Weekly Market View – 19th December 2020

Indian Market Outlook:

The Key benchmark indices rose over 1 percent during the week on the earlier-than-expected deployment of Covid-19 vaccines, impending US fiscal stimulus and decreasing domestic Covid-19 cases. Nifty ended the week 1.83 percent higher at 13760 points while Sensex ended 1.87 percent higher at 46960 points. The rally was also supported by the Broder Market also. BSE Midcap index ended 1.60 percent higher, while the BSE Small cap index rose 1.23 percent, during the course of the week. It is not just equities but other asset classes such as commodities, especially metals and oil, are also witnessing an upmove. Bitcoin has managed to hit another all-time high after crossing the $20,000 mark. Foreign Institutional Investors were the net buyers during the week; bought equities worth Rs.11806 crore while the DIIs were the net sellers of Rs.11025 crore. Going forward expect FII flows to slowdown in the next two weeks as we head towards Christmas vacation. In the upcoming week sectors such as defence and metals could remain in focus. Any supportive policies by the government in these sectors could lead to strong moves in these stocks. Going forward, All factors indicate that the bull run in the market is here to stay, however there will be some  profit booking. Investors looking at a longer time horizon should continue buying on dips in a staggered manner as Calendar 2021 is expected to bring in a lot of cheer to markets. The initial public offer of Mrs Bectors Food Specialities broke the record of all IPO subscriptions this year. Basis of allotment of IPO will be announced on December 22.

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Economic News:

• Inflation concerns remained primary talking point in the recently concluded Monetary Policy Committee (MPC) meeting with most members expecting it to rise further, posing challenges for monetary policy, reveals the minutes of the meeting released on Friday. The MPC was of the view that inflation may remain elevated, barring temporary relief in the winter months from prices of perishables, which would constrain monetary policy from acting in support of economic growth. CPI inflation rose to 7.3 per cent in September and further to six-year high of 7.6 per cent in October, before easing marginally to 6.93 per cent in November. Unseasonal rains, supply disruptions and pandemic-induced woes pushed have kept it well over the RBI’s comfort zone.

• Bank credit grew by 5.73 per cent to Rs 105.04 lakh crore while deposits increased by 11.34 per cent to Rs 145.92 lakh crore in the fortnight ended December 4, the RBI data showed. In the fortnight ended December 6, 2019, bank credit had stood at Rs 99.35 lakh crore and deposits at Rs 131.06 lakh crore. In the previous fortnight ended November 20, credit grew by 5.82 per cent to Rs 104.34 lakh crore and deposits by 10.89 per cent to Rs to Rs 143.70 lakh crore.

Industry News:

• India’s domestic air passenger traffic continued to improve on a monthly basis in November, but declined by more than half on a yearly basis. According to the Directorate General of Civil Aviation (DGCA), 63.54 lakh domestic passengers travelled by air in November, which was 20.54 per cent higher than the air passenger traffic recorded last month. Domestic airlines flew 52.71 lakh and 39.43 lakh passengers in October and September, respectively.

• The Textiles Ministry is bringing to fore a structure under which the Production Linked Incentive Scheme for technical textiles and manmade fibre segment will be rolled out, Union Minister Smriti Irani said on Friday. She said the new Textile Policy is on the anvil, observing that the previous national Textile Policy was unveiled two decades ago. “We are currently on the anvil of also bringing to the fore the new Indian textile policy, the last time India had a textile policy was two decades ago,” Irani, Minister for Textiles and Women & Child Development, said while virtually addressing Assocham Foundation Week 2020.

Company News:

• Reliance Industries Ltd. and its partner bp Plc of the U.K. have announced the commencement of natural gas production from Asia’s deepest project, according to a company filing with the stock exchanges. The production from ultra-deepwater R-Cluster, the first of the three deepsea projects Reliance-bp are developing in the eastern offshore KG D6 block, started production, the two firms said in a statement. Reliance and bp are developing three deepwater gas projects in block KG D6 — R Cluster, Satellites Cluster and MJ — which together are expected to meet about 15% of India’s gas demand by 2023, the company statement said.

• Prestige Estates is in advanced stages of signing a joint development deal with Century Real Estate for a 16-acre land parcel in the capital city of Karnataka, according to a source in the know. The parcel, owned by Century, is located in Hebbal area of Bengaluru and is valued at around Rs 600 crore, sources said. The land has a development value of Rs 12,000-14,000 crore, sources said.

• Apollo Hospitals Enterprises (AHEL) is planning to raise around Rs 1,500 crore in the next two months to support its inorganic growth and strengthen balance sheet and its digital platform. It’s an “indicative figure, not definite”, Suneeta Reddy, managing director, Apollo Hospitals Group, said. The money, Reddy said, will be deployed in Apollo 24/7, the company’s six-month-old digital health platform, and in supporting growth in the hospital business and deleveraging the balance sheet.

Global News:

• Applications for U.S. state unemployment benefits unexpectedly jumped to the highest level in three months, suggesting the labor market’s recovery is faltering amid the surge in Covid-19 cases and widening business restrictions. Initial jobless claims in regular state programs rose by 23,000 to 885,000 in the week ended Dec. 12, Labor Department data showed Thursday.

• S. stocks ended lower on Friday, pulled down by uncertainty around a coronavirus stimulus deal, while Tesla shares jumped in heavy trading in anticipation of their addition to the S&P 500 next week.

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

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