Daily Market Update – 07th Dec 2020

unnamed Daily Market Update   07th Dec 2020

The CPSE ETFs, the instrument used by the government to divest PSU, has suddenly seen a surge of interest from the HNI segment. According to latest data, the average volumes on the NSE have jumped to 14.7 million units in the latest week compared to the average volumes of 3.3 million units in the past. The reasons are not hard to fathom. Cheap valuations of PSU stocks, attractive dividend yields, low returns on bank deposits and extremely low expense ratios are making the difference. In most cases, the dividend yield on the CPSE ETF is much better than the bank deposit yields, acting as a magnet for HNIs.

Cargo traffic for November fell for the eighth month in a row as the port volumes still struggle to pick up from the effects of COVID. In fact, cargo at the top-12 ports in India fell by 10.53% yoy to 414.30 million tonnes during the April-November period. Among the major ports, Mormugao was the only port to witness 17.6% growth in cargo volumes with all other ports recording fall in volumes. Volumes at the Kamarajar Ennore port dipped by 29.7% to 14.46MT even as other ports like Chennai, Kochi and Mumbai also saw volumes dip by 17% for the Apr-Nov period. JNPT suffered a 15% fall volumes during the same period. India currently has 12 major ports under the government which handle close to 61% of the total cargo traffic annually. However, the recovery in cargo volumes was visible since Jun-20.

India’s coal imports dropped by 18.6% to 116.81 MT during the Apr-Oct period this year. However, for the month of October, the total coal imports at 21.5 MT were higher than 18.3MT in Oct-19. There has been a spike in October 2020 in the imports of coking coal and non-coking coal. The increased volumes in October can be largely attributed to the festive season as well as the typical winter re-stocking. Traders also stocked coal on fears that the international supply shortfall could lead to a spike in coal prices. For the full year, the estimate is that coal imports would still be sharply lower than previous year.

Even as stock markets are celebrating the return of FPI flows in Nov-20, domestic mutual funds continued to sell. In a month when FPIs infused more than Rs.65,000 crore into Indian equities, Indian mutual funds withdrew Rs.30,760 crore as redemption pressures built up at higher levels and the financial pressures created by COVID also triggered selling in mutual funds. Most retail MF investors have been cautious about the equity market at 36 P/E and that had forced MFs to sell out of Indian equities. Since beginning of June 2020, Mutual Funds have now withdrawn Rs.68,400 crore from stocks.

Foreign portfolio investors or FPIs pumped in Rs.17,818 crore into Indian markets in the first four sessions of December. While FPIs net bought Rs.16,520 crore of equities, they also bought Rs.1298 crore of debt in December. FIIs got a morale booster after the GDP contraction for Sep-20 quarter was lower than expected. Also, the markets were enthused by the RBI maintaining its accommodative stance and also upgrading its estimate for full year GDP contraction to just -7.5%. In the last 2 months, there has been a massive risk-on shift in FPI investing after the Biden vote in the US and growth recovery in India.

Six out of the ten most valuable stocks in the Indian market added Rs.91,629 crore in market value during the week. ICICI Bank and TCS led the gains during the week while HDFC Bank and other financials in the index saw a correction during the week. ICICI Bank added Rs.20,273 crore to market cap while TCS added Rs.17,580 crore during the week. Even Bharti Airtel saw value accretion to the tune of Rs.16,695 crore during the week on the back of robust September subscription numbers. Mont the other three gainers, Infosys gained Rs.14,525 crore, HUL Rs.11,971 crore and Reliance added Rs.10,587 crore during the week. HDFC Bank lost a massive Rs.30,590 crore during the week after the RBI decision to put a halt to HDFC Bank’s digital initiatives. Kotak Bank, HDFC and Bajaj Finance were among the other losers.

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