Weekly Market View – 10th October 2020

Indian Market Outlook:

The Key benchmark indices rose over 4 percent over the week led by rally in IT and Financial stocks. Nifty ended the week 4.68 percent higher at 11914 points while Sensex ended 4.68 percent higher at 40509 points. Broader market underperformed the Key benchmark indices. BSE Midcap index ended 0.32 percent lower, while the BSE Small cap index fell 0.03 percent, during the course of the week. Foreign Institutional Investors were the net buyers during the week; bought equities worth Rs.3371 crore while the DIIs were the net sellers of Rs.2389 crore. RBI in its monetary Policy kept interest rates unchanged while maintained accommodative stance. The Reserve Bank’s decision to enhance liquidity into the system through long-term repo operations will ease the borrowing cost for NBFCs and relaxation in loan to value guideline will help revive the economy. In the US, a negotiation on fresh stimulus for the US economy has come to a grinding halt, and has been pushed back till January or February 2021. Going forward, The Supreme Court will further hear the interest waiver case on 13^th October, 2020. TCS has given the results season a great start. Other IT majors will also announce their earning next week. Key Results to watch next week are Wipro, Infosys, Mindtree, HCL Tech, Tata Elxsi, Federal Bank, Avenue Supermart, Bajaj Consumer and HDFC Bank. Along with quarter result next week, Wipro will also provide the details of buyback. On Macro Front Industrial Production for August and CPI Inflation would be announced on 12th October, 2020 while WPI inflation would be announced on 13th October, 2020.

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Economic News:

• India’s Monetary Policy Committee kept interest rates unchanged at its latest meeting, as it opted to look through the current high inflation scenario, stressing that its objective remains to revive growth in a durable manner while maintaining inflation within the targeted range of 4 (+/-2)%. In its first forecast since the Covid crisis began, the RBI said it expects the economy to contract 9.5% in FY21, with risks tilted to the downside. Retail inflation is expected to remain close to the targeted level by the last quarter of the current fiscal year. However, it is likely to stay above the tolerance level at 6.8 % for the quarter that ended in September 2020.

• India’s fuel demand in September rose for the first time since June as easing coronavirus restrictions supported economic activity and travel, but consumption remained weaker than a year earlier, government data showed on Friday. Consumption of refined fuels, a proxy for oil demand, rose 7.2% in September from the prior month to 15.47 million tonnes, the first monthly increase since June when demand rose to 16.09 million tonnes.

Industry News:

• The government is considering changing the price formula for domestic natural gas to encourage investment in the sector, ONGC Chairman Shashi Shanker has said. An official committee has been constituted to consider the issue of gas pricing, Shanker said. “Talk is going on for giving some kind of floor pricing and changing the formula as well,” he said, without giving more details. The floor price could be linked to some international benchmarks. The government revised the domestic natural gas price down 25% to a record-low of $1.79 per million metric British thermal unit (mmBtu) from October 1. The price, based on a 2014 formula set by the government, will be applicable until March-end.

• The Reserve Bank’s decision to enhance liquidity into the system through long-term repo operations will ease the borrowing cost for NBFCs and relaxation in loan to value guideline will help revive the economy, the industry said on Friday. Under the targeted long-term repo operations (TLTROs) measures, the Reserve Bank of India will conduct on-tap TLTRO with tenors of up to three years for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate. Besides, in order to give a fillip to real estate sector, the RBI decided to rationalise the risk weights and link them to LTV (loan to value) ratios for all new housing loans sanctioned up to March 31, 2022, keeping in view the role of real estate sector in generating employment and economic activity.

Company News:

• Drug firm Glenmark Pharmaceuticals Ltd. on Friday said the addition of antiviral Umifenovir did not demonstrate any significant clinical benefit over Favipiravir alone in moderate Covid-19 patients. The clinical study evaluated the possible superiority of the combination’s efficacy against Favipiravir monotherapy, Glenmark said in a statement. As per the results that Glenmark presented to the regulator, the study showed no superior clinical outcomes with the addition of Umifenovir, it added.

• Arbitration proceedings between Amazon and Future Group for its deal with Reliance Industries is expected to start in November. The proceedings in Singapore could go on for at least 9-12 months. Amazon has sent intimation notices alleging Future Group’s compliance issue to Singapore International Arbitration Centre (SIAC), Future Group, its investors and shareholders. The arbitration process is yet to start. It would require representation from all the parties including Amazon, Future and its investors. Amazon said that the Future Group did not seek permission from them before striking a deal with Reliance Industries.

• A top Bharti Airtel executive said the adjusted gross revenue (AGR) issue was more or less behind it, but the telecom operator still needed some clarity from the government over what was the actual amount to be paid from here on, given the Rs 18,000 crore it had already paid up front. The telco has yet to make a decision on filing a curative petition seeking a correction in the computation of its AGR-based dues, said the executive, who spoke to ET on the condition of anonymity.

Global News:

• The United States is imposing new tariffs on $1.96 billion worth of aluminum sheet products from 18 countries after determining that the goods were being dumped, U.S. Commerce Secretary Wilbur Ross said on Friday. Fox Business Network. Brazil, Croatia, Egypt, Greece, India, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, South Korea, Spain, Taiwan and Turkey were also affected, he said.

• Senate Majority Leader Mitch McConnell said the differences are likely too big and the time is too short for Congress to agree on a new comprehensive stimulus package before the election, despite President Donald Trump’s renewed interest in striking a deal.

 (Source: Bloomberg Quint, Economic Times, BusinessToday, Business Standard, Financial Express, Investing, Moneycontrol, livemint)

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