Markets & Macro - HDFC securities Retail Research · HSL may from time to time solicit from, or...
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HDFC securities Retail Research Markets & Macros May 2020
Transcript of Markets & Macro - HDFC securities Retail Research · HSL may from time to time solicit from, or...
HDFC securities Retail Research
Markets & MacrosMay 2020
Markets in April
Indian Macros
What’s Happening?
What’s Charts Foretell?
What’s Worrying?
Markets & Macros
Agenda
Markets in April: Sharp Rebound After A Steep Fall
Markets & Macros Source: Bloomberg, HDFC securities Retail Research
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
Nas
daq
Nif
ty 5
0
BSE
Se
nse
x
S&P
50
0
Do
w J
on
es In
d. A
vg.
Ko
spi
Ru
ssia
n R
TS
MSC
I Wo
rld
Ind
ex
Bra
zil I
bo
vesp
a
DA
X
Nik
kei 2
25
MSC
I EM
Ind
ex
Han
g Se
ng
FTSE
10
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CA
C 4
0
Shan
ghai
Co
mp
osi
te
Taiw
an T
aie
x
-10.0%
-5.0%
0.0%
5.0%
10.0%
Ind
on
esi
a R
up
iah
Au
stra
lia D
olla
r
Taiw
an D
olla
r
Bri
tish
Po
un
d
Thai
lan
d B
aht
Can
ada
Do
llar
Sin
gap
ore
Do
llar
Ph
ilip
pin
es P
eso
Ind
ian
Ru
pe
e
Mal
aysi
a R
ingg
it
Ko
rean
Wo
n
Jap
anes
e Y
en
Ch
ine
se R
enm
inb
i
Ho
ngk
on
g D
olla
r
Euro
Me
xica
n P
eso
Sou
th A
fric
a R
and
Bra
zilia
n R
eal
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
Nat
ura
l Gas
($
/mm
Btu
)
Bre
nt
Cru
de
Oil
($/b
bl)
Silv
er
($/o
z.)
Go
ld (
$/o
z.)
LME
Nic
kel (
$/M
T)
LME
Co
pp
er (
$/M
T)
LME
Zin
c ($
/MT)
LME
Alu
min
ium
($
/MT)
LME
Lead
($
/MT)
ICE
Co
tto
n (
$/l
b.)
ICE
Suga
r ($
/lb
.0
CB
OT
Soyb
ean
($
/bu
.)
CB
OT
Wh
eat
($
/bu
)
CB
OT
Co
rn (
$/b
u.)
ICE
Co
ffe
e ($
/lb
.)
5%6%
7%8%
11%11%
12%14%
14%15%
16%18%
20%24%
26%
0% 5% 10% 15% 20% 25% 30%
FMCG
Consumer Durable
RealEstate
Power
IT
Capital Goods
Bank
Mid Cap
Sensex
Nifty
Small Cap
Metal
Oil
Auto
Healthcare
Indian Macro
Industrial Activities Plunge On Lockdown
Normal Monsoon Expected This Year
India’s Policy Response So Far
Indian Macros
Markets & Macros
Indian Macros: Industrial Activities Plunge On Lockdown
Markets & Marcos Source: GoI, HDFC securities Retail Research
-15
-10
-5
0
5
10
15
Jul/
18
Au
g/1
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Sep
/18
Oct
/18
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v/1
8
Dec
/18
Jan
/19
Feb
/19
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/19
Ap
r/1
9
May
/19
Jun
/19
Jul/
19
Au
g/1
9
Sep
/19
Oct
/19
No
v/1
9
Dec
/19
Jan
/20
Feb
/20
Mar
/20
Electricity
-30
-20
-10
0
10
20
30
Jul/
18
Au
g/1
8
Sep
/18
Oct
/18
No
v/1
8
De
c/1
8
Jan
/19
Feb
/19
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/19
Ap
r/1
9
May
/19
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/19
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Au
g/1
9
Sep
/19
Oct
/19
No
v/1
9
De
c/1
9
Jan
/20
Feb
/20
Mar
/20
Steel & Cement
Steel Cement
-20
-15
-10
-5
0
5
10
Jul/
18
Au
g/1
8
Sep
/18
Oct
/18
No
v/1
8
De
c/1
8
Jan
/19
Feb
/19
Mar
/19
Ap
r/1
9
May
/19
Jun
/19
Jul/
19
Au
g/1
9
Sep
/19
Oct
/19
No
v/1
9
De
c/1
9
Jan
/20
Feb
/20
Mar
/20
Crude Oil & Netural Gas
Crude Oil Natural Gas
-15
-10
-5
0
5
10
15
Jul/
18
Au
g/1
8
Sep
/18
Oct
/18
No
v/1
8
Dec
/18
Jan
/19
Feb
/19
Mar
/19
Ap
r/1
9
May
/19
Jun
/19
Jul/
19
Au
g/1
9
Sep
/19
Oct
/19
No
v/1
9
Dec
/19
Jan
/20
Feb
/20
Mar
/20
Fertilizers
Indian Macros: Normal Monsoon Expected This Year
Markets & Marcos Source: IMD, HDFC securities Retail Research
April IMD Forecast
Year IMD April Forecast
(+/-5% of LPA) IMD June Forecast
(+/- 4% of LPA)Actual rainfall
(% of LPA)
2013 98% 98% 105%
2014 95% 93% 88%
2015 93% 88% 86%
2016 106% 106% 97%
2017 96% 98% 95%
2018 97% 97% 91%
2019 96% 96% 110%
2020 100% - -
The IMD’s first stage forecast has predicted that the volume of rainfall inthe upcoming southwest monsoon season (June-September) would be100% of the long period average (LPA), with an error range of +/-5% .
Additionally, the IMD estimates a 21% probability of monsoon rainfallbeing above-normal (104-110% of the LPA).
Indian Macros: India’s Policy Response So Far
Markets & Marcos Source: GoI, HDFC securities Retail Research
US Fed In Overdrive: Massive Infusion Of Liquidity In US
COVID19 Confirmed Cases: Gradual Flattening Of New Infection Curve
Debt Funds : G Sec And PSU Bonds Attract Capital
Indian Pharmaceutical Market (IPM) Grew 10%
Investors Turn Little Nervous , But Keep The Faith In SIPs
Oil Is Not Well
Very Low Leveraged Positions Makes Markets Safe From Sharp Cuts
Nifty Surged 14% In The April Series Highest In A Decade
What’s Happening ?
Markets & Macros
What’s Happening ? US Fed In Overdrive: Massive Infusion Of Liquidity In US
Markets & Macros
Federal Reserve Balance Sheet Changes
Source: Bloomberg, HDFC securities Retail Research
Short interest on the $2.9 billion iShares MSCI India ETF has risen to a record 38% of total shares outstanding
What’s Happening ? COVID19 Confirmed Cases: Gradual Flattening Of New Infection Curve
Markets & Macros
COVID19 Daily Confirmed Cases (7 Day Rolling Avg.)
Source: FT, HDFC securities Retail Research
Short interest on the $2.9 billion iShares MSCI India ETF has risen to a record 38% of total shares outstanding
Data Updated April 28represents national lockdown
What’s Happening ? Debt Funds : G Sec And PSU Bonds Attract Capital
Markets & Macros Source: NAV India, HDFC securities Retail Research
Other Corporates
44%
Gsec7%
PSU Banks
7%
PSU NBFCs8%
Other PSU2%
Pvt NBFC32%
Sep-18
Other Corporates
41%
Gsec11%
PSU Banks12%
PSU NBFCs11%
Other PSU6%
Pvt NBFC19%
Mar-20
What’s Happening ? Indian Pharmaceutical Market (IPM) Grew 10%
Markets & Macros Source: AIOCD, HDFC securities Retail Research
IPM grew 10% in FY20 Therapy wise growth in FY20
0.81 0.92 1.05 1.15 1.22 1.31 1.44
10.3
13.4
14.5
9.1
6.0
7.6
9.9
0
5
10
15
0
0.5
1
1.5
2
FY14 FY15 FY16 FY17 FY18 FY19 FY20
Total IPM Growth (%)
Rs lakh cr
1955818278
15955
14056
1227210964
9797 95808659
7045
2642 2572
1012
8
11
9
13
10
79
6
11
7
0
2
4
6
8
10
12
14
0
3000
6000
9000
12000
15000
18000
21000
An
ti-I
nfe
ctiv
es
Car
dia
c
Gas
tro
(G
I)
An
ti-D
iab
etic
Vit
amin
s
Res
pir
ato
ry
Pai
n M
anag
emen
t
Der
mat
olo
gy
CN
S
Gyn
aeco
logy
Ho
rmo
nes
Op
hth
alm
olo
gy
Market Size Growth (%)
Rs cr
What’s Happening ? Investors Turn Little Nervous , But Keep The Faith In SIPs
Markets & Macros Source: AMFI, HDFC securities Retail Research
SIP continues to see steady inflow New SIP vs. Discontinued rises in Mar’20
71.275.5 77.3
80.2 80.6 81.2 82.685.2 86.4
0
10
20
30
40
50
60
70
80
90
100
Mar/18 Jul/18 Nov/18 Mar/19 Jul/19 Nov/19 Mar/20
Rs bn
910
9
10
99
10
11
10
1211
8
56
5 6 6 65
66 6 6
6
0
2
4
6
8
10
12
14
Ap
r/1
9
May
/19
Jun
/19
Jul/
19
Au
g/1
9
Sep
/19
Oct
/19
No
v/1
9
De
c/1
9
Jan
/20
Feb
/20
Mar
/20
New SIPs SIPs Discontinued
#Lacs
What’s Happening ? Oil Is Not Well
Markets & Macros Source: Bloomberg, HDFC securities Retail Research
-60
-40
-20
0
20
40
60
80
WTI Price
0
200
400
600
800
1000
1200
1400
1600
1800
20
00
20
01
20
01
20
02
20
03
20
04
20
05
20
06
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06
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08
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11
20
11
20
12
20
13
20
14
20
15
20
16
20
16
20
17
20
18
20
19
20
20
US Crude Rotary Rig Count
US drilling activity has nearly halved since January WTI plunged into negative territory
What’s Happening ? Very Low Leveraged Positions Makes Markets Safe From Sharp Cuts
Markets & Macros Source: NSE, HDFC securities Retail Research
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Feb
-05
Feb
-06
Feb
-07
Feb
-08
Feb
-09
Feb
-10
Feb
-11
Feb
-12
Feb
-13
Feb
-14
Feb
-15
Feb
-16
Feb
-17
Feb
-18
Feb
-19
Feb
-20
Nifty Futures' Open Interest(No Cr)
200
250
300
350
400
450
500
550
Oct
-15
Jan
-16
Ap
r-1
6
Jul-
16
Oct
-16
Jan
-17
Ap
r-1
7
Jul-
17
Oct
-17
Jan
-18
Ap
r-1
8
Jul-
18
Oct
-18
Jan
-19
Ap
r-1
9
Jul-
19
Oct
-19
Jan
-20
Ap
r-2
0
Stock Futures' Open Interest( No Of Shares Cr)
What’s Happening ? Nifty Surged 14% In The April Series Highest In A Decade
Markets & Macros Source: NSE , HDFC securities Retail Research
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
Jan
-09
Jun
-09
No
v-0
9
Ap
r-1
0
Sep
-10
Feb
-11
Jul-
11
Dec
-11
May
-12
Oct
-12
Mar
-13
Au
g-1
3
Jan
-14
Jun
-14
No
v-1
4
Ap
r-1
5
Sep
-15
Feb
-16
Jul-
16
Dec
-16
May
-17
Oct
-17
Mar
-18
Au
g-1
8
Jan
-19
Jun
-19
No
v-1
9
Ap
r-2
0
EXP
IRY
RET
UR
N (
%)
Gold Managed To Maintain Strength In Rising Equity Markets
Attraction Towards Pharma Sector Started Rising Again, Pharma Index Registered
Highest Ever Monthly Rise of 30%
Emerging Markets Underperformed World Index : MSCI Emerging Market Index Has
Not Even Retraced 50% of the Fall
What’s Charts Foretell?
Markets & Macros
Markets & Macros Source: Bloomberg, HDFC securities Retail Research
What’s Charts Foretell?Gold Managed To Maintain Strength In Rising Equity Markets
Markets & Macros Source: Bloomberg, HDFC securities Retail Research
What’s Charts Foretell?Attraction Towards Pharma Sector Started Rising Again
• Pharma Index Registered Highest EverMonthly Rise of 30%
Markets & Macros Source: Bloomberg , HDFC securities Retail Research
What’s Charts Foretell?MSCI EM Underperformed MSCI World IndexMSCI Emerging Market Index Has Not Even Retraced 50% of the Fall
Order Inflows Were Muted And Capacity Utilization Was Below 5 Year Avg.
before Covid-19.
Reverse Repo Cut Fails To Encourage Banks To Lend
What’s Worrying?
Markets & Macros
Markets & Macros Source: Bloomberg, HDFC securities Retail Research
What’s Worrying? : Even Before Covid-19 the Order Inflows Were MutedAnd Capacity Utilization Was Below 5 Year Avg.
Order inflow of Indian E&C companies Capacity Utilisation
Markets & Macros Source: RBI, HDFC securities Retail Research
What’s Worrying?Reverse Repo Cut Fails To Encourage Banks To Lend
Despite deep cut in Repo rate, the daily avg. reverse repo outstanding spiked in April. This represents risk averseness of banks
6.25
3.75
Oct
/18
No
v/1
8
De
c/1
8
Jan
/19
Feb
/19
Mar
/19
Ap
r/1
9
May
/19
Jun
/19
Jul/
19
Au
g/1
9
Sep
/19
Oct
/19
No
v/1
9
De
c/1
9
Jan
/20
Feb
/20
Mar
/20
Ap
r/2
0
Reverse Repo Rate
0.4 0.40.8
2.8
6.7
7.3
Nov/19 Dec/19 Jan/20 Feb/20 Mar/20 Apr/20
Daily avg. reverse repo outstanding (Rs. Trn.)
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Markets & Macros
