Weekly Market View – 31st October 2020

Indian Market Outlook:

The Key benchmark indices fell over 2 percent over the week amid weak cues from global markets. Upcoming US Presidential Election, rising COVID-19 cases in Europe and the US and lack of fiscal stimulus has spooked sentiment of the market. Nifty ended the week 2.63 percent lower at 11642 points while Sensex ended 2.41 percent lower at 39614 points. Broader market outperformed the Key benchmark indices. BSE Midcap index ended 0.48 percent lower, while the BSE Small cap index fell 1.63 percent, during the course of the week. Foreign Institutional Investors were the net buyers during the week; bought equities worth Rs.973 crore while the DIIs were the net sellers of Rs.2170 crore. DIIs have sold shares worth over Rs 17148 crore in October. Going forward Market would first react to Reliance industries numbers in early trade on Monday i.e. November 2. The auto numbers at the start of the week will give us an idea about whether the auto sector has recovered growth momentum. Then, the major event that lies ahead for the financial markets is the US elections which scheduled on 3^rd November. Key Results to watch Next week are Punjab National Bank, Cadila Healthcare, HDFC Ltd., Escorts, Zee Entertainment, Berger paint, Adani Ports, Dabur India, PVR, Adani Enterprise, Ashok Leyland, BEL, BEML, BHEL, ITC, State Bank of India, Pidilite Industries, MRF, SAIL, Tata Consumer, Voltas and IPCA Lab. On Macro front Nikkei Markit Manufacturing PMI is scheduled to release on November 02.

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Economic News:

• The travel allowance scheme initially announced for central government employees has now been extended to all other employees with riders to boost consumption during the festive season. The government has announced that all non-central government employees will be eligible for income tax exemption for the entire leave travel concession amount up to Rs 36,000 per person without producing travel bills. However, such employees will have to spend three times the amount for purchasing goods or services on which GST of 12% or higher is levied, said a press release from Central Board of Direct Taxes.

• The 15th Finance Commision will submit its report for fiscal years 2021-22 to 2025-26 to President Ram Nath Kovind on Nov. 9, according to an official statement on Friday. The Chairman NK Singh-led commission has concluded deliberations on the report, which was signed by him and members of the panel—Ajay Narayan Jha, Anoop Singh, Ashok Lahiri and Ramesh Chand. The 15th Finance Commission will also present a copy of the report to Prime Minister Narendra Modi later in November. The report, which contains recommendations pertaining to five financial years, 2021-22 to 2025-26, will be tabled in the parliament by the union finance minister along with an action-taken report of the Government of India.

 Industry News:

• Tractor sale volumes are expected to grow 10-12 per cent this fiscal over the previous year primarily driven by a strong rural income owning to solid rabi crop harvest, ratings agency Ind-Ra has said. Moreover, government initiatives in the form of a hike in minimum support price (MSP) for kharif crops and increased budgetary allocation under MGNRES are supporting rural income, it said in a report. According to Ind-Ra, the segment volumes in 2021-22 are estimated to stand at a high single to low double-digit rate on account of four consecutive good crop harvests, translating into higher cash flows for farmers.

• Petrol and diesel prices haven’t been revised in at least a month because international crude oil prices have remained range-bound, Indian Oil Corp. Ltd. said on Friday. While petrol prices haven’t changed since Sep. 22, diesel rates are static since Oct. 2. “Crude oil has not seen any drastic movement,” Indian Oil Chairman Shrikant Madhav Vaidya told reporters in New Delhi, after announcement of the state-run oil refiner’s September quarter results. “Crude oil has traded in $39-42 per barrel range in recent weeks.” The basket of crude oil that India buys has averaged $40 per barrel in October as against $41.35 in the previous month. According to Vaidya, this range-bound movement does not warrant a change in retail rates.

Company News:

• Reliance Industries (RIL) on Friday reported a 15.1 per cent year-on-year decline in its consolidated net profit to Rs 9,567 crore for the September-ended quarter. Consolidated net revenue also dipped 25.7 per cent year-on-year to Rs 1.11 trillion because of weak performance in the refining, petrochemicals, and retail businesses. The profit number beat street estimates while revenue was in line with expectations. The company’s telecom business (Reliance Jio Infocomm) reported a net profit of Rs 2,844 crore, a three-fold increase over Rs 990 crore a year ago. Net profit from retail business was Rs 973 crore, an increase of 125 per cent. RIL recorded gross refining margins (GRM) at $5.7 per barrel for the July-September period, lower from $9.4 a year ago.

• Grasim Industries Ltd, a flagship company of Aditya Birla Group has signed an agreement with a global specialty chemical producer, Lubrizol Advanced Materials to manufacture and supply chlorinated polyvinyl chloride (CPVC) resin in India with initial production expected in late 2022. “This collaboration with Lubrizol Advanced Materials is part of our long-term direction to bring in world class technologies to India and additionally complements our growth strategy in Chlor-Alkali and Derivatives platform,” said Mr. Kalyan Ram Madabhushi, CEO, global chemicals, Aditya Birla Group.

• Reliance Industries Ltd. is raising $1 billion in investment from two sovereign wealth funds as investors double down on the consumer businesses of Asia’s richest man, who’s diversifying his conglomerate away from oil refining. Abu Dhabi Investment Authority, or ADIA, and Saudi Arabia’s Public Investment Fund, or PIF, will each invest 37.8 billion rupees ($507.2 million) in buying units of Digital Fibre Infrastructure Trust, Reliance said in a post-earnings presentation on Friday. The company highlighted the “induction of strong partners” in what it called a “critical asset base.”

Global News:

• Economists mostly projected U.S. fourth-quarter growth at an annual pace slightly below 3% to about 6% following Thursday’s report, which showed gross domestic product jumped 33.1% in the July-September period. That figure largely reflected a rebound in economic activity after widespread lockdowns earlier this year.

• China unveiled the first glimpses of its economic plans for the next five years, promising to build the nation into a technological powerhouse as it emphasized quality growth over speed.

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

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