.50 Reserve kept interest rates unchanged and indicated that there are no interest rate 10.00 -8.76% hikes likely through 2023 despite an 1.06% 9.50 improving outlook and higher inflation. 1.28% 9.00 Brent Crude 19-Feb-21 5-Mar-21 19-Mar-21 • Brent crude prices plunged after data from Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl) the EIA showed that U.S. crude inventories Source: Refinitiv rose by 2.4 million barrels for the week ended Mar 12, 2021. Persisting concerns Performance of various commodities over the COVID-19 pandemic after some Commodities Last Closing* 1-Week Ago European countries halted the use of the Brent Crude($/Barrel) 63.23 69.30 AstraZeneca vaccine also dampened Gold ($/Oz) 1744.74 1726.41 sentiments. Gold (Rs/10 gm) 44788 44177 Silver ($/Oz) 26.25 25.91 Baltic Dry Index Silver (Rs/Kg) 66744 65835 • The index rose during the week due to Source: Refinitiv *Value as on Mar 19, 2021 improved capesize and panamax activities. 13 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
Currencies Markets Currency Movement Rupee 10.30 • The Indian rupee rose against the U.S. dollar on Rebased to 10 greenback inflows associated with initial public Currency Prices ( in terms of INR) 10.20 10.10 offerings of corporates. -0.52% 10.00 Euro -0.23% 9.90 • Euro fell against the U.S. dollar on rise in U.S. 9.80 -0.49% Treasury yields. However, losses were limited as 9.70 the U.S. Fed does not expect to increase -0.19% 9.60 interest rates till the end of 2023. 19-Feb-21 5-Mar-21 19-Mar-21 USD GBP Euro JPY Pound Source: Refinitiv • Pound fell against the U.S. dollar on possible Movement of Rupee vs Other Currencies downside risks relating to the UK's Covid-19 vaccine rollout and tensions with the European Currency Last Closing* 1-Wk Ago Union. US Dollar 72.52 72.68 Yen Pound Sterling 100.94 101.47 • Yen was little changed against the U.S. dollar as EURO 86.45 86.88 fall due to rise in U.S. treasury yields neutralised 100 Yen 66.64 66.77 gains as the U.S. Fed does not expect to increase interest rates till the end of 2023. Source: Refinitiv Figures in INR , *Value as on Mar 19, 2021 14 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
The Week that was… 15th Mar to 19th Mar 15 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
The Week that was (Mar 15 – Mar 19) Present Previous Date Events Value Value • India Wholesale Price Inflation (Feb) 4.17% 2.03% Monday, • India Trade Deficit (Feb) (USD) 12.62B 14.54B March 15, 2021 • China Retail Sales (YoY)(Feb) 33.80% 4.60% • China Industrial Production (YoY)(Feb) 35.10% 7.30% • U.S. Retail Sales (MoM)(Feb) -3% 7.60% • Japan Industrial Production (YoY)(Jan) -5.20% -5.30% Tuesday, • Japan Merchandise Trade Balance Total (Feb) (Yen) 217.4B -325.4B March 16, 2021 • Germany ZEW Survey - Economic Sentiment (Mar) 76.6 71.2 • Eurozone ZEW Survey - Economic Sentiment (Mar) 74 69.6 Wednesday, • Eurozone Consumer Price Index (MoM)(Feb) 0.20% 0.20% March 17, 2021 • U.S. Housing Starts (MoM)(Feb) 1.421M 1.584M • Japan National Consumer Price Index (YoY)(Feb) -0.40% -0.60% Thursday, • Eurozone Labor Cost(Q4) 3% 1.60% March 18, 2021 • U.S. Initial Jobless Claims (Mar 12) 770K 725K Friday, • U.K. GfK Consumer Confidence (Mar) -16 -23 March 19, 2021 • Eurozone Producer Price Index (MoM) (Feb) 0.70% 1.40% 16 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
The Week Ahead 22nd Mar to 26th Mar 17 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
The Week Ahead Day Event Monday, • People’s Bank of China Interest Rate Decision Mar 22, 2021 • Japan Leading Economic Index (Jan) Tuesday, • U.K. ILO Unemployment Rate (3M) (Jan) • U.S. New Home Sales (MoM)(Feb) Mar 23, 2021 • Bank of Japan Monetary Policy Meeting Minutes • U.K. Consumer Price Index (YoY)(Feb) Wednesday, • U.S. Durable Goods Orders (Feb) • Germany Markit PMI Composite (Mar) PREL Mar 24, 2021 • Eurozone Markit PMI Composite (Mar) PREL • U.K. Markit Services PMI (Mar) PREL Thursday, • U.S. Gross Domestic Product Annualized (Q4) Mar 25, 2021 • Germany Gfk Consumer Confidence Survey (Apr) • U.S. Michigan Consumer Sentiment Index (Mar) Friday, • U.S. Core Personal Consumption Expenditure - Price Index (MoM) (Feb) Mar 26, 2021 • U.K. Retail Sales (YoY) (Feb) • Germany IFO – Business Climate (Mar) 18 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
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