Weekly Market View – 21st November 2020

Indian Market Outlook:

The Key benchmark indices rose over 1 percent over the week. Sensex and Nifty are up more than 10% in November, the best month so far this year on the back of inflows from foreign institutional investors, positive COVID-19 vaccine trial results and a better economic outlook than before. Nifty ended the week 1 percent higher at 12859 points while Sensex also ended 1 percent higher at 43882 points. The Broder Market Outperformed the benchmark indices . BSE Midcap index ended 3.53 percent higher, while the BSE Small cap index rose 3.47 percent, during the course of the week. Foreign Institutional Investors were the net buyers during the week; bought equities worth Rs.13018 crore while the DIIs were the net sellers of Rs.12342 crore. In the current month so far, FIIs have net bought Rs 42,300 crore worth of Indian equities, the highest inflow in a month at least in the last two decades. Major reason behind such a large inflow was the expected stimulus worth trillions of dollars from central banks to revive economies that are hit hard by the COVID-led lockdown. United States is also going to announce its second stimulus to sustain economic growth, though it may take some time amid discussion between Republican and Democratic parties. DIIs net sold nearly Rs 30,000 crore of shares in November so far, in addition to Rs 17,300 crore of selling in the previous month taking advantage of this rally by booking profits. Going Forward Investors may look to book profit at current higher levels and wait for a correction before starting fresh buying.

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Economic News:

• The Reserve Bank of India’s internal working group (IWG) reviewing corporate structure of private sector banks has suggested sweeping changes in bank ownership in its report released on Friday, including allowing large corporate and industrial houses to own banks by amending the Banking Regulation Act, 1949. The cap on promoters’ stake in private banks has been proposed to be raised to 26 per cent from 15 per cent over a period of 15 years. For non-promoter shareholding, a uniform cap of 15 per cent has been proposed – up from 10 per cent. The other significant proposal is to allow large non-banking financial companies (NBFCs) with asset size of Rs 50,000 crore and above (including those within the fold of corporate houses), and with a decade’s track record, to convert to banks. Bajaj Finance, Mahindra & Mahindra Financial, and Shriram Transport Finance may become prime candidates for conversion into high-street banks despite their strong corporate lineage if the Reserve Bank of India (RBI) accepts the suggestions of its internal working group.
• A quicker than expected rebound in India’s economic activity has prompted economists to tweak their estimates for GDP contraction in the current financial year. Economists, however, continue to warn that medium-term risks remain and the Covid damage to the Indian economy will be substantial. Moody’s revised its GDP forecast to a contraction of 10.6% in FY21, compared to a contraction of 11.5% estimated earlier. India is estimated to grow by 10.8% in FY22, compared with its earlier forecast of 10.6%

Industry News:

• The Central government is targeting investments worth $9 billion in the fisheries sector over the next five years. This was revealed by Dr Rajeev Ranjan, Union secretary, ministry of fisheries, while speaking at the ‘e-conference on Innovation for Transforming the Sustainable Marine Economy’ organized by the Indian Chamber of Commerce (ICC) and the ministry of earth science on Friday. It was also informed that fisheries export is expected to reach Rs 10,00,00 crore by 2024-25 from the current Rs 46,589 crore.
• The Food Ministry on Friday said it has given in-principle approval to 185 sugar mills and standalone distilleries to avail Rs 12,500 crore of loans for capacity addition of about 468 crore litre of ethanol per annum as part of its efforts to achieve 20 per cent blending with petrol. In the last two years, 70 ethanol projects were sanctioned loans of Rs 3,600 crore. Apart from promoting ethanol production from sugarcane, the ministry is making efforts to manufacture ethanol using surplus rice with state-owned FCI as well as maize.

Company News:

• In a huge setback for e-commerce giant Amazon, Competition Commission of India (CCI) on Friday approved the much-anticipated Future Group-Reliance Retail deal. “Commission approves acquisition of retail, wholesale, logistics & warehousing businesses of Future Group by Reliance Retail Ventures Limited and Reliance Retail and Fashion Lifestyle Limited,” CCI said in a tweet. Mukesh Ambani-led Reliance Industries Ltd in August acquired the businesses of Kishore Biyani’s Future Group for ₹24,713 crore to add to its fast expanding retail business.
• Rashtriya Chemicals and Fertilizers Ltd (RCF) has recorded its highest ever daily sale of industrial products of Rs 5.44 crore on November 18, the government said on Friday. S C Mudgerikar, CMD of RCF, said the RCF apart from manufacturing chemical fertilisers and industrial products is actively engaged in promoting the use of organic fertilisers and non-chemical bio fertilisers.
• Heavy commercial vehicles-maker Ashok Leyland on Friday said it has incorporated a wholly owned subsidiary ‘Vishwa Buses and Coaches Ltd’ (VBCL) with a paid-up share capital of Rs 60 crore. In a BSE filing, the Hinduja Group company said VBCL is a 100 per cent subsidiary and the initial capital of Rs 60 crore was fully infused by the company at par of Rs 10 each per share.

Global News:

• JP Morgan Chase & Co. analysts are forecasting a U.S. economic contraction next quarter as various states impose restrictions on businesses and activity amid a record surge in Covid-19 cases. The world’s largest economy is expected to shrink at a 1% annualized pace in the January-to-March period, JPMorgan said in its 2021 U.S. outlook issued Friday.
• The S&P 500 Index extended a weekly decline as traders weighed a conflict between the White House and Federal Reserve over emergency lending programs along with assurances that the government has plenty of room to help the economy.

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

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