The first advance estimates (FAE) released by the National Statistical Office (NSO) on January 7, 2020 placed India’s real gross domestic product (GDP) growth for 2019-20 at 5.0 per cent. In its January 31 release, the NSO revised real GDP growth for 2018-19 to 6.1 per cent from 6.8 per cent given in the provisional estimates of May 2019. Turning to more recent indicators, both production and imports of capital goods – two key pointers of investment activity – continued to contract in November/December, though at a moderate pace compared with the previous month.
Consumer Price Index (CPI) increased to 7.59% in January 2020 from 7.35% in December 2019. This rise in CPI is attributed to costlier food items like vegetables, pulses and protein-rich items. Inflation in January was above the Reserve Bank of India’s medium-term target of 4% for the fourth straight month. Index of Industrial Production (IIP) decreased 0.3% in December 2019 as compared to the growth of 1.8% in November 2019. IIP for April-December of FY20 contracted 0.5%. Rupee depreciated against the dollar in January 2020 to close at Rs.71.49 compared to Rs.71.30 in December 2019. Yield on 10-year government bond increased by 5 basis points from 6.55% in December 2019 to 6.60% in January 2020.
Trends in Capital Markets:
- Primary market Update:
During January 2020, there was no main board public issue as compared to two main board issues in December 2019 of Ujjivan Small Finance Bank Ltd. (mobilising Rs.746 crore) and Prince Pipes and Fittings Ltd. (mobilising Rs.500 Crore) mobilising total Rs.1246 Crore. During January 2020, the amount raised through private placement of equity (i.e. preferential allotment and QIP route) stood at Rs.21,982 crore comparing with Rs.40,537 crore in December 2019. During January 2020, there were two issues amounting Rs.2,194 crore from the Public Issue of Corporate Bonds comparing with three issues amounting Rs.2,519 crore in December 2019. During January 2020, Private Placement of Corporate Debt Reported to BSE and NSE increased by 23.4 per cent to Rs.69,296 crore over Rs.56,158 crore in December 2019.
Funds Mobilisation by Corporates (₹ crore)
2. Trends in Secondary Markets:
a) Capital Markets
At the end of January 2020, Nifty 50 closed at 11,962, decreased by 206.4 points (1.7 per cent) over December’s closing. S&P Sensex closed at 40,723 on January 31, 2020, a decrease of 530.3 points (1.3 per cent) over previous month closing. During the month, Nifty and Sensex reached its all-time high at 12,431 and 42,274 on January 20, 2020 respectively. During the month, Nifty and Sensex reached its low at 11,930 and 40,477 on January 08, 2020.
The market capitalization of BSE stood at Rs.1,56,50,982 crore as on January 31, 2020, increased by 0.6 per cent over previous month. The market capitalisation of NSE stood at Rs.1,55,17,107 crore as on January 31, 2020, increased by 0.6 per cent over previous month.
During the month of January 2020, the sectoral indices witnessed mixed trends. Among BSE indices, S&P BSE Realty noted gains owing to the expectations from Union Budget 2020 to bring in reforms & initiatives to ease the liquidity crisis. S&P BSE Realty increased by 10.75 per cent, followed by S&P BSE Telecom (5.6 per cent), S&P BSE Consumer Durables (4.5 per cent), S&P BSE Healthcare (3.93 per cent). On the other hand, S&P BSE Metal decreased due to the fears about disruptions to the steel supply chain because of the ongoing coronavirus outbreak in China. S&P BSE Metal went down by 8.96 per cent, followed by S&P BSE Energy (7.39 per cent), S&P BSE Oil & Gas (5.57 per cent) during the period.
Among select NSE sectoral indices, Nifty Small 100 increased by 6.7 per cent during January 2020, followed by Nifty Midcap 100 (5.3 per cent), Nifty Midcap 50 (4.6 per cent), Nifty IT (3.1 per cent), Nifty FMCG (2.2 per cent), Nifty Media (1.8 per cent) and Nifty Pharma (0.1 per cent). On the other hand, Nifty PSU Bank decreased by 6.3 per cent, followed by Nifty Bank (4.1 per cent), Nifty 100 (1.5 per cent), Nifty 200 (0.8 per cent), Nifty MNC (0.2 per cent) and Nifty 500 (0.1 per cent) during the month.
b) Corporate Debt Market
During January 2020, BSE noted 4,822 trades of corporate debt with a traded value of Rs.62,925 crore as compared to noted 4,397 trades of corporate debt with a traded value of Rs.52,392 crore in December 2019. At NSE, 7,718 trades were noted with a traded value of Rs.1,34,636 crore in January 2020 as compared to 5,877 trades noted with a traded value of Rs.97,560 crore in December 2019.
c) Institutional Investments
The mutual fund industry saw a net inflow of Rs.1,20,149 crore in January 2020 compared to a net outflow of Rs.61,497 crore in December 2019. During January 2020, mutual funds made a net investment of Rs.33,578 crore (of which Rs.32,193 crore investment in debt and Rs.1,384 crore in equity) compared to an investment of Rs.47,298 crore (of which Rs.45,493 crore investment in debt and Rs.1,805 crore in equity) in December 2019.
During January 2020, FPIs invested Rs.12,123 crore in equity compared to an investment of Rs.7,338 crore in equity during December 2019. During January 2020, FPIs withdrew Rs.11,119 crore from debt securities and Rs.46 crore from Hybrid securities compared to Rs.4,616 crore withdrawn from debt securities and Rs.40 crore investment in Hybrid securities in December 2019. In total, during January 2020, FPIs invested Rs.957 crore in the Indian securities market compared to Rs.2,762 crore in December 2019.
d) Portfolio Management Services
As on January 31 2020, AUM of the portfolio management industry increased by 2.6 per cent to Rs.18.4 lakh crore from Rs.17.9 lakh crore in December 2019. Of the total, AUM of fund managers of EPFO/PFs contributed Rs.13.5 lakh crore (i.e., 74 per cent of total AUM).
e) Trends in Substantial Acquisition of Shares and Takeovers
During January 2020, three open offers with offer value of Rs.5,079 crore was made to the shareholders as against three open offers with offer value of Rs.349 crore made in December 2019. All the open offers were for change in control of management.
The IMF has revised the global economic growth downwards from 3.4 per cent to 3.3 per cent. IMF attributed its downward revision of global economic growth to India’s slowdown in growth. However, IMF noted that India would recover in the next fiscal year owing to some of the positive measures taken by the Government. IMF has downward revised US growth to 2 per cent, down by 0.1 per cent compared to its October 2019 projection. Also, the fast spreading coronavirus outbreak has dragged down the markets world-wide, majorly in China. This is dragging down the global growth prospects too for 2020.
However, the year 2020 has started off on a positive note and was gaining during mid-January. The trade war tensions between US and China eased with both the countries signing the first phase of trade deal on January 15, 2020. Another major event in January 2020 was the exit of UK from the European Union.
Global Equity Markets:
The Nasdaq Composite gained about 2 per cent while Dow Jones Industrial Average Index declined by about 1 per cent. Amongst other developed markets, Hong Kong’s Hang Seng index recorded the least return with a decline of 6.7 per cent, Taiwan’s Taiex by 4.2 per cent UK’s FTSE by 3.4 per cent. Amongst the major emerging economies, Russian Traded Index declined by 3.6 per cent, China’s Shanghai Stock Exchange Composite Index by 2.4 per cent and Brazil Bovespa by 1.63 per cent. India’s Nifty and Sensex index posted a negative return of 1.7 per cent and 1.3 per cent respectively.
Global Debt Markets:
Yields on 10-year bonds witnessed a fall across sovereign bond markets. In January, Germany’s sovereign bond’s yield dipped by 25 basis points and it declined by 23 basis points for Spain. UK’s 10-year Gilt yield fell by 30 basis points. Japan’s 10-year bond yield declined by 5 basis points. The 10-year government bond yield for Russia, Brazil, and China fell by 19 bps, 7 bps and 14 bps respectively during January 2020.
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