Equity Markets Snapshot For The Week
- The US, and Eurozone will publish GDP growth figures.
- Feds monetary policy meeting will be keenly watched.
- Domestic investors will watch for Q1Fy21 earnings.
- Implied volatility (IV) for put and call at the money options stood at 23 and 14 levels respectively.
FIIs/FPIs have bought Indian equity shares worth Rs. 218 billion in June 2020 and bought shares worth Rs. 23 billion in July 2020 (till 26th July 2020). Foreign Institutional Investors (FIIs) Derivative Statistics have shown a rise in the open interest across Index Futures, Index Options, and Stock Futures.
The Nifty Index futures witnessed fall in open interest by 7% for July series and 97% rise for the August series. Implied volatility (IV) fell for call option and rose for put option in the last week. Fall in IV for call option and rise in IV for put option shows unsteady support for Nifty at present levels.
The S&P BSE SENSEX closed on a flat note on Friday, following a sell-off in US markets overnight. The sentiment was also deteriorated after APNews reported that Beijing ordered the US today to close its consulate in Chengdu (China). Adding the bearish tone, a senior Indias official said the government is unlikely to meet the Budget targets for 2020-21 due to a Covid-19 health crisis. On the earnings front, ICICI Bank reported 36% (Y-o-Y) rise in profits due to 4% stake sale in ICICI Lombard & 1.5% stake sale in ICICI Prudential for a total amount of Rs. 30 billion. Revenue from operations increased by 22% (Y-o-Y) and NPAs stood at 1.41% compared to 1.77% reported during the same quarter last year and NII growth reported at 20% (Y-o-Y). Axis Bank reported 20% growth in NII and NPA level stood at 1.23% compared to 2% during the same quarter last year. Net profit declined by 19% (Y-o-Y) due to higher provisions.
On global front, US indices closed in negative territory after a sell-off triggered by sharp declines in Tech stocks, the US-China tensions, high coronavirus cases in the US, and worse-than-expected weekly unemployment data. On the corporate side, Intel shares plunged 16% after the chipmaker revised downwardly its guidance for Q3 and delayed the release of its next-generation chips. During the week, Dow Jones declined by 0.80%, Nasdaq fell by 1.33% and S&P 500 down by 0.3%.
European indices closed in deep negative territory on Friday, escalation of tensions between China and US outweighed strong industry data. During the week, FTSE slumped by 2.7% and DAX declined by 0.70%.
During the week, Brent Crude Oil declined by 4%, however, the sentiment on Friday was positive amid hopes over further stimulus from governments and central bankers around the globe that could support the global economic recovery from the COVID-19 pandemic. EIA reported a 4.892 million barrels to increase in US crude oil stocks last week, well above market expectations of a 2.088 million decrease.
Global Economy
The IHS Markit US Services PMI rose to 49.6 levels in July 2020 from 47.9 levels in the previous month, missing market consensus of 51 levels. The latest reading pointed to the sixth month of contraction in the US service sector as a resurgence in COVID-19 cases forced many states to re-impose lockdown measures.
The IHS Markit US Manufacturing PMI increased to 51.3 levels in July 2020 from 49.8 levels in June 2020, below market forecasts of 51.5 levels. The reading pointed to the first expansion in factory activity since February 2020. Overall growth was driven by the first upturns in both output and new orders for five months.
The IHS Markit Eurozone Composite PMI increased to a 25-month high of 54.8 levels in July 2020 from 48.5 levels in the previous month. Both manufacturing and services returned to growth as more businesses reopened following the coronavirus lockdown.
The number of Americans filling for unemployment benefits increased 1.42 million in the week ended 18th July 2020, accelerating for the first time in nearly four months and compared to market expectations of 1.30 million, as a resurgence in new COVID-19 cases forced several states to scale back or pause the reopening of their economies. The latest number lifted the total reported since 21st March 2020 to 52.7 million.
