Weekly Market View – 8th August 2020

Indian Market Outlook:

The Key benchmark indices rose over 1% over the week. Nifty ended the week 1.27 percent higher at 11214 points while Sensex ended 1.15 percent higher at 38040 points. The Broader market outperformed the benchmark indices. The BSE Midcap index ended 3.34 percent higher, while the BSE Small cap index rose 4.97 percent, during the course of the week. Foreign Institutional Investors were the net buyers during the week; bought equities worth Rs.9497 crore while the DIIs were the net sellers of Rs 2134 crore. The bank nifty index has underperformed the benchmark index in the week gone by and rose 0.53 percent. Stocks like Tata Motors and Tata steel outperformed the most. Reserve Bank of India kept interest rates steady, but the central bank announced many measures to support an economy battered by the COVID-19 pandemic. If inflation remains under control, there will be further policy easing from the central bank. The RBI said it would allow a one-time restructuring of loans, a move that would help banks. Going forward, US is expected to finalize a second round of stimulus package in the coming week for the American people to fight economic fallout from the COVID-19 pandemic. This move is expected to lift the overall sentiment of the US market and in turn markets across the globe. On Macro Front Industrial Production (YoY) (Jun) and CPI (YoY) (Jul) of India would be announced on 11^th August and 12^th August respectively.

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Economic News:

• India’s foreign exchange reserves rose to a record high in the last week of the previous month. Data released by the Reserve Bank of India on Friday showed that forex reserves rose $11.9 billion in the week ended July 31, taking total reserves to $534 billion. India has seen a huge build up of reserves in the last few months as foreign investors pumped in money into Indian equities. One-off inflows from corporate fundraising deals has also helped push up reserves. In the latest week, however, mark-to-market gains on non-dollar forex holdings may have pushed up reserves. While India holds a majority of its forex reserves in dollars, it also holds a part of this kitty in currencies such as the euro, the Japanese yen and the British pound.

• The number of Covid-19 cases in India continues to rise, leaving behind disrupted economic activity and weak consumer sentiment. While activity has rebounded from the lows of April and May, the pick-up remains uneven across different states based on the spread of the virus, show state-level concurrent economic indicators. The top five states by GDP still account for over two-thirds of all Covid-19 cases in the country. These are Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu and Uttar Pradesh. Together, these states contribute about 40% to India’s GDP.

  Industry News:

• The demand for small warehouses within city limits is expected to rise over the next one year as e-commerce firms are targeting to ensure same-day deliveries of food and groceries items to customers, according to a report. The demand is likely to be for warehousing of 5000-10,000 sq ft size, property consultant Colliers International said. “E-commerce companies are focussing on same-day delivery with the pandemic-influenced lockdowns placing greater dependency on e- commerce for food and grocery items,” the report said.

• Insurers have seen more than 90,600 Covid-related claims worth Rs 1,463 crore, of which almost 60,000 claims amounting to Rs 563.81 crore have been settled. State-wise data shows, Maharashtra, which has recorded the maximum number of cases in the country, has the maximum claims coming in, followed by Tamil Nadu, Delhi, Gujarat, and Karnataka. While initially, the claim amount was high, now it has moderated as many states have prescribed a standard treatment rate for Covid-19. Even the General Insurance Council has prescribed a standard Covid-19 treatment rate.

Company News:

• Dabur on Friday announced the expansion of its baby care portfolio with the launch of eight new Ayurveda-based products looking into the growing demand of baby care products. Dabur has launched the new baby care products on e-commerce platform Amazon, where these would be exclusively available, the company said in a statement. Commenting on the development Dabur India Marketing Head-Healthcare OTC Ajay Singh Parihar said, “With the growing demand of baby care products, we have decided to expand the Dabur Baby Care portfolio with a range of products enriched with Ayurvedic herbs.”

• Cipla on Friday reported a 21 per cent rise in consolidated profit after tax at Rs 578 crore in the April-June quarter as against Rs 478 crore in the corresponding quarter of last fiscal. Total revenue from operations saw a 9 per cent on-year growth at Rs 4,346 crore as against Rs 3,989 crore. Cipla said that its India operations saw an on-year growth of 16 per cent in the quarter under review. The US business saw a 14 per cent QoQ growth. The healthy growth of the generics segment at 46 per cent over last year mainly led the growth in overall sales.

• Tata Power Company Ltd (TPCL), India’s oldest power generation company, targets to drastically cut its gross debt, launching infrastructure investment trust (InvIT) in the second half of this financial year. According to the estimates of experts, the company wants to reduce the debt by at least Rs 18,000-20,000 crore on its books through the process. N Chandrasekaran, chairman, Tata group said at the recent annual general meeting (AGM) that the company will reduce its gross debt to Rs 25,000 crore, which is at Rs 48,376 crore right now.

Global News:

• The U.S. labor market’s third straight month of solid improvement from the depths of the pandemic could very well be its last for a while. Workers returned to low-wage jobs at restaurants and retailers, as major cities — especially New York — continued to reopen early in the month. Since then, though, many measures of activity have leveled off and a key relief program has expired with no agreement on a new deal.

• Gold slumped over 2% on Friday, snapping its record-breaking rally, after a decent U.S. jobs report boosted the dollar, but a worsening pandemic kept prices on course for their longest streak of weekly gains in about a decade.

   (Source: Bloomberg Quint, Economic Times, Business Today, Business Standard, Financial Express, Investing, Moneycontrol, livemin)

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