Equity Markets Snapshot For The Week
- The US, Eurozone, and Japan will publish flash PMI levels.
- Japan will publish trade balance and inflation figures.
- Domestic investors will watch for Q1Fy21 earnings.
- Implied volatility (IV) for put and call at the money options stood at 21 and 20 levels respectively.
FIIs/FPIs have bought Indian equity shares worth Rs. 218 billion in June 2020 and sold shares worth Rs. 60 billion in July 2020 (till 17th July 2020). Foreign Institutional Investors (FIIs) Derivative Statistics have shown a rise in the open interest across Stock Options, Index Futures, Index Options, and Stock Futures.
The Nifty Index futures witnessed fall in open interest by 11% for the July series and 13% rise for the August series. Implied volatility (IV) fell for put option and rose for call option in the last week. Fall in IV for put option and rise in IV for call option shows unsteady support for Nifty at present levels.
Sensex & Nifty continued to record weekly gains as Infosys & Wipro reported better than expected results and investment by Google in Reliance Jio helped RIL share price to surge during the week. The number of Covid-19 cases in India, surpassed 108,000, forcing several state governments to re-impose the lockdown. During the week, Sensex and Nifty gained by 1.16% and 1.24% respectively. On the earnings front, Wipro, Infosys, and L&T Infotech reported strong quarterly results however the guidance remained bleak. On financial sector front, HDFC Bank reported 20% (Y-o-Y) growth in net profit, NII (Net Interest Income) rose by 18% (Y-o-Y) and loan book witnessed 21% (Y-o-Y) growth. Management of HDFC Bank said economy slowdown may lead to a rise in NPAs and provisions in the coming quarters. IMD reported rainfall has been at a 6% surplus this year so far and North India witnessed rainfall deficiency.
On the global front, Wall Street witnessed volatile week, main concerns were the sharp surge in Corona Virus cases in several states, consumer morale weakened in July 2020 and bleak corporate earning guidance. Netflix reported in-line expected earnings and warned the investors about expected weak subscriber growth of 2 million for the next quarter. During the week, Dow Jones gained by 2.29%, Nasdaq declined by 1% and S&P 500 rose by 0.5%.
European stocks closed on a mixed note, as European Union leaders gathered for a meeting in Brussels to discuss the Euro 750 billion recovery plan to respond to the COVID-19 crisis, which will probably include grants and loans to help the most affected countries by the pandemic. The outcome from the mentioned meeting will drive European Indices in the coming week. During the week, FTSE surged by 3% and DAX gained by 2.2%.
During the week, Brent Crude Oil gained by 6%, however, the sentiment on Friday was weak as the global Covid-19 cases are rising which could lead to further lockdown. Further economy opening restriction would lead to lesser demand for oil & oil derivative products. On oil supplying front, OPEC has agreed to ease supply by 2 million bpd from August 2020.
Global Economy
The Federal Reserve expanded its Main Street Lending Program on 17th July 2020 to provide greater access to credit for non-profit organizations such as educational institutions, hospitals, and social service organizations that were in sound financial condition prior to the pandemic.
Retail sales in the US surged 7.5% (M-o-M) in June 2020, following an upwardly revised record 18.2% rise in May 2020.
The consumer price inflation in the Euro Area was confirmed at 0.3% (Y-o-Y) in June 2020, up from a four-year low of 0.1% in the previous month.
The European Central Bank left monetary policy unchanged during its July 2020 meeting, as policymakers took a wait-and-see approach to assess the effectiveness of a series of unprecedented measures taken over the past four months to support the economy amid the coronavirus crisis. The ECB kept its main refinancing rate unchanged at 0% while the deposit rate remained at a record low -0.5%.
The Eurozones trade surplus narrowed to Euro 9.4 billion in May 2020 from Euro 20.7 billion in the same month last year, Exports slipped by 30% and Imports plunged by 27%.
The Chinese economy grew by 3.2% (Y-o-Y) in Q2Fy20, rebounding from a record 6.8% contraction in the previous three-month period and beating market consensus of a 2.5% expansion.
Chinas industrial production rose by 4.8% from a year earlier in June 2020, the largest increase in six months and slightly above market consensus of 4.7%, as the economy gradually emerged from COVID-19 pandemic and more factories reopened their activity.
The number of Americans filling for unemployment benefits stood at 1.30 million in the week ended 11th July 2020, little-changed from a revised 1.31 million claims in the prior week and above market expectations of 1.25 million.
US crude oil stocks rose by 5.654 million barrels in the week ended 04th July 2020, after posting the largest decrease for six months in the previous period and compared with market expectations of a 3.114 million decline, according to the EIA Petroleum Status Report
