Market Pulse June 2020 PDF

June 2020
Volume 2, Issue 6
Market Pulse
A monthly review of Indian economy and markets
Market Pulse
June 2020 | Vol. 2, Issue 6
Indian
A Monthly Review
Economy and
Markets
Volume 2, Issue 6
This monthly publication is a review of
major developments in the economy and
financial markets during the month.
Online: www.nseindia.com
NATIONAL STOCK EXCHANGE OF INDIA LIMITED

Market Pulse
Market Pulse
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Market Pulse
Table of Contents
Executive Summary ........................................................................................................................................................ 1
Story of the month........................................................................................................................................................... 3
Market concentration on the rise............................................................................................................................. 3
Chart of the month ........................................................................................................................................................ 14
Unlock 1.0: Google/Apple mobility trends point to a gradual return of normalcy .................................... 14
Macro economy .............................................................................................................................................................. 23
Food inflation declines in May as supply improves ........................................................................................... 23
Industrial production contracts sharply in April ............................................................................................... 28
Lockdown continues to hurt imports; exports witness a modest recovery ................................................ 33
May MPC Policy Minutes: Space available for further rate cuts .................................................................... 37
Household financial savings improved in FY20 amid falling liabilities ........................................................ 40
RBI Surveys: Consumer confidence collapses; FY21 GDP to contract by 1.5% ........................................ 46
Modest MSP hikes and a normal monsoon to support farm incomes ........................................................... 49
Economic fallout of COVID-19 severe than anticipated, says World Bank and IMF................................. 53
Insights ............................................................................................................................................................................ 61
Invited article: COVID-19 and prioritizing the important over the habitual............................................... 61
Whether higher environmental and social score helped firms to cope up with the Covid-19 crisis ..... 67
Market Performance ..................................................................................................................................................... 69
Market Round-up ....................................................................................................................................................... 69
Market performance across asset classes .......................................................................................................... 73
Institutional flows across market segments in India ....................................................................................... 78
Fund mobilisation through NSE ................................................................................................................................. 80
Market Statistics: Primary market ........................................................................................................................ 80
New listings in the month ........................................................................................................................................ 81
............................................................................................. 82
Long term trends and impact of macro indicators ............................................................................................ 82
Institutional investments through NSE platform .............................................................................................. 87
Total turnover in CM and derivatives market ..................................................................................................... 88
Average daily turnover in CM and derivatives market ..................................................................................... 88
Turnover of top traded symbols over the month ............................................................................................... 91
Client category-wise participation in total turnover ........................................................................................ 92
Market Pulse
Asset category-wise open interest (average daily volume) ............................................................................ 97

Internet-based trading ............................................................................................................................................ 98
Spatial distribution of trading activities ................................................................................................................ 100
Region-wise distribution of new investors registered ................................................................................... 100
Region-wise distribution of individual investor turnover in the cash market .......................................... 102
Investment through mutual funds in India ........................................................................................................... 104
Policy developments .................................................................................................................................................. 106
Comparison of trading activities across major exchanges globally ................................................................ 109
Economic calendar for major countries (July 2020) ........................................................................................... 113
Annual Macro Snapshot ............................................................................................................................................. 114
Market Pulse
Executive Summary
Rising COVID-19 cases keep Indian markets jittery in May; activity resuming gradually
The rising number of COVID-19 cases and fatalities in India and consequent extension of lockdown restrictions,
particularly in states/cities with high caseloads, has led to incremental (downward) revisions in growth estimates across
the board. Several multilateral institutions, including the IMF, the World Bank and the Asian Development Bank, have
joined others (including us at -6% refer to Q4FY20 GDP data points to a protracted slowdown; revising FY21E to -6.0%)
in estimating a contraction for India in FY20. Indian equity markets as a result remained cautious in the month of May,
underperforming developed markets as well as the broader emerging market pack, even as ample global liquidity led to
renewed foreign inflows. The market rally resumed in June amid positive global cues and a sustained global risk-on
environment. The benchmark Nifty 50 and Nifty 500 Index fell by 2.8% and 2.4% respectively in the month of May,
followed by a rebound in June, up 8.4% and 9.4% (as of June 26th).
Fixed income markets globally remained steady for yet another month amid continued liquidity injection by global
central banks. While yields at the short-end remained largely stable, long-end inched up amid huge supply of
Government paper and growth concerns. India was no different, with the decline in yields at the short-end being much
higher than at the long-end. A steep 155bps cut in reverse repo rate over the last couple of months, along with a slew of
liquidity easing measures taken by the RBI and a huge surplus systemic liquidity, has brought the shorter end of the
yield curve lower. Indian Rupee remained under pressure in May owing to mounting growth concerns, reflecting in
sovereign rating by one notch to Baa3 thus

bringing the rating in line with other rating agencies Fitch
Our Story of the Month features excerpts from a forthcoming report where we analyse concentration in the Indian equity
markets in terms of market value and in their trading activity across the NSE and the BSE. We use a standard
concentration measure, the eponymous Herfindahl-Hirschman index (HHI), and the simpler Concentration Ratio (CR4)
in this exercise. In this initial segment of our analysis, we restrict ourselves to the illustration of the long-term trend seen
in Indian markets. The final report would explore related issues of causality, correlation with major macro and market
indicators, and on comparison with major markets. According to our analysis, the market concentration has been rising
steadily over the last three years, in line with global markets, but for different reasons. The current level, however,
remains significantly lower than the peak levels of the 90s.
In the Chart of the Month section, we have explored the extent of resumption in business activity by analysing Google
and Apple mobility trends across economies as well as Indian states. While India saw one of the most stringent and
prolonged lockdowns in the world, the Google and Apple mobility data show gradual increase in footfalls since May-
beginning as restrictions were partially lifted in Green and Orange districts. However, the recent spike in cases has
impacted mobility across location categories over the last one week. Moreover, state-wise mobility trends point to a
stricter adherence to the lockdown restrictions by states witnessing higher number of cases.
Meanwhile, incoming macro data (refer to the Macro economy section) remained weak, indicating the extent of
economic damage caused by COVID-19 and attendant control measures. Industrial production declined by 55.5% in
April much weaker than market expectations, merchandise imports fell by more than 50% for the second month in a
row in May reflecting lacklustre
Monthly Bulletin for June 2020 showed net household financial savings rate (savings as % of GDP) rising by 50bps YoY
to 7.7% in FY20, led by drop in household financial liabilities, largely reflecting the tendency to save more in the times
of an economic slowdown and/or income uncertainty. In this gloom and doom scenario, the agriculture sector is
expected to provide the only silver lining, supported by an effective policy intervention, modest hikes in Minimum
Support Prices (MSPs) of Kharif crops and expectations of a normal monsoon.
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Market Pulse
The importance of environment and social governance for firms has gained momentum in recent years particularly to
improve their long-term returns and sustainability. In the wake of the Covid-19, while many firms are tackling with
several challenges and surviving through uncertainties, it has become much more important to understand whether
firms with better Environment and Social (ES) score can tackle the unprecedented outbreak of coronavirus and its
adverse impact much more efficiently than others. In this context, we feature an interesting paper this month (in
our Insights section) by Albuquerque, et al. (2020) that examines the resiliency of firms with high ES scores during
exogenous market events such as COVID-19 outbreak.
Our invited article this month from the Arguden Academy features a topic that has garnered immense interest worldwide
over the last few years Climate Change. The article talks about the lessons that COVID-19 experience has imparted on
the global community, one of the most important being preparing for an unexpected event and taking actions early on.
In this context, the article emphasizes on the need of taking immediate policy actions for reducing carbon emissions and
explains how global stock exchanges are becoming enablers for climate change.
We first analysed the impact of COVID-19 in our February edition of Market Pulse. This is the fifth edition since then and
the worst of the outbreak for India is still not behind us, it seems. Cases in India are rising rapidly (4.9mn as on June
25th vs. 1.9mn in May-end), and so are casualties (15.3k), leading to India jumping to the 4th position globally in terms
of the caseload. Media articles are now talking about a second wave of COVID-19 in the US and China. On the positive
th
) from 48% in May-end.
Fingers crossed, we bring you the June issue of the Market Pulse. We hope you find it useful, and as always, we look
forward to your comments and suggestions.
Dr. Tirthankar Patnaik

Chief Economist
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Market Pulse
Story of the month

Market concentration on the rise
Indian equity markets have witnessed significant growth in the last 24 years both in terms of market value and trading
activity. Overall market capitalisation of the listed universe has risen ~30x since 1996, and in doing so the average daily
turnover in the cash segment alone has risen ~50x. The rise in market value and trading activity has not been secular
across the listed universe, with the action limited to a smaller set of stocks. Illustratively, trading activity and
commensurately, the market value, has been largely driven by the top 500 stocks and to some extent, even the NIFTY
(commensurate) rise in concentration, over the last three years. Illustratively, the top five stocks in the US now account
for a fifth of the total market capitalisation of the S&P 500. Emerging markets in general have even higher concentration,
being expected to be inversely proportional to market depth. Rising concentration is an indicator of various aspects of
the market, like divergence with macro fundamentals, rising passive ownership that sometimes works in a feedback
loop, and usually leads to self-correcting market movements as earnings fail to justify valuations.
In this article, we provide excerpts from a forthcoming report where we analyse concentration in the Indian equity
markets in terms of market value and also in their trading activity across the NSE and the BSE. Market concentration is
a well-researched topic, esp. for specific industries, in the context of perceived market power/monopolistic behaviour,
and there are many indicators available. We use a standard concentration measure, the eponymous Herfindahl-
Hirschman index (HHI), and the simpler Concentration Ratio (CR4) in this exercise. In this initial segment of our analysis,
we restrict ourselves to the illustration of the long trend seen in Indian markets. From initial reading on the trends seen
in concentration in the Indian markets, the final report would explore related issues of causality, correlation with major
macro and market indicators, and comparison with major markets.
The NIFTY 500 Universe accounts for an average ~88% of the listed universe (~91% of ADT1) during our analysis period
(1996-2020), wherein the NIFTY 50 accounts for ~55% of the market (avg. share of listed equities) in both value and
trading activity. According to our analysis, the market concentration has been rising steadily over the last three years, in
line with global markets, but for different reasons. The current level however, remains significantly lower than the peak
levels of the 90s.
• Nifty 50 and Nifty 500 universes have driven performance and Rise in market value of Nifty 50 Universe,
trading activity: Indian equity markets have grown at an impressive Nifty 50 and listed universe (rebased to 100
pace over the past three decades. Overall market capitalisation has as on May 31st, 1996)
improved with a large number of listings, and wide market participation.
5000
In line with other equity markets, however, market performance has Nifty 500 Index (ex-Nifty 50)
tended to concentrate in a sample of stocks, usually index constituents. Listed universe (ex-Nifty 500)
While Nifty 500 and Nifty 50 market capitalisation has risen 27 and 55x 4000 Nifty 50 Index
in the last 24 years (as of May 2020), the rest of the listed space has
expanded at a much slower pace (5x). Market valuations touched 3000
icant fall following the global
outbreak of COVID-19 virus and the subsequent shutting of businesses, 2000
factories, infrastructure and travel to contain the virus.
Trading in equities has also witnessed heightened activities with daily 1000
turnover (NSE + BSE) in cash market rising from Rs17bn as of end of
-time high of Rs866bn on May 31st, 2020. While the 0
level of trading in Indian equities has risen steadily over the years, it has
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again been largely driven by the top 500 stocks (Nifty 500 universe).
The share of Nifty 500 stocks averaged ~91% (Max 99% and Min 61%)
1
ADT: Average Daily Turnover in Rsm.
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Market Pulse
of the total traded value and 88% (Max 95% and Min 70%) of the listed market
capitalisation and the Nifty 50 stocks averaged ~55% both in terms of traded value
(Max 96% and Min 30%) and market capitalisation (Max 65% and Min 37%) during
the analysis period.
• Concentration has fallen meaningfully from its peak levels of the 90s...:
The decline in
Emerging markets usually show high levels of concentration given limited trading, concentration can be
narrow markets and a lack of depth. These features fade over time as markets largely attributed to: (a) a
mature, with wilder participation, deeper market and higher liquidity across a wide rise in institutional flows,
spectrum of securities. For India, the long-term trend indicated concentration in (b) increasing retail
trading activity and market capitalisation, measured by the Herfindahl-Hirschman participation through the
Index was at its peak in the 90s but has fallen significantly since then (See Figure SIP route, (c) better
1). The fall in the concentration is also noticeable in CR4 i.e., the concentration of regulatory oversight, (d)
top 4 Nifty stocks by traded value (See Figure 2). This decline in concentration can implementation of
be largely attributed to: (a) rise in institutional flows through FPIs and DIIs, (b) technologies, (e) improved
gradual rise in retail participation through Systematic Investment Plan (SIP) route, transparency in
information dissemination
(c) better regulatory oversight, (d) implementation of technologies (d) improved
and, (e) pursuit of higher
transparency in information dissemination and, (e) pursuit of higher governance
governance standards by
standards by trading members and investors. The Indian equity market has evolved
trading members and
greatly since the establishment of market regulator Securities and Exchange Board investors.
of India (SEBI) and demutualisation of stock exchanges. Although concentration
has increased steadily in the last three years, it is tellingly lower than the 90s.
While the gap between the HHI for listed universe and Nifty 500 universe in
marginal, the HHI in the Nifty 50 universe has remained higher than the overall
market implying higher concentration in the top 50 stocks.
• ...but has risen again over the past three years: Interestingly, the last three years
have seen a rise again in market concentration. From an average 358 (Nifty 50 The top five stocks in the
universe) over the period 2010-2017, our key indicator, the HHI (mcap) has risen US markets now account
to an average 409 since then. The share of trading activity in the top index stocks for over 20% of the S&P
500 market capitalisation,
has risen on cue, with the NIFTY 50 stocks now accounting for 55% for the NIFTY
their highest in 40 years.
500 universe ADT vs. 53% over 2010-2017. Such trends are in line with global
Concentration levels in
markets: For instance, the top five stocks in the US markets now account for over
India are even higher
20% of the S&P 500 market capitalisation (See Figure 8), their highest in 40 years. (25%) but exhibit a very
Concentration levels in India are even higher (25%) but exhibit a very similar trend. similar trend.
The similarities end there, however. From a sector perspective, the US markets are
led by Technology stocks, while it has been initially Financials (esp. Private Banks)
but has lately diversified into a set of sectors in the top 50 universe.
• Dominance of Financials and Information Technology companies in the listed
The share of Financials in
space has increased noticeably: Sector composition of listed space has altered market capitalisation and
noticeably in the last 24 years. The share of Financials in market capitalisation and traded value has nearly
traded value has nearly doubled since the 90s, replacing dominance of Energy and doubled since the 90s,
Commodity companies. Four sectors: Financials, Consumer Staples, IT and Energy replacing dominance of
comprise the four largest sectors in terms as of today with 60% of the listed market Energy and Commodity
companies.
IT and Financials in trading activity has risen significantly during this period,
partially attributed to higher FII flows into stocks of this sector.
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Market Pulse
Long-term trend in Indian equity markets

The Indian equity market has grown meaningfully in the last 24 years both in terms of
trading activity and market value. While the average daily traded value in the cash
segment has increased nearly ~50 times, the market capitalisation has increased ~30
times during this period. The trading activity has been largely driven by the top 500 stocks
(Nifty 500 universe), accounting an average of ~91% (Max 99% and Min 61%) of the total
traded value and 88% (Max 95% and Min 70%) of the listed market capitalisation during
the analysis period. The market benchmark index - Nifty 50 averaged ~55% (Max 96%
and Min 30%) of the total trading and ~55% (Max 65% and Min 37%) of the listed market
capitalisation during this period. Barring the top 500 companies, there is very limited
trading activity in the rest of the listed space.
Figure 1: Share of Nifty 50 and Nifty 500 universe in listed universe market capitalisation
120% Share of Nifty 500 Index (LHS) Share of Nifty 50 Index (LHS) Listed universe mcap (Rstn) 180
160
100%
140
80% 120
100
60%
80
40% 60
40
20%
20
0% 0
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Source: CMIE Prowess, NSE
Note: Market cap is as on last trading day of the month
Figure 2: Share of Nifty 50 and Nifty 500 universe in listed universe traded value
Rsbn
120% Share of Nifty 500 - LHS Share of Nifty 50 - LHS Listed universe (Rsbn) 700
100% 600
500
80%
400
60%
300
40%
200
20% 100
0% 0
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Note: Above chart shows 3-month moving average of the traded value of the last trading day of the month
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Market Pulse
Concentration in Indian equity market

Concentration indices such as the Herfindahl-Hirschman Index (HHI) and the CR4 are
used to measure the level of competition in a given industry or market. While HHI is
calculated as the sum of the squares of the share of each company in the market, CR4
measures the sum of the shares of the top 4 companies in the overall market. A lower
index value implies less concentration.
Market concentration in Indian equities can be analysed in two ways: (i) Trading activity
and (ii) Size i.e., market capitalisation. Indian equity markets were highly concentrated in
the initial years of the analysis period but concentration has come off meaningfully since
then. This decline can be largely attributed to: (a) rise in institutional (FPIs and DIIs) flows,
(b) gradual rise in retail participation through the SIP route, (c) better regulatory oversight,
(d) implementation of technology (d) improved transparency in information dissemination
and, (e) pursuit of higher governance standards by trading members and investors.
Figure 3: Market concentration trend by trading activity in the last 24 years measured by HHI (3MMA)
3500
3000 Nifty 500 Index Listed universe Nifty 50 Index
2500
2000
1500
1000
500
0
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Source: CMIE Prowess, NSE. Note: HHI in terms of traded value is calculated for the last trading day of the month. 3MMA: Three-month moving average.
Figure 4: Market concentration trend by size (market capitalisation) in the last 24 years measured by HHI (3MMA)
800
Listed Universe Nifty 500 Index Nifty 50 Index
700
600
500
400
300
200
100
0
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Source: CMIE Prowess, NSE. Note: HHI is calculated for the last trading day of the month. 3MMA: Three-month moving average.
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Market Pulse
Although Nifty stocks account for nearly half of the cash market turnover, market
concentration (CR4) in terms of trading activity has fallen significantly in the last 24 years.
The share of top four Nifty companies has fallen from a steep 90% as on end of
Two of the top four companies (used for CR4 ratio) in most
months belong to the Financial sector.
In recent times, however, the CR4 ratio has witnessed a steady rise in market
capitalisation and traded value. The share of these companies in overall market capital as
-term average of 10%. The share in traded
value has risen, indicating heightened market interest in large cap stocks. The steady rise
in market concentration is also noticeable in the HHI levels in Figure 6 and Figure 7 below.
Typically, a market with a CR4 less than 40% is considered to be a competitive market
i.e., less concentrated.
Figure 5: Concentration trend (CR4 ratio) of top 4 Nifty stocks by traded value and market cap in the last 24 years
100%
Share of top 4 Nifty companies in traded value
Share of top 4 Nifty companies in Mcap
80%
60%
40%
20%
0%
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Note: CR4 in terms of trading activity/market cap is calculated as traded value/market cap (3MMA) of top four companies to total traded value/market cap (3MMA) of listed
universe in percentage terms.
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Market Pulse
Rise in concentration in the last three years:

terms of size i.e., market capitalisation is at its highest level in the last five years, thanks
to the risk-off sentiment by investors in view of the imminent recessionary concerns
which has pushed trading in the large-caps compared to the riskier mid- and small-cap
stocks.
Figure 6: Rise in concentration (HHI) in terms of trading activity over the last three years
Nifty 500 Index Listed universe Nifty 50 Index
700
600
500
400
300
200
100
0
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Note: HHI in terms of traded value is calculated for the last trading day of the month. The above chart shows 3-month moving average (3MMA)
Figure 7: Rise in concentration (HHI) in terms of size (market capitalisation) over the last three years
600
Listed Universe Nifty 500 Index Nifty 50 Index
500
400
300
200
100
0
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Note: HHI in terms of market capitalisation of listed companies is calculated for the last trading day of the month. The above chart shows 3-month moving average (3MMA)
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Market Pulse
Market concentration in the US vs India: The top five stocks in the US markets now
account for over 20% of the S&P 500 market capitalisation, their highest in 40 years.
Concentration levels in India are even higher (25%) but exhibit a very similar trend. The
similarities end there, however. From a sector perspective, the US markets are led by
Technology stocks, while it has been initially Financials (esp. Private Banks) but has lately
diversified into a set of sectors in the top 50 universe.
Figure 8: The concentration of the largest five stocks in the S&P 500 market cap 2
Figure 9: Concentration of the largest five stocks in the Nifty 500 market cap
50%
45% 43%
40%
35%
30%
Average = 25% 25%

25%
20%
15%
10%
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2
Business Insider article dated April 27th, 2020: https://markets.businessinsider.com/news/stocks/sp500-concentration-large-cap-bad-sign-
future-returns-effect-market-2020-4-1029133505
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Market Pulse
Sector-wise analysis of size and trading activity

Listed universe
Sector-wise analysis of the listed universe shows that the Financial and IT companies
have replaced the dominance of companies in Energy, Materials, Industrials and Utilities
during the analysis period. The two sectors comprise a sizeable chunk of the institutional
portfolios in Indian equities. The share of financial firms around 22% of the overall market
cap has been largely driven by private financial firms. The share of IT companies in terms
of trading activity was highest during 1999-2002 (period before and after the dotcom
crash of early 2000) but has now fallen far below its long-term average of ~17%.
Real Estate and Utilities continue to have minimal representation in the overall listed both
in terms of size and trading activity due to higher promoter holding in these sectors i.e.,
lower free-float stocks.
Figure 10: Sector-wise composition of listed universe in terms of market capitalisation

Communication Services Consumer Discretionary Consumer Staples Energy
Financials Health Care Industrials Information Technology
Materials Real Estate Utilities
100%
80%
60%
40%
20%
0%
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Note: Sector-wise composition is calculated for the last trading day of the month.
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Market Pulse
Figure 11: Sector-wise share in trading activity in listed universe

100%
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20%
0%
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Nifty 50 universe
representation in Nifty 50 universe in terms of size, which is in-line with the overall
composition of the Indian listed space. Sectors that have fallen sizeably in terms of share
in overall Nifty 50 space during the analysis period include Consumer staples and
Materials. Financial companies (27.2%) continue to enjoy a higher share in trading activity
as well, thanks to institutional action in this sector.
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Market Pulse
Figure 12: Sector composition of Nifty 50 universe in terms of market capitalisation

100%
80%
60%
40%
20%
0%
May-12
May-16
May-96
May-97
May-98
May-99
May-00
May-01
May-02
May-03
May-04
May-05
May-06
May-07
May-08
May-09
May-10
May-11
May-13
May-14
May-15
May-17
May-18
May-19
May-20
Figure 13: Sector-wise share in trading activity in Nifty 50 universe

100%
80%
60%
40%
20%
0%
May-02
May-09
May-16
May-96
May-97
May-98
May-99
May-00
May-01
May-03
May-04
May-05
May-06
May-07
May-08
May-10
May-11
May-12
May-13
May-14
May-15
May-17
May-18
May-19
May-20

Note: Sector-wise composition is calculated for the last trading day of the month
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Market Pulse
Nifty 500 universe

The composition of sectors in the Nifty 500 largely reflects the composition of the listed
space, as Nifty 500 companies account for a major share both in market capitalisation
and traded value. Financial companies have a comparatively higher concentration in
Indian equities in terms of si
trading activity, the sectors have been in-line with the change in their share in terms of
size during the analysis period.
Figure 14: Sector-wise composition of Nifty 500 universe in terms of market capitalisation
100%
80%
60%
40%
20%
0%
May-02
May-07
May-12
May-96
May-97
May-98
May-99
May-00
May-01
May-03
May-04
May-05
May-06
May-08
May-09
May-10
May-11
May-13
May-14
May-15
May-16
May-17
May-18
May-19
May-20
Source: CMIE Prowess, NSE. Note: Sector-wise composition is calculated for the last trading day of the month.
Figure 15: Sector-wise trading activity in Nifty 500 universe

100%
80%
60%
40%
20%
0%
May-20
May-96
May-97
May-98
May-99
May-00
May-01
May-02
May-03
May-04
May-05
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Source: CMIE Prowess, NSE. Note: Sector-wise composition is calculated for the last trading day of the month.
13/116
Market Pulse
Chart of the month

Unlock 1.0: Google/Apple mobility trends point to a gradual return of normalcy
Cross-country comparison of Google/Apple mobility trends points to the stringency with which lockdown was
implemented in India much before the virus hit the country hard. India saw the highest drop in footfalls amongst the top
10 infected countries, particularly in retail and recreation category, even as the mobility is gradually improving since
mid-May in the wake of partial and selective lifting of lockdown restrictions. That said, footfalls have come off marginally
over the last one week amid a sharp spike in COVID-19 cases in India. Moreover, state-wise comparison of mobility
trends points to a stricter adherence to the lockdown restrictions by states witnessing higher number of cases.
According to the Google COVID-19 Community Mobility Reports3, amongst the top 10
infected countries in terms of caseloads, India saw the second highest drop in footfalls in
places falling under retail and recreation category, including restaurants, cafes, shopping
centres, theme parks, museums, libraries and cinemas, as these places were completely
shut during the lockdown period. Footfalls at grocery and pharmacy stores in India have
consistently increased, barring the first few days of the lockdown, reflecting continued
easing of restrictions and recovery in supply chains. Visits to other common location types
have been slowly improving since May-beginning, amid gradual lifting of restrictions and
selective commencement of non-essential activities. However, the recent spike in cases
in India has impacted mobility across location categories over the last one week.
Peru is probably the only country apart from India to have implemented a very stringent
lockdown, having extended it for the fifth time on May 23 rd until June 30th, translating into
a total lockdown for more than three and a half months. This is much stricter than many
of the other worst affected nations. A sharp rise in cases in Chile also forced the country
to implement a strict lockdown around mid-May. The impact of this on footfalls at
common location types is reflected in the Google mobility trends for these countries.
State-wise mobility trends point to a stricter adherence to the lockdown restrictions by
states witnessing higher number of cases. We have compared changes in footfalls across
different location categories between Lockdown 1.0 (25th March to 14th April) and the first
two weeks of Unlock 1.0 (8-21st June) across states using the Google mobility data. Our
analysis shows that increase in footfalls between Lockdown 1.0 and Unlock 1.0 at retail
stores & recreation centres in Maharashtra is much lower as compared to other worst
affected states like Delhi, Gujarat and Tamil Nadu. Visits to grocery and pharmacy stores
have risen at a much slower pace in the worst affected states viz. Delhi, Maharashtra,
the sharpest rice in turnout at workplaces amongst the worst hit states. With Maharashtra
having the highest number of cases in India, accounting for 30%, the state has exercised
the highest amount of caution in terms of mobility across all location categories.
The Apple Mobility data4, that shows daily changes in requests for directions by different
transportation types across countries from the baseline period, also paints a similar
picture. The direction requests made to Apple maps in India is amongst the lowest in the
top 10 affected countries (data for Peru and Iran is not available), reflecting stricter
restrictions and caution practiced in India compared to the other worst affected countries.
3
The Google COVID-19 Community Mobility Reports show movement trends by countries/regions across different categories of places. The data
shows how visitors to (or time spent in) categorised places change compared to the baseline days. A baseline day represents a normal value for that
day of the week and is the median value from the 5-week period Jan 3 Feb 6, 2020, translating into seven baseline values for seven days of the
week. The Residential category shows a change in duration the other categories measure a change in total visitors.
4
The Apple Mobility data is generated by counting the number of requests made to Apple maps for directions through different transportation types
including driving, walking and transit for all available countries/regions, sub-regions and cities. The volume of directions requests per country/region,
sub-region or city is compared to a baseline volume on January 13th, 2020.
14/116
Market Pulse
Google COVID-19 Community Mobility Trends

Figure 16: Mobility trends for retail & recreation for top-10 affected countries
% Mobility trends for Retail & Recreation: India vs. other top-10 affected countries
20 (7-period moving average of mobility change from the baseline date)
India US Brazil Russia United Kingdom Spain Peru Italy Chile Germany
0 Baseline
-20
-40
-60
-80
-100
03-Apr
10-Apr
17-Apr
24-Apr
01-May
08-May
15-May
22-May
29-May
21-Feb
28-Feb
06-Mar
13-Mar
20-Mar
27-Mar
05-Jun
12-Jun
19-Jun
Source: Google COVID-19 Community Mobility Reports, NSE.
Note: Retail & recreation includes places like restaurants, cafes, shopping centres, theme parks, museums, libraries and cinemas. A baseline day represents a normal value
for that day of the week and is the median value from the 5-week period Jan 3rd Feb 6th, 2020, translating into seven baseline values for seven days of the week . The data
in the chart above represents seven-day moving average of the change in total visitors compared to the baseline day. The last available data is for June 22nd, 2020.
Figure 17: Mobility trends for grocery and pharmacy for top-10 affected countries
% Mobility trends for Grocery and Pharmacy: India vs. other top-10 affected countries
20
10
Baseline
0
-10
-20
-30
-40
-50
-60
-70
-80
03-May
21-Feb
28-Mar
03-Apr
09-Apr
15-Apr
21-Apr
27-Apr
04-Mar
10-Mar
16-Mar
22-Mar
09-May
15-May
21-May
27-May
27-Feb
02-Jun
08-Jun
14-Jun
20-Jun

Note: Grocery and pharmacy includes places like supermarkets, food warehouses, speciality food shops and pharmacies. A baseline day represents a normal value for that
day of the week and is the median value from the 5-week period Jan 3rd Feb 6th, 2020, translating into seven baseline values for seven days of the week. The data in the
chart above represents seven-day moving average of the change in total visitors compared to the baseline day. The last available data is for June 22nd, 2020.
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Market Pulse
Figure 18: Mobility trends for parks for top-10 affected countries
% Mobility trends for Parks: India vs. other top-10 affected countries
(7-period moving average of mobility change from the baseline date)
150
100
50
Baseline
0
-50
-100
04-Mar
10-Mar
16-Mar
22-Mar
28-Mar
03-Apr
09-Apr
15-Apr
21-Apr
27-Apr
03-May
09-May
15-May
21-May
27-May
02-Jun
08-Jun
14-Jun
20-Jun
21-Feb
27-Feb

Note: Parks include places like national parks, public beaches, marinas, dog parks, plazas and public gardens. A baseline day represents a normal value for that day of the
week and is the median value from the 5-week period Jan 3rd Feb 6th, 2020, translating into seven baseline values for seven days of the week. The data in the chart above
represents seven-day moving average of the change in total visitors compared to the baseline day. The last available data is for June 22nd, 2020.
Figure 19: Mobility trends for transit stations for top-10 affected countries
% Mobility trends for Transit Stations: India vs. other top-10 affected countries
Baseline
0
-20
-40
-60
-80
-100
16-Mar
15-May
03-Apr
09-Apr
15-Apr
21-Apr
27-Apr
04-Mar
10-Mar
22-Mar
28-Mar
03-May
09-May
21-May
27-May
21-Feb
27-Feb
02-Jun
08-Jun
14-Jun
20-Jun

Note: Transit stations include places that are public transport hubs, such as underground, bus and train stations and taxi stands. A baseline day represents a normal value
for that day of the week and is the median value from the 5-week period Jan 3rd Feb 6th, 2020, translating into seven baseline values for seven days of the week. The data
in the chart above represents seven-day moving average of the change in total visitors compared to the baseline day. The last available data is for June 22 nd, 2020.
16/116
Market Pulse
Figure 20: Mobility trends for workplaces for top-10 affected countries
% Mobility trends for Workplaces: India vs. other top-10 affected countries
20
0 Baseline
-20
-40
-60
-80
-100
28-Mar
03-Apr
09-Apr
15-Apr
21-Apr
27-Apr
04-Mar
10-Mar
16-Mar
22-Mar
03-May
09-May
15-May
21-May
27-May
21-Feb
27-Feb
14-Jun
02-Jun
08-Jun
20-Jun
Note: Workplaces include places of work. A baseline day represents a normal value for that day of the week and is the median value from the 5-week period Jan 3rd Feb
6th, 2020, translating into seven baseline values for seven days of the week. The data in the chart above represents seven-day moving average of the change in total visitors
compared to the baseline day. The last available data is for June 22nd, 2020.
Figure 21: Mobility trends for residential category for top-10 affected countries
% Mobility trends for Residential: India vs. other top-10 affected countries
45
40
35
30
25
20
15
10
Baseline
0
-5
15-Apr
03-Apr
09-Apr
21-Apr
27-Apr
04-Mar
10-Mar
16-Mar
22-Mar
28-Mar
03-May
09-May
15-May
21-May
27-May
21-Feb
27-Feb
02-Jun
08-Jun
14-Jun
20-Jun

Note: Residential includes places of residence A baseline day represents a normal value for that day of the week and is the median value from the 5-week period Jan 3rd
Feb 6th, 2020, translating into seven baseline values for seven days of the week. The data in the chart above shows the seven-day moving average of the change in duration
from the baseline day. The last available data is for June 22 nd, 2020.
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Market Pulse
The chart below shows the weekly average change in number of visitors to different
category of places in India since the lockdown was implemented, March 25 th, 2020 that
is. Visits to grocery and pharmacy stores, considered essential trips, have been
consistently increasing, barring the first week of the lockdown, reflecting continued
easing of restrictions and resolution of supply chain bottleneck, and have now risen to the
pre-COVDID levels. Footfalls at other common location types including workplaces and
transit stations, have been slowly improving since May-beginning, amid gradual lifting of
restrictions and selective commencement of non-essential activities. However, footfalls
at parks in India, which anyway saw the lowest drop post the lockdown implementation,
-up. Footfalls at places of retail and recreation continued to
fall until week 5 of the lockdown and has been gradually rising thereafter as restrictions
were partially and selectively lifted in Orange and Green zones from May-beginning.
Figure 22: Weekly average change in footfalls in India during different lockdown periods from the baseline day
%
Average change in footfalls during different lockdown periods from the baseline period
Retail and Recreation Grocery and Pharmacy stores Parks Transit Stations Workplaces
10
-10 Lockdown 3.0

Lockdown 1.0 Lockdown 2.0
March 25 - April May 4 - May 17 Unlock 1.0
-20 April 15 - May 3
Lockdown 4.0 June 8 -
May 18 - June 7
-30
-40
-50
-60
-70
-80
-90
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
TD
Source: Google COVID-19 Community Mobility Reports, NSE. TD till available date (June 22, 2020)
Note: Weeks start from the day lockdown was implemented in India, i.e. March 25 th, 2020. Accordingly, Week 1 is March 25-31, Week 2 is April 1-7 and so on.
State-wise mobility trends point to a stricter adherence to the lockdown restrictions by

State codes used in the charts
states witnessing higher number of cases. We have compared changes in footfalls,
below are as follows:
expressed in percentage points, across different categories of places as available in the Delhi (DN), Maharashtra (MH),
Google COVID-19 Community Mobility Reports between Lockdown 1.0 (25th March to 14th Tamil Nadu (TN), Goa (GA),
April) and the first two weeks of Unlock 1.0 (8-21st June) across 23 states. Our analysis Gujarat (GJ), Haryana (HR),
Assam (AS), Chandigarh (CH),
shows that increase in footfalls between Lockdown 1.0 and Unlock 1.0 at retail stores & Bihar (BH), Telangana (TN),
recreation centres in Maharashtra is much lower as compared to other worst affected Uttarakhand (UT), Rajasthan
states like Delhi, Gujarat and Tamil Nadu. Visits to grocery and pharmacy stores, however, (RJ), Madhya Pradesh (MP),
have risen at a much slower pace in the worst affected states including Delhi, West Bengal (WB), Karnataka
(KA), Punjab (PB), Andhra
Maharashtra, Gujar Pradesh (AP), Odisha (OR),
the first two weeks of Unlock 1.0 as compared to Lockdown 1.0. Gujarat has seen the Himachal Pradesh (HP),
sharpest rice in turnout at workplaces amongst the worst hit states. With Maharashtra Kerala (KL), Chhattisgarh (CT),
having the highest number of cases in India, accounting for 30%, the state has exercised Uttar Pradesh (UP) and
Jharkhand (JH).
the highest amount of caution in terms of mobility across all categories of places.
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Market Pulse
Figure 23: State-wise comparison of visits to retail & recreation centres between Lockdown 1.0 and Unlock 1.0
State-wise comparison of change in footfalls in Retail & Recreation in the first two weeks of Unlock
1.0 (June 8-21) vs. Lockdown 1.0 (March 25 - April 14)
30
KA
27
CH
24
Rise in footfalls (percentage points)
TG TN
PB
21 RJ GJ DL
AP
KL UT
18 BR HR
UP
MP
15
CT GA
AS
HP MH
12
OR
JH
9
6 WB
3
0 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300
Cases per mn population
Source: Google COVID-19 Community Mobility Reports, NSE. Note: The Y axis represents the change in number of footfalls, expressed in percentage points, at retail and
recreation centres between Lockdown 1.0 (March 25th April 14th) and the first week of Unlock 1.0 (June 8-14th) compared to the baseline day (median value from the 5-
week period Jan 3 Feb 6, 2020). Size of the bubble denotes number of deaths per mn population.
Figure 24: State-wise comparison of visits to grocery & pharmacy stores between Lockdown 1.0 and Unlock 1.0
State-wise comparison of change in footfalls in Grocery & Pharmacy in the first two weeks of
Unlock 1.0 (June 8-21) vs. Lockdown 1.0 (March 25 - April 14)
95
BR
85
RJ
75 UP
MP
CT
KL
65
HP PB UT
AS
JH GJ
AP
KA HR
55 TN
WB
TG
OR
45 CH
DL
MH
GA
35
0 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300
Source: Google COVID-19 Community Mobility Reports, NSE. Note: The Y axis represents the change in number of footfalls, expressed in percentage points, at grocery and
pharmacy stores between Lockdown 1.0 (March 25 th April 14th) and the first week of Unlock 1.0 (June 8-14th) compared to the baseline day (median value from the 5-
week period Jan 3 Feb 6, 2020). Size of the bubble denotes number of deaths per mn population.
19/116
Market Pulse
Figure 25: State-wise comparison of change in footfalls at parks between Lockdown 1.0 and Unlock 1.0
State-wise comparison of change in footfalls in Parks in the first two weeks of Unlock 1.0 (June 8-
21) vs. Lockdown 1.0 (March 25 - April 14)
39
KL
33 BR
27
21
15
WB
9 UT
OR
3 JH
UP GA TN
AP GJ
-3 HP TG CH MH
CT
MP
-9 KA
RJ DL
-15 PB
-21
HR
-27
0 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300
Source: Google COVID-19 Community Mobility Reports, NSE. Note: The Y axis represents the change in number of footfalls, expressed in percentage points, at parks
between Lockdown 1.0 (March 25th April 14th) and the first week of Unlock 1.0 (June 8-14th) compared to the baseline day (median value from the 5-week period Jan 3
Feb 6, 2020). Size of the bubble denotes number of deaths per mn population.
Figure 26: State-wise comparison of change in footfalls at transit stations between Lockdown 1.0 and Unlock 1.0
State-wise comparison of change in footfalls in Transit Stations in the first two weeks of Unlock 1.0
(June 8-21) vs. Lockdown 1.0 (March 25 - April 14)
45
BR
42 HP
RJ
KA GJ
39 MP
KL
TG
36 CH
AS
UP
33 AP UT TN
WB
30 OR
CT HR
PB
JH DL
27
GA
24
MH
21
18
0 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300
Source: Google COVID-19 Community Mobility Reports, NSE. Note: The Y axis represents the change in number of footfalls, expressed in percentage points, at transit
stations between Lockdown 1.0 (March 25th April 14th) and the first week of Unlock 1.0 (June 8-14th) compared to the baseline day (median value from the 5-week period
Jan 3 Feb 6, 2020). Size of the bubble denotes number of deaths per mn population.
20/116
Market Pulse
Figure 27: State-wise comparison of change in footfalls at workplaces between Lockdown 1.0 and Unlock 1.0
State-wise comparison of change in footfalls in Workplaces in the first two weeks of Unlock 1.0
(June 8-21) vs. Lockdown 1.0 (March 25 - April 14)
48
45
GJ
42
HP
RJ
39 PB
KA HR
KL CH TN
36 AS GA
AP UT DL
CT
33 UP MP TG
30 BR WB
MH
27 JH
24 OR
21
0 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300
Source: Google COVID-19 Community Mobility Reports, NSE. Note: The Y axis represents the change in number of footfalls, expressed in percentage points, at workplaces
Figure 28: State-wise comparison of duration change at residential places between Lockdown 1.0 and Unlock 1.0
State-wise comparison of change in duration at Residential places in the first two weeks of Unlock
1.0 (June 8-21) vs. Lockdown 1.0 (March 25 - April 14)
-10
JH UT
WB
-12 OR MH
DL
BR AP
UP
HP
-14 MP
PB
CT TN
HR GA
RJ
-16
KL
KA TG CH
-18
GJ
-20
-22
0 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300
Source: Google COVID-19 Community Mobility Reports, NSE. Note: The Y axis represents the change in duration, expressed in percentage points, at residential places
21/116
Market Pulse
Apple Mobility Trends
The Apple Mobility data, that shows daily changes in requests for directions by different
transportation types across countries from the baseline period, also paints a similar
picture. The direction requests made to Apple maps in India is amongst the lowest in the
top 10 affected countries (data for Peru and Iran is not available), reflecting higher level
of restrictions and caution practiced in India as compared to other high case-load
countries including US, Russia, Brazil and UK.
Figure 29: Country-wise comparison of change in volume of direction requests by driving vs. the baseline date
% Percentage change in volume of direction requests by driving compared to the baseline
volume on Jan 13th, 2020 (7 period moving average)
India US Brazil Russia UK
40.0 Spain Italy Chile Germany Turkey
20.0
Baseline
0.0
-20.0
-40.0
-60.0
-80.0
-100.0
19-Jan
26-Jan
29-Mar
01-Mar
08-Mar
15-Mar
22-Mar
05-Apr
12-Apr
19-Apr
26-Apr
03-May
10-May
17-May
24-May
31-May
07-Jun
14-Jun
21-Jun
02-Feb
09-Feb
16-Feb
23-Feb
Source: Apple mobility data, NSE
Figure 30: Country-wise comparison of change in volume of direction requests by walking vs. the baseline date
% Percentage change in volume of direction requests by walking compared to the baseline
volume on Jan 13th, 2020 (7 period moving average)
India US Brazil Russia UK
60.0 Spain Italy Chile Germany Turkey
40.0
20.0
Baseline
0.0
-20.0
-40.0
-60.0
-80.0
-100.0
19-Jan
26-Jan
05-Apr
12-Apr
19-Apr
26-Apr
01-Mar
08-Mar
15-Mar
22-Mar
29-Mar
03-May
10-May
17-May
24-May
31-May
02-Feb
09-Feb
16-Feb
23-Feb
07-Jun
14-Jun
21-Jun
Source: Apple mobility data, NSE
22/116
Market Pulse
Macro economy
Food inflation declines in May as supply improves
Food inflation (39.1% of the CPI basket) eased 120bps MoM to 9.3% in May 2020 as supply-side pressures abated, led
by a sharp fall in vegetable inflation, partly offset by meat & fish where inflation surged to the highest level in the series.
Excluding meat & fish, food inflation fell by 350bps MoM to a seven-month low of 8.5%. Within core inflation, while
health inflation inched up, housing inflation fell to the lowest level in the series. Price collection of other categories has
not happened for the 2nd month in a row owing to unavailability of transaction data.
While continued easing of supply-side bottlenecks and expectations of a normal monsoon should further bring down
food inflation, a meaningful deterioration in aggregate demand is expected to keep core inflation benign, even as the
recent hike in fuel prices may impart some upside pressure. This should keep the room open for further monetary easing.
We expect the RBI to cut policy rates by another 25-50bps, ceteris paribus.
• Data collection hampered by lockdown: Retail prices are collected from field
visits to selected 1114 urban and 1181 villages in the country on a weekly roster.
In the wake of nation-wide lockdown, price collection through personal visits were
suspended w.e.f. March 19th. Data collection for the month of May has taken place
from 987 urban and 836 villages for commodities that were transacted and were
available during the lockdown. Given the transactions were largely limited to
essential products, price movement for several sub-groups were not compiled.
• Food inflation declines amid easing supply pressures: The lockdown-induced
supply-side bottlenecks that had impacted food prices in April eased meaningfully Food inflation eased in
in May, particularly in perishables. Consequently, food inflation (39.1% of the CPI May led by a sharp fall in
basket) fell by 120bps MoM to 9.3% in May 2020, largely led by sharp fall in vegetable inflation as
supply situation improved.
vegetable inflation to 10-month low of 5.3%, partly offset by meat & fish where
inflation surged to 16% the highest since the commencement of the series as
supplies remained under pressure. Inflation in oils & fat also surged to more than
seven-year high of 12.0%. Inflation in cereals, pulses and spices came off
marginally in May but still remain at elevated levels. Excluding meat & fish, food
inflation fell by 350bps MoM to a seven-month low of 8.5%. Within core inflation,
while health inflation inched up, housing inflation fell to the lowest level in the
series. Price collection of other categories has not happened for the 2nd month in
a row owing to unavailability of transaction data.
• RBI to ease further: Growth trajectory has got adversely impacted due to COVID-
19 and attendant containment measures. While supply-side situation is expected
to improve at a much faster pace as restrictions gradually get lifted pan-India,
aggregate consumption demand is expected to remain weak in the foreseeable
future as the second-order effect of lockdown feeds in, thereby further delaying a
recovery in the investment cycle. We expect Indian economy to contract by 6% in
FY21 (refer to Q4FY20 GDP data points to a protracted slowdown; revising FY21E to
-6.0%). Inflation, however, is expected to remain benign. While further easing of
supply-side bottlenecks and expectations of a normal monsoon should result in
further decline in food inflation, a meaningful deterioration in aggregate demand is
expected to keep core inflation benign, even as the recent hike in fuel prices may
impart some upside pressure. This should keep the room open for further monetary
easing. We expect the RBI to cut policy rates by another 25-50bps, ceteris paribus.
23/116
Market Pulse
Figure 31: Consumer price inflation in May 2020 (%YoY)

Weight (%) May-20 Apr-20 May-19 FY20 FY19
CPI NA NA 3.0 4.8 3.4
Core CPI inflation* 44.9 NA NA 4.2 4.0 5.8
Food & Beverages 45.9 7.4 8.6 2.0 6.0 0.7
Food 39.1 9.3 10.5 1.8 6.7 0.1
Cereals and products 9.7 7.4 7.8 1.2 2.8 2.1
Meat & fish 3.6 16.0 NA 8.1 9.3 4.0
Egg 0.4 8.7 9.0 1.8 4.5 2.3
Milk and products 6.6 8.9 9.4 0.3 2.9 1.8
Oils and fats 3.6 12.0 10.8 0.8 2.9 2.1
Fruits 2.9 2.1 2.7 (5.2) 0.7 2.3
Vegetables 6.0 5.3 23.6 5.5 21.3 (5.2)
Pulses and products 2.4 21.1 22.8 2.1 9.9 (8.3)
Sugar and confectionary 1.4 6.1 10.3 0.3 0.8 (7.0)
Spices 2.5 12.6 12.8 1.3 4.4 2.2
Non-alcoholic beverages 1.3 3.1 2.2 3.2 2.6 2.6
Pan, Tobacco & Intoxicants 2.4 NA NA 3.9 4.2 6.2
Clothing & Footwear 6.5 NA NA 1.8 1.6 4.1
Housing 10.1 3.7 3.9 4.8 4.5 6.7
Fuel & Light 6.8 1.4 2.9 2.5 1.3 5.7
Miscellaneous 28.3 NA NA 4.6 4.4 5.8
Health 5.9 4.3 2.8 8.0 6.2 7.1
Source: CSO, NSE. * Headline inflation excluding food & beverages, pan, tobacco & intoxicants and fuel & light. NA = Not Available.
Figure 32: India inflation vs. interest rates
Source: Refinitiv Datastream, NSE
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Market Pulse
Figure 33: India consumer price inflation (CPI)
Source: Refinitiv Datastream, NSE. Note: Data for Pan, tobacco & intoxicants, Clothing & footwear and Miscellaneous categories is only up to March 2020
25/116
Market Pulse
Figure 34: Category-wise contribution to India consumer price inflation (CPI)
Figure 35: Category-wise contribution to India Food and Beverages inflation (CPI)
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Market Pulse
• Wholesale prices move into deflation zone in May: Wholesale price inflation
(WPI) also declined sharply in May and moved into deflation, registering a drop of WPI inflation moderated to
3.2% YoY. This was led by moderation across the board, except for minerals. Within a four-month low of 1% in
primary articles, food inflation moderated to a 17-month low of 1.1% in May, non- March 2020.
food primary articles inflation fell to a 35-month low of -2.9%, crude, petroleum &
natural gas prices fell by 46.2% YoY reflecting a sharp fall in crude oil prices, while
inflation in minerals inched up modestly to 2.2%. Fuel & power category was pulled
deep into deflation by mineral oils, registering a price decline of -37.4% YoY the
steepest decline in 55 months, even as coal and electricity registered a modest
increase in prices. Manufactured products inflation declined to -0.4% YoY. The
sharp fall in wholesale prices should ideally reflect in final consumer prices, albeit
with a delay, further supporting the prognosis of a benign consumer inflation
trajectory ahead.
Figure 36: Wholesale price inflation for May 2020 (%YoY)
Weight (%) May-20 Apr-20 May-19 FY20 FY19
WPI (3.2) NA 2.8 1.7 4.3
Primary articles 22.6 (2.9) (0.8) 6.8 6.8 2.7
Food articles 15.3 1.1 2.6 7.3 8.4 0.3
Non-food articles 4.1 (3.5) (1.2) 6.0 4.6 3.0
Minerals 0.8 2.2 (0.4) 18.4 13.2 11.4
Crude petroleum & natural gas 2.4 (46.2) (34.0) (2.8) (7.6) 26.6
Fuel & power 13.2 (19.8) (10.1) 2.0 (1.8) 11.5
Coal 2.1 2.3 2.3 0.5 1.6 3.9
Mineral oils 8.0 (37.4) (21.5) 3.4 (4.6) 17.3
Electricity 3.1 2.9 6.2 - 2.0 5.7
Manufactured products 64.2 (0.4) NA 1.5 0.3 3.7
Food group 24.4 2.3 3.6 5.5 6.9 0.6
Source: CSO, NSE
Figure 37: India wholesale price inflation (WPI)
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Market Pulse
Industrial production contracts sharply in April

Industrial product
month, and weaker than the Consensus Estimate of -45% (source: Bloomberg). This was led by a huge drop in
manufacturing activity as majority of the manufacturing units were shut w.e.f. March 25th in the wake of an extended
and stringent nation-wide lockdown imposed to contain the spread of COVID-19. Electricity and mining sectors,
however, fared relatively better. Within the manufacturing sector, while capital goods, infrastructure/construction goods
and consumer durables registered an YoY decline of 83-95%, essential categories such as primary goods and consumer
non-durables performed somewhat better. During Mar-April 2020, industrial production fell by 36% YoY. With
manufacturing activity resuming marginally in May and further in June as restrictions were eased and lifted off in some
cases, industrial production is expected to recover, even as the contraction is likely to persist for another couple of
months, at least.
• Lockdown impacts data collection: Like consumer prices, data flow from factories
and establishments has also got impacted due to lockdown. The weighted average
response in March/April was 85/87% in the first revision/provisional estimates,
lower than 94%/93% in the final revision for December 2019/January 2020.
• Industrial production declines sharply owing to lockdown: Following an 18.3%
Industrial production
drop in the previous month, industrial production fell sharply by 55.5% in April
declined by 55.5% in April
2020, lower than the consensus estimate of -45%. This translates into a decline of after an 18.3% drop in the
35.7% in March-April. The sharp drop in April was largely led by a 64.3% YoY previous month.
contraction in manufacturing output as majority of the manufacturing units were
shut w.e.f. March 25th in the wake of an extended and stringent nation-wide That said, this has likely hit
lockdown imposed to contain the spread of COVID-19. The drop in electricity and the bottom and industrial
activity is expected to
mining sectors, however, was much lower at 22.6% and 27.4% respectively. While
improve, even as YoY
mining activity was hit by limited labour availability despite being categorised as an
contraction is likely to
essential activity, electricity production got impacted amid low demand from
persist for a couple of
industrial and commercial establishments. Except for three out of 23 sub-sectors months more, at least.
within the manufacturing space, notably food products, coke & refined petroleum
products and pharmaceuticals, medicinal chemical & botanical products (22% of
the IIP basket) which recorded a sub-50% drop, rest all sectors reported 50%+
drop, with 13/23 groups registering more than 90% YoY contraction.
On the use-based side, capital goods, infrastructure/construction goods and
consumer durables got impacted the most, contracting by 92%, 83.9% and 95.7%
respectively. Primary goods and consumer non-durables, largely falling under
essential categories, saw a relatively much lower YoY contraction of 26.6% and
36.1% respectively.
• Industrial recovery derailed: The industrial recovery has got significantly derailed
due to lockdown and other containment measures undertaken to control the virus
outbreak as well as global supply disruptions impacting production of industries
like pharmaceuticals, automobiles, electronics and others which rely heavily on
global markets for raw materials/inputs. Further, a significant deterioration of
aggregate demand is also likely to weigh on industrial production over the coming
months. We expect industrial sector GDP to contract by 13.5% in FY21 (refer to
Q4FY20 GDP data points to a protracted slowdown; revising FY21E to -6.0%). On
the positive side, a coordinated monetary and fiscal response should help mitigate
the economic shock to some extent.
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Market Pulse
Figure 38: India industrial production for April 2020 (%YoY)

Weight (%) Apr-20 Mar-20 Apr-19 FY20 FY19
IIP (55.5) (18.3) 3.2 (0.9) 3.8
Sector- Mining 14.4 (27.4) (1.4) 5.1 1.6 2.8

based Manufacturing 77.6 (64.3) (22.4) 2.5 (1.4) 3.8
indices Electricity 8.0 (22.6) (8.2) 6.0 0.9 5.2
Primary Goods 34.0 (26.6) (4.1) 5.1 1.2 3.5
Capital Goods 8.2 (92.0) (38.3) (1.4) (11.5) 5.7
Intermediate Goods 17.2 (66.0) (18.5) 3.0 11.9 (0.2)
Use-based
Infra/Construction Goods 12.3 (83.9) (25.2) (0.7) (1.8) 8.2
Goods
Consumer Goods 28.2 (61.9) (27.0) 4.0 (1.4) 5.6
Consumer Durables 12.8 (95.7) (36.5) 2.2 (6.1) 6.5
Consumer Non-durables 15.3 (36.1) (20.2) 5.4 2.2 4.9
Source: CSO, NSE:
Figure 39: India industrial production (3MMA)
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Market Pulse
Figure 40: Long-term industrial production trend (12MMA)
30/116
Market Pulse
Figure 41: India industrial production use-based goods (3MMA)
31/116
Market Pulse
Figure 42: India eight-core sector growth (3MMA)
Figure 43: India manufacturing and Services PMI remained deep in the contraction zone for yet another month
Manufacturing and Services PMI

70.0 Manufacturing PMI Services PMI
60.0
50.0
40.0
30.0
20.0
10.0
-
May-15
May-13
May-14
May-16
May-17
May-18
May-19
May-20
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Nov-18
Nov-19
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Feb-19
Feb-20
Aug-13
Aug-14
Aug-15
Aug-16
Aug-17
Aug-18
Aug-19
Source: CMIE Economic Outlook, NSE
32/116
Market Pulse
Lockdown continues to hurt imports; exports witness a modest recovery
month in a row in May, even as a sharp contraction in trade deficit to more than 11-year lows of US$3.1bn would future
in May, largely led by petroleum products and labour-intensive sectors such as textiles and gems & jewellery all of which
saw a 60%+ YoY fall in exports. Excluding these, the YoY decline in exports was much lower at 20%, reflecting easing
global restrictions and gradual resumption of business activities. Export of essential categories (agri commodities,
pharma and other chemicals), however, was relatively less impacted. Imports on the other hand contracted by a much
sharper 51.1% YoY as restrictions were only partially and selectively lifted in May in the wake of a surge in COVID-19
cases back home. Oil imports led the sharp drop, reflecting lower crude oil prices and a significant deterioration in
demand, followed by negligible gold imports for yet another month. Excluding oil and gold, imports fell by a relatively
lower 33.7%.
Merchandise trade performance is expected to improve meaningfully in June amid further loosening of lockdown
restrictions in large parts of the country. That said, exports are likely to fare better than imports as an aggressive policy
response globally should help revive global demand faster. Moreover, a relatively more stringent and prolonged
lockdown in India and its second-order impact in the form of job losses and decline in disposable incomes may keep
discretionary demand weak for an extended period. This is expected to result in a significant contraction in trade deficit,
notwithstanding lower crude oil prices, and a current account surplus in FY21. Additionally, a surge in foreign exchange
reserves to all-time high levels (US$502bn as of June 5th, +US$44bn YTD) bodes well for the INR.
▪ Exports fell by 36% YoY in May After registering a 60% YoY drop in April when
the lockdown was effective pan-India for the entire month fell Exports fell by 36% YoY in
by a relatively lower 36.5% YoY in May. The decline was particularly prononuced in May, much lower than 60%
petroleum products (-68.5% YoY), reflecting lower crude oil prices, and labour- drop in the previous month.
intensive sectors such as gems & jewellery (-68.8% YoY), readymade textiles (-
66.2% YoY) and leather & leather products (-75.1% YoY) as limited labour
availability and social distancing norms kept production levels low, despite partial
and selective lifting of lockdown restrictions during the month. Excluding these, the
YoY decline in exports was much lower at 20%, reflecting easing global restrictions
and gradual resumption of business activities. While exports of engineering goods
fell by a much lower 24% YoY, essential categories, viz. agricultural commodities
(rice, spices), ores, chemicals and pharmaceuticals fared much better.
▪ Unlike exports, imports

registered a lacklustre performance for the second in a row, with the overall bill Imports fell by a much
higher 51% YoY in May;
falling by 51.1% YoY in May, following a 60% drop in the previous month. Oil
excluding oil and gold, the
imports declined by a huge 72% YoY, reflecting a sharp drop in crude oil prices and
YoY decline in imports was
weak domestic demand, leading to oil trade deficit contracting to more than 15-
lower at 34%.
year lows. Gold imports also remained almost negligible for the second month in a
row. Excluding gold and oil, imports fell by a lower 33.7% YoY in May. Like the trend
seen in exports, imports of essential items including medicinal & pharmaceutical
products, and other chemicals were relatively less impacted.
▪ resulting in trade deficit contracting to more than 11-year lows: A sharper

Trade deficit contracted to
contraction in imports as compared to exports, thanks to relatively faster reopening more than 11-year lows of
of global economies as compared to India, resulted in trade deficit contracting to US$3.1bn in May.
US$3.1bn the lowest in more than 11 years.
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Market Pulse
▪ Expect current account surplus in FY21: Exports are expected to fare better than
imports in FY21, benefiting from an aggressive global policy response and relatively A significant deterioration
in trade deficit is likely to
lenient lockdown restrictions. India, on the other hand, has seen one of the most
translate into a current
stringent and extended lockdowns which not only brought the economic activity to
account surplus in FY21 vs.
a standstill for a couple of months, but has significantly deteriorated consumption an expected current
as well as investment demand. In fact, discretionary demand is expected to remain account deficit of 1% of
weak in India for an extended period in the wake of falling disposable incomes and GDP in FY20.
changing consumer behaviour. This, along with lower crude oil prices, should result
in a significant contraction in trade deficit in FY21, translating into a current account
surplus vs. an expected current account deficit of 1% of GDP in FY20. Moreover, a
surge in foreign exchange reserves to all-time high levels (US$502bn as of June 5th,
+US$44bn YTD) bodes well for the INR.
Figure 44: India monthly trade balance for May 2020

Trade
Exports Imports
balance
Oil Non-oil Gold
Total
US$bn %YoY %YoY imports %YoY imports %YoY Import %YoY US$bn
(US$ bn)
(US$bn) (US$bn) (US$bn)
May-20 19.1 -36.5 22.2 -51.1 3.5 -72.0 18.7 -43.1 0.1 -98.4 -3.1
Apr-20 10.4 -60.2 17.1 -59.6 4.7 -59.7 12.5 -59.6 0.0 -99.9 -6.8
May-21 30.0 3.6 45.4 3.3 12.4 7.5 32.9 1.8 4.8 37.4 -15.4
FY21TD 29.4 -47.5 39.3 -55.2 8.1 -66.1 31.2 -51.1 0.1 -99.1 -9.9
Source: Ministry of Commerce, CMIE Economic Outlook, NSE
Figure 45: India monthly trade balance trend
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Market Pulse
Figure 46: Non-oil, non-gold imports trend Figure 47: Oil imports trend
Non-oil non-gold imports remained weak for yet another Oil imports fell by a much sharper 72% YoY in May,
month, falling by 34% YoY in May reflecting lower crude oil prices and weak demand.
US$bn Non-oil non-gold imports remain weak % US$bn Oil imports trend %
35 Oil Imports % YoY (R)

Non-oil non-gold imports % YoY (R) 18 110
30 40
15
25 20 60
12
20
0
9 10
15
(20)
10 6
(40)
5 (40) 3
0 (60) 0 (90)
May-15 May-16 May-17 May-18 May-19 May-20 May-15 May-16 May-17 May-18 May-19 May-20
Source: Ministry of Commerce, CMIE Economic Outlook, NSE
Figure 48: Oil imports vs. Brent crude oil prices trend
An increase in crude oil prices over the last few weeks, coupled with continued lifting of mobility restrictions, should
translate into a pick-up in oil imports over the coming months
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Market Pulse
Figure 49: Global trade projected to fall sharply in 2020

World trade volume growth which was already on a declining trend over the last 12-15 months, thanks to the trade war,
has worsened further owing to the economic and social disruptions caused by the COVID-19 outbreak. World trade
volume fell by 4.3% in March (as per the latest data released by CPB Netherlands Bureau for Economic Policy Analysis)
and is expected to contract by 13 to 32% in FY21 as per the World Trade Organisation. The UNCTAD (United Nations
Conference on Trade and Development), in its recent report, projected global trade to fall by 27% in Q2 2020 and 20%
in 2020 as a whole.
Source: Refinitiv Datasream, NSE.
Figure 50: Global trade projected to fall sharply in 2020

On the positive side, a significant accretion to forex reserves over the years, and particularly this year (+US$44bn in
2020 till date), has resulted in a significant improvement in import cover, further supported by moderation in domestic
to 14 months now, thereby
red
US$ bn Forex reserves and import cover (months) # of months
550 15
FX reserves (US$bn) Import cover ratio (months, RHS)
14
500
13
450
12
400 11
350 10
9
300
8
250
7
200 6
May-14 May-15 May-16 May-17 May-18 May-19 May-20
Source: CMIE Economic Outlook, NSE. Import cover is calculated as the ratio of forex reserves at the end of the period to average monthly imports over the last 12
months
36/116
Market Pulse
May MPC Policy Minutes: Space available for further rate cuts
Committee in its March policy review meeting decided to reduce the policy rates by 40bps,
citing the need to address growth concerns sooner than later in the wake of a much adverse macroeconomic impact of
COVID-19 than envisaged earlier. This takes the repo and the reverse repo (the de facto policy rate in the current surplus
liquidity environment) rates to 4% and 3.35%, translating into a total cut this year of 115bps and 155bps respectively.
While refraining from giving estimates, the RBI expects Indian economy to contract in FY21 for the first time in the last
40 years and inflation to remain elevated in H1FY21 amid persisting supply dislocations. The COVID-19 outbreak and
ensuing lockdowns have resulted in a s
Except for Dr. Chetan Ghate who voted for a 25bps cut amid concerns on an effective transmission in the wake of huge
supply of Government paper and an expected spike in NPAs, rest all MPC members voted for a 40bps cut. That said, the
members viewed prudency in preserving space for easing in the future that should open up as inflation trajectory comes
off. We expect the MPC to cut rates by another 25-50bps in this fiscal, ceteris paribus, but effectiveness is contingent
on transmission.
Figure 51: Word cloud of the minutes of February 2020 and May 2021 MPC review meetings
We have compared the word clouds of the minutes of the February 2020 when the COVID-19 outbreak hit the Indian
economy, and May 2020 when the country was undergoing its fourth lockdown to contain the spread. While inflation
continued to have the highest number of mentions in both the meetings, growth-related words demand, growth,
activity etc. gained prominence in the recent monetary policy meeting, and understandably so. The MPC members have
incrementally turned far more cautious on the Indian economy, expecting GDP growth in FY21 to fall into the negative
zone for the first time in 40 years as continued lockdown effectively brought the economy to a standstill in April-May.
With a 40bps cut, MPC members viewed prudency in preserving policy space for future.
February 2020 MPC review meeting May 2020 MPC review meeting
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Market Pulse
Figure 52: Views of MPC members over the last five MPC meetings
Members October 2019 MPC December 2019 MPC February 2020 MPC March 2020 MPC May 2020 MPC
Dr. Chetan Ghate
Since the last review,
Output gap has Weakness in growth Broader economic Acute downside risks to
several high frequency
widened further. remains broad-based. activity is beginning to growth have mounted
indicators have
External demand Industrial Outlook show preliminary signs due to COVID-19 and
declined sharply. This
Growth conditions have Survey shows of a turn-around. lockdown measures. A
has not only led to a
worsened, and persistence of Tighter monetary large decline in global
large negative output
domestic sentiments pessimistic demand conditions important to growth to also affect
gap but also a drop in
remain weak. conditions in Q3FY20. meet the 4% target. exports adversely.
potential output.
Inflationary Supply-side pressure in
New disinflationary
expectations have the food sector remains
Inflationary Inflationary pressures have
moderated. The current a concern. COVID-19
expectations have seen expectations have risen emerged due to drop in
spike in CPI inflation is imparting a deflationary
an uptick. Headline sharply on account of crude oil prices and
Inflation temporary, but future shock is unclear. Both
inflation was flat in Aug spike in food prices. demand slowdown.
prints should be 3-month and 1-year
despite an increase in Low service inflation is Supply-side disruptions
carefully watched ahead inflationary
food inflation. unlikely to sustain. in the food sector
expectations have
poses an upside risk
spiked sharply.
Policy 25bps cut; stance: Pause; stance: Pause; stance: 50bps cut; stance: 25bps cut; stance:
action accommodative accommodative accommodative accommodative accommodative
Dr. Pami Dua
Consumption and There are some signs of Lockdown has brought COVID-19 induced
investment activity a modest revival, even economic activity to a lockdown has led to a
"..private consumption remain weak. Steeper as overall economic standstill. There are collapse in economic
and investment activity decline in imports vs. activity continues to ramifications stemming activity, which has
are weak, and business exports indicates a remain weak. Credit from supply side come to a near
Growth
and consumer more acute slowdown flow to the commercial disruptions, demand standstill. Except for
sentiment are in domestic vs. global sector has picked up in contraction, slowdown agri, economic activity
somewhat downbeat." demand. last two months. in global growth and a may continue to remain
loss in consumer/ sluggish even after the
investor confidence. lifting of the lockdown.
Inflation is expected to CPI inflation trajectory Headline inflation is
While outlook for Headline inflation is
moderate but remain at is heading downwards expected to ease in H2
inflation seems benign, projected to rise in the
elevated levels. Supply on easing food prices, FY21 and fall to sub-
Inflation disruptions in the near-term, but
disruptions in China collapse in crude oil 4% led by low crude oil
global oil market may moderate to below
poses upside risk. prices and weakening prices, and weak
impart upside risks. target by Q2FY21.
aggregate demand. demand.
Dr. Ravindra H. Dholakia
Growth slowdown may Prolonged lock-down Growth in FY21 to fall
Green shoots visible.
Growth slowdown may be prolonged, and the has seriously adverse into the negative zone
points at
continue in Q2FY20. real growth may remain economic and social for the first time in 40
growth slowdown
"..output gap would sub-7.5% for the next implications. FY21 GDP years. Nominal GDP
Growth bottoming in Q2FY20
continue to be negative couple of years leading growth may range growth may also come
and recovering
for at least next 3 to 4 the negative output gap between 4 to 4.5%, negative-reflected in
gradually in Q3/Q4 and
quarters" to expand. leading to further fall in demand, and
FY21.
widening of output gap. high unemployment.
Headline inflation Inflationary
Headline CPI inflation Inflation to fall to 2.8%
"..inflation rate crossing expected to remain expectations of
by Q4FY21 is expected in Q4FY21. Real policy
the mid-point target of above the 4% target households and
to be only around rate in India is very high
Inflation 4% during the next and closer to the upper businesses show a
2.5%, making the at ~1.2-1.6% vs. other
year or so has very little bound of the target
current real policy rate countries where it is
probability." range over next 2-3 inflation est. four
unduly high. zero or negative.
months. quarters down is 3.2%.
Dr. Janak Raj
Domestic activity has Though difficult to conomic activity is
remained weak due to quantify, it is clear that expected to contract in
Growth reduced investment aggregate demand will 2020-21. While supply
and consumption weaken significantly in lines are likely to be
demand. Some high- the near future, which restored as lockdown is
38/116
Market Pulse
frequency indicators, will impact the growth relaxed, demand would

however, show a prospects for the year take far longer to revive
modest turnaround. as a whole to pre-COVID levels
Headline inflation Barring near-term Inflation over the
surged due to spike in pressure, inflation medium-term is
vegetable prices. outlook has turned expected to be benign
Inflation
Inflation expectations benign due to demand due to fall in crude oil
have moderated but slowdown and a sharp prices and collapse in
still remain elevated. drop in crude oil prices. domestic demand.
Policy Pause; stance: 75bps cut; stance: 40bps cut; stance:
action accommodative accommodative accommodative
Dr. Michael Debabrata Patra
Weakness in overall Activity remains weak, Economic dislocations
Economic downturn is he damage due to
activity may likely with some signs of due to COVID-19 are
deeper and more COVID-10 is so deep
prolong into Q3. growth stabilising, but severe. Prospects for
pervasive than and extensive that
However, the upturn in they are far from the economy now hinge
Growth expected, with the
retail inflation calls for gaining economy-wide around how pervasive
state of the economy has been pushed down,
a pause, leaving scope traction. Coronavirus and severe COVID-19
expected to get worse and it will take years to
for calibrated policy outbreak poses new turns out to be, and
before it gets better. repair.
actions in future. risks. how long it lasts.
Inflation is expected to The breach in the Persisting drop in GDP
"..inflation continues to Inflation has peaked
rise further over next 2- upper tolerance band growth to keep core
trail below target and is and will likely ease well
3 months. Persistence inflation benign. Spike
Inflation projected to remain so below the target in the
of high food inflation target band in the Dec in food prices can be
over the 12 months second half of 2020-
and its spill-over into print may well recur in looked through for
ahead horizon" 21.
non-food is a key risk. the months ahead policy purposes
Shri Shaktikanta Das
Activity has weakened Demand conditions Growth impulses face Growth in FY21 to fall
further with GDP remain weak, even as strong headwinds from into negative zone.
Economic activity has
growth in Q2 declining some green shoots are sluggish demand and While supply side is
deteriorated further.
for the 6th quarter in a visible. Global activity disruptions in supply of expected to ease
High frequency
Growth row. Beyond Q2, has slowed down, with labour and key inputs. gradually as lockdown
indicators suggest that
however, some positive weakened prospects Erosion of consumer/ is lifted, demand side
economic activity
signs have emerged. due to Corona virus. investor confidence will continue to weigh
remained weak in Q2.
may worsen the growth on economic activity for
outlook even further. some time to come.
Near-term inflation Inflation has surged in Headline inflation rose Weak demand outlook
Price pressures to
outlook remains last 3 months reflecting for the 5th consecutive and lower crude oil
moderate amid weak
subdued, with inflation a spike in vegetable month led by a surge in prices should keep
demand conditions,
projected to remain prices, leading to rise in vegetable prices but is upside risks to inflation
Inflation easing of supply issues
sub-5% until Q1FY20, inflationary expected to moderate. firmly contained, even
in the food sector and a
even as inflationary expectations. Benign Nevertheless, inflation in the face of
sharp drop in crude oil
expectations have core inflation suggests uncertainty remains temporary supply chain
prices.
moved up. weak demand. high. disruptions.
Shri Bibhu Prasad Kanungo
Growth slowdown in Q2 GDP growth was
Q1 has been weaker than projected
underpinned by weak earlier. High frequency
Growth domestic demand. High indicators point to
frequency indicators continued weakness in
suggest continued loss Q3. Some green shoots
in momentum in Q2. are emerging.
Inflation remained soft Temporary demand-
in July-Aug, though supply imbalance led to
there was a pick-up in a spike in food inflation.
Inflation
food inflation. It is CPI inflation to rise in
projected to remain H2 but fall below the
below 4% till Q1 FY21. target in Q2FY21.
Policy 25bps cut; stance: Pause; stance:
action accommodative accommodative
Source: RBI.
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Market Pulse
Household financial savings improved in FY20 amid falling liabilities

Bulletin for June 2020 showed net household financial savings5 rising by a strong 14% in FY20 to
Rs15.6trn, largely on account of a sharp 20% drop in gross household financial liabilities, reflecting weak demand, even
as gross household financial assets grew by a modest 3%, similar to the growth seen in the previous year. This is largely
nty.
Net household financial savings rate (% of GDP) consequently improved by 50bps YoY to 7.7% in FY20. Except for
provident & pension fund and small savings, rest all financial instruments saw a moderation in savings rate.
Household liabilities as a % of GDP fell by ~100bps YoY in FY20 to 2.9%, largely led by a sharp drop in advances from
the banking sector, reflecting a consequence of weak household demand amid a slowing economy and a lower risk
appetite of banks in the wake of strengthening asset quality concerns. Borrowings by non-banking finance companies
(NBFCs) as well as housing finance companies (HFCs) also contracted owing to tight liquidity conditions and depressed
real estate demand from households.
Household financial savings are expected to rise further in Q1 FY21 amid a sharp drop in consumption demand due to
COVID-19-induced lockdown. However, this should normalise, albeit gradually, as economy opens up. Nevertheless, an
expected prolonged weakness in consumption demand in the wake of rising job/income uncertainty, coupled with weak
construction activity, should ideally result in higher household financial savings in the near-term.
• Net household financial savings improve in FY20 on lower liabilities: Gross

household financial assets rose by a modest 3% YoY in FY20 similar to the growth Net household financial
seen in the previous year, but much lower than the nominal GDP growth rate of savings rate increased by
7.2%. This consequently led to gross household financial savings rate (savings as a 50bps YoY to 7.7% led by
% of GDP) falling by ~50bps YoY to 7.2% in FY20. Gross household financial a huge drop in financial
liabilities, however, declined by a huge 20% YoY in FY20, reflecting a consequence liabilities.
of weak household consumption demand amid a slowing economy, declining risk
appetite of banks and tight liquidity conditions in the non-banking financial sector.
Consequently, net household financial savings grew by 14% YoY to Rs15.6trn in
FY20, with the savings rate improving from the revised 7.2% of GDP in FY19 (vs.
6.5% as per the data released by the CSO) to 7.7% in FY21.
• Deposits/currency take the major share of household financial savings : Bank

deposits and currency together accounted for ~70% of the outstanding household Bank deposits and
currency accounted for
financial assets as of March 2020, even as the share has gradually fallen over the
~70% of the outstanding
years. While share of bank deposits in the outstanding household financial assets
household financial assets
(only select instruments available) remained broadly stable at 56.5% as on March
as of March 2020.
2020, share of currency funds saw an increase, largely towards the fourth quarter
as heightened COVID-19 induced uncertainty led to flight of household savings to As a % of GDP, all financial
currency funds. While share of life insurance in the outstanding household financial instruments except for
provident & pension fund
assets saw a modest increase in FY20, share of mutual funds fell sharply in Q4FY20
and small savings saw a
after rising over the previous few quarters, partly reflecting the lacklustre equity
moderation in savings rate.
and fixed income market performance amid strengthening expectations of an
ensuing global recession due to COVID-19 outbreak.
As a % of GDP, all financial instruments except for provident & pension fund and
small savings saw a moderation in savings rate in FY20. Notably, given limited pass
through of lower interest rates in the market to small savings instruments, the
5
Net household financial savings is the difference between household financial assets and financial liabilities. Household hold their financial assets
in currency, bank deposits, debt securities, mutual funds, insurance, provident funds, pension funds and small savings. Financial liabilities are primarily
held in the form of loans and borrowings from banks, NBFCs and HFCs.
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Market Pulse
accretion of household savings in small savings instruments has seen a steady

increase over the last few years. Mutual funds have also garnered some interest
from households in the recent years, as also reflected in steady rise in SIP inflows.
• Household liabilities drop reflecting weak consumption demand: Household

liabilities as a % of GDP fell by ~100bps YoY in FY20 to 2.9%, largely led by a sharp Household liabilities as a
drop in advances from the banking sector. Borrowings by non-banking finance % of GDP fell by ~100bps
companies (NBFCs) as well as housing finance companies (HFCs) also contracted YoY in FY20 to 2.9%,
owing to tight liquidity conditions and depressed real estate demand from reflecting weak
households. In terms of composition of liabilities (available for only select financial consumption demand,
declining risk appetite of
sources), borrowings from commercial banks lead with a ~76% share in FY20,
banks and tight liquidity
+50bps YoY. Share of NBFCs/HFCs in the outstanding gross household financial
conditions in the non-
liabilities fell by a huge 110bps YoY to 17.3% in FY20.
banking financial sector.
As a % of GDP, bank credit fell by a huge 3.3 percentage points to 19-year lows of
1.4% in FY20, signalling the seriousness of consumption slowdown. Acquisition of
household liabilities in the form of loans and advances from other financial
institutions, including NBFCs and HFCs, also contracted to seven-year low of 0.2%
of GDP, marking the second consecutive year of contraction.
• Household financial savings should rise further amid heighted economic
uncertainty: Household financial savings are expected to rise further in Q1 FY21 Household financial
amid a sharp drop in consumption demand due to COVID-19-induced lockdown. savings are expected to
While this is positive in the current situation when the requirement for a sustainable rise further in Q1 FY21
source of financing is huge and critical for an economic recovery, it also indicates a amid a sharp drop in
weak demand environment and lacklustre consumer confidence. Savings rate, consumption demand due
to COVID-19-induced
however, should normalise, albeit gradually, as economy opens. Nevertheless, an
lockdown.
expected prolonged weakness in consumption demand in the wake of rising
job/income uncertainty, coupled with weak construction activity, should ideally
result in higher household financial savings in the near-term.
Figure 53: Long-term trend of annual household financial savings rate (as % of nominal GDP)
Household financial savings as % of nominal GDP
20% Gross financial assets Gross financial liabilities Net financial savings
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
FY78
FY79
FY80
FY81
FY82
FY83
FY84
FY85
FY86
FY87
FY88
FY89
FY90
FY91
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Source: RBI, CMIE Economic Outlook, NSE
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Market Pulse
Figure 54: Trend of quarterly household financial savings rate over the last three years (as % of nominal GDP)
Household financial savings as % of nominal GDP
20% Gross financial assets Gross financial liabilities Net financial assets
15%
10%
5%
0%
-5%
Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Source: RBI Monthly Bulletin, NSE
Figure 55: Composition of outstanding household Figure 56: Outstanding household financial assets for
financial assets for select financial instruments select financial instruments as a % of GDP (annual
(annual trend) trend)
While share of deposits of the outstanding household Outstanding household financial assets for select
financial assets (only select instruments available) financial instruments as a % of GDP improved for yet
remained broadly stable as on March 2020 at 56.5%, life another year, largely led by increase in bank deposits, life
insurance and currency funds saw an increase in their insurance and currency funds, even as outstanding
shares, reflecting household tendency to save more household financial assets in mutual funds as a % of GDP
during a slowdown and income/health uncertainty. Share saw a significant drop amid a lacklustre equity as well as
of mutual funds of the outstanding household financial fixed income market performance.
assets on the other hand fell sharply in Q4FY20, reflecting
the sharp market correction.
Composition of outstanding household financial % of GDP Outstanding household financial assets for select
assets for select financial instruments financial instruments as % of GDP
Bank deposits Life insurance Currency funds Mutual funds Bank deposits Life insurance Currency funds
90
100% Mutual funds Total78.1 78.5
7.7 8.0 7.0 75.8
80
12.0 12.6 13.4 6.3 5.5
5.8
80% 70
9.1 9.8 10.5
23.0 23.0 23.2 60
60% 17.5 18.0 18.2
50
40
40%
30
57.3 56.4 56.5
20 43.5 44.1 44.3
20%
10
0% 0
FY18 FY19 FY20 FY18 FY19 FY20
Source: RBI Monthly Bulletin, NSE. Note: Data is available only for a select financial instruments.
42/116
Market Pulse
Figure 57: Composition of outstanding household financial assets for select financial instruments (quarterly trend)
Composition of outstanding household financial assets for select financial instruments
Bank deposits Life insurance Currency funds Mutual funds
100%
7.5 7.8 7.9 7.7 8.4 7.9 8.1 8.0 8.1 8.0 8.5 7.0
90%
10.9 10.8 11.5 12.0 12.6 12.1 12.6 12.6 12.9 12.5 12.7 13.4
80%
70% 23.2 23.1 23.7 23.0 23.2 23.2 23.0 23.2 23.2
23.1 23.4 23.3
60%
50%
40%
30% 58.4 58.3 56.8 57.3 55.9 56.7 56.0 56.4 55.6 56.3 55.6 56.5
20%
10%
0%
Figure 58: Outstanding household financial assets for select financial instruments as a % of GDP (quarterly trend)
% of GDP Outstanding household financial assets for select financial instruments as % of GDP
Bank deposits Life insurance Currency funds Mutual funds Total
90
79.1 79.3 80.8 78.8
78.7 77.2 77.8 77.9 78.1 78.5
75.8 76.2
80
5.9 6.1 6.4 6.5 5.5
6.1 6.6 6.2 6.3 6.7
5.8 6.2
70 8.6 8.5 10.1
8.9 9.8 9.4 9.8 10.2 10 10.5
9.1 9.6
60
18.4 18.2 18.6 18.7 18.2
18.3 17.5 18 18.1 17.7 18 18.3
50
40
30
46.2 45.9 43.9 43.5 43.5 44.2 42.7 44.1 44.1 45.5 43.8 44.3
20
10
0
Figure 59: Household financial assets by instruments as a % of GDP

Except for provident & pension fund and small savings, rest all instruments saw a moderation in savings rate.
Household financial assets by instruments (% of GDP)
12.0% Currency Deposits Life insurance
10.0% Provident and pension fund Claims on Government Investments
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
FY89
FY02
FY78
FY79
FY80
FY81
FY82
FY83
FY84
FY85
FY86
FY87
FY88
FY90
FY91
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Source: RBI, CMIE Economic Outlook, NSE. Note: Claims on Government include small savings. Investments include shares & debentures, mutual funds and units of UTI.
43/116
Market Pulse
Figure 60: Composition of outstanding household Figure 61: Outstanding household financial liabilities
financial liabilities for select financial sources (annual assets for select financial sources as a % of GDP
trend) (annual trend)
In terms of composition of outstanding household Outstanding household financial liabilities as a % of GDP
liabilities (available for only select financial sources), rose for yet another year, largely led by a borrowings from
borrowings from commercial banks lead with a ~76% commercial and cooperative banks/credit societies.
share in FY20, +50bps YoY. Share of NBFCs/HFCs in the However, outstanding household liabilities through
outstanding gross household financial liabilities fell by a NBFCs and HFCs as a % of GDP fell in FY20 after
huge 110bps YoY to 17.3% in FY20 as banks took up part witnessing an increase in the previous year.
of the slack created by non-banking financial institutions
owing to tight liquidity conditions
Composition of outstanding household financial % of GDP Outstanding household financial liabilities for select
liabilities for select sources sources as % of GDP
Commercial banks Coop banks & credit societies Commercial banks Coop banks & credit societies
NBFCs HFCs 40 NBFCs HFCs
Other financial corp Other financial corp Total
100% 2.0 1.9 1.9 30.9
30.2
11.3 11.0 10.2 28.5
30 0.5 0.6
6.9 7.5 7.2 0.6 3.3 3.1
80% 4.7 4.2 4.9 3.2 2.2
2.3
2.0 1.3 1.5
1.3
60% 20
40% 75.2 75.4 75.9

22.8 23.5
10 21.4
20%
0% 0
FY18 FY19 FY20 FY18 FY19 FY20
Figure 62: Composition of outstanding household financial liabilities for select financial sources (quarterly trend)
Composition of outstanding household financial liabilities for select sources
Commercial banks Coop banks & credit societies NBFCs HFCs Other financial corp
100% 2.1 2.1 2.1 2.0 2.0 2.0 2.0 1.9 1.9 1.9 1.9 1.9
11.1 11.1 11.4 11.3 11.6 11.5 11.2 11.0 11.3 11.2 10.5 10.2
90%
6.1 6.5 6.9 6.9 7.0 7.6 7.3 7.5 7.5 7.5 7.7 7.2
80% 4.9
5.2 4.9 4.9 4.7 4.6 4.4 4.3 4.2 4.8 4.8 5.0
70%
60%
50%
40%
75.6 75.4 74.8 75.2 74.8 74.5 75.2 75.4 74.5 74.6 74.9 75.9
30%
20%
10%
0%
Source: RBI Monhtly Bulletin, NSE. Note: Data is available only for a select financial instruments.
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Market Pulse
Figure 63: Outstanding household financial liabilities for select financial sources as a % of GDP (quarterly trend)
% of GDP Outstanding household financial liabilities for select sources as % of GDP
Commercial Banks Coop banks & credit societies NBFCs HFCs Other financial corp Total
35
31.0 30.6 30.9
30.0 30.2 30.3
29.0 29.2 29.6
28.8 28.5 28.5 0.5 0.6 0.6
30 0.6 0.5 0.5
0.5 0.5
0.5 0.7 0.5 0.6 3.5 3.2 3.1
3.5 3.3 3.4
3.4 3.3
3.2 3.2 3.3 3.2 2.3 2.4 2.2
25 2.3 2.2 2.3 2.3
1.8 1.9 2.0 2.0 2.0 1.5 1.5
1.3 1.5 1.5
1.5 1.4 1.4 1.3 1.3
1.4 1.3
20
15
22.8 22.6 23.2 22.9 23.5

21.8 21.8 21.3 21.4 21.9 22.3 22.3
10
0
Figure 64: Household financial liabilities by financial sources as a % of GDP

As a % of GDP, bank credit fell by a huge 3.3 percentage points to 19-year lows of 1.4% in FY20 after witnessing a huge
increase in the previous year, signalling the seriousness of consumption slowdown, notwithstanding growing risk
aversion in the banking sector amid rising asset quality concerns. Acquisition of household liabilities in the form of loans
and advances from other financial institutions, including NBFCs and HFCs, also contracted to seven-year low of 0.2% of
GDP, marking the second consecutive year of contraction
Household financial liabilities by sources (% of GDP)

7.0% Bank advances Loans & advances from other financial institutions
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
FY82
FY89
FY09
FY16
FY78
FY79
FY80
FY81
FY83
FY84
FY85
FY86
FY87
FY88
FY90
FY91
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY10
FY11
FY12
FY13
FY14
FY15
FY17
FY18
FY19
FY20
Source: RBI, CMIE Economic Outlook, NSE
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Market Pulse
RBI Surveys: Consumer confidence collapses; FY21 GDP to contract by 1.5%

The RBI released the results of the recently conducted forward-looking surveys including the Consumer Confidence
ectations Survey (May 2020) and Survey of Professional Forecasters on
Macroeconomic Indicators (round 64th). Results of all these surveys reflect the severity of economic and social
implications of COVID-19 and the attendant containment measures including lockdown. Key highlights of the survey
results are as follows.
• Consumer Confidence Survey (May 2020 round) 6: Consumer confidence, as

Consumer confidence, as
measured by the current situation i measured by the current
uture expectations index (FEI) for the one-year situation index (CSI) and
ahead period also collapsed and entered the zone of pessimism, falling from 115.2 future expectations Index
sentiments on the general economic (FEI) fell sharply in
situation, employment scenario, price levels and household income plunged
sharply. While essential spending remained afloat, discretionary spending has seen
a significant cut and is unlikely to improve in the coming year.
Figure 65: Consumer confidence indices
Current Situation Index Future Situation Index
140
130
120
115.2
110
100
97.9
90
85.6
80
70
63.7
60
May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19 May-20
Source: RBI, CMIE Economic Outlook, NSE. CSI and FEI are compiled on the basis of net responses on the economic situation, income, spending, employment and the
price level for the current period and a year ahead, respectively. CSI/FEI = 100 + Average of Net Responses of the above parameters
Figure 66: Summary of survey responses

One-year ahead expectations compared with current
Current perception compared to one-year ago
Variable situation
Mar-20 May-20 Mar-20 May-20
Economic Situation -23.9 -60.0 15.1 -11.7
Employment -30.5 -48.2 14.7 -5.9
Price level -84.6 -75.8 -70.4 -66.4
Change in price level (inflation) -77.3 -68.2 -71.5 -66.3
Income -2.2 -40.8 44.2 18.1
Spending 69.2 43.2 72.3 55.6
Essential items 80.6 59.5 79.2 66.7
Non-essential items -2.6 -32.5 8.3 -13.6
Consumer Confidence Index 85.6 63.7 115.2 97.9
Source: RBI, CMIE Economic Outlook, NSE.
6
Consumer Confidence Survey: Perceptions and expectations on the general economic situation, the employment scenario, the overall price situation
and own income and spending are obtained from 5,300 households across 13 major cities.
46/116
Market Pulse
7
• : In contrast to market expectations,
inflationary expectations rose sharply in the latest survey, particularly in the near- Household inflation
term. Median inflation expectations of households for three-months ahead period expectations for the three-
increased from 8.5% in the previous round (March 2020) to 10.4% in May 2020— months as well as one-year
the highest in the last 30 surveys. For the one-year ahead period, median inflation ahead periods have
expectations rose by 120bpps to 10.2%—the highest in the last by 22 surveys. significantly hardened.
Expectations of increase in inflationary pressures is much more pronounced in food
items than non-food items. While the share of households expecting general inflation
to rise over the next three months has increased as compared to the previous round,
it has fallen for the one-year ahead period.
Figure 67: Median inflation rate: Perception and Figure 68: Median inflation rate: Perception and one-
three-months ahead expectations year ahead expectations
% Median inflation rate - perception and three-months % Median inflation rate - perception and one-year ahead
ahead expectations expectations
11
Three months ahead Current 11 One-year ahead Current
10
9
9
8
7
7
6
5 5
Figure 69: Household median inflation expectations

Survey period (%) Current perception Three-months ahead expectations One-year ahead expectations
Jul-19 6.6 7.6 7.9
Sep-19 7.1 8.0 8.1
Nov-19 8.2 9.2 9.9
Jan-20 7.6 8.6 9.2
Mar-20 7.6 8.5 9.0
May-20 9.3 10.4 10.2
Figure 70: Households expecting general price movements in coherence with movements in price expectations of
various product groups: Three months ahead and one-year ahead (percentage of respondents)
Survey period Food Non-food Households durables Housing Cost of services
Three-months ahead
Sep-19 62.7 62.1 50.2 56.8 61.2
Nov-19 64.7 65.1 51.0 60.7 63.1
Jan-20 66.1 66.2 53.4 59.3 64.5
Mar-20 65.4 64.6 55.8 61.1 64.7
May-20 63.3 59.8 46.5 42.6 57.3
One-year ahead
Sep-19 70.7 67.5 56.8 65.5 70.0
Nov-19 73.9 70.9 57.8 69.7 72.3
Jan-20 72.2 70.9 60.3 67.8 72.8
Mar-20 71.9 71.8 63.2 69.9 72.3
May-20 62.3 59.5 50.9 50.3 62.3
7
It is a bi-monthly survey conducted by the RBI. It provides directional information on near-term inflationary pressures as expected by the
on inflation.
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Market Pulse
• Survey of Professional Forecasters (SPF)8 on macroeconomic indicators: The -

results of the Survey of Professional Forecasters conducted by the RBI show that 1.3% growth in FY21 which
growth forecast for FY21 has been slashed sharply by 6.8pp, with current growth is set to get meaningfully
pegged at -1.3%. While Private Final Consumption Expenditure is expected to revised downwards.
decline by 1.2%, contraction in investment activity is expected to be much severe,
with Gross Fixed Capital Formation growth pegged at -7.5%. Forecasts for Real
GVA growth has been lowered by 6.4pp to -1.1%, largely led by a sharp contraction
in industrial activity (-5.3%), even as growth in agriculture sector is expected to
remain fairly stable at 2.6%. A sharp deterioration in economic activity is expected
to translate into a meaningful drop in savings rate.
Headline inflation for FY21 is expected to remain steady at 4.1%, 10bps lower than
the previous round, largely on account of elevated food inflation in the wake of
supply-side disruptions, partly offset by a meaningful drop in core inflation,
reflecting weak aggregate demand and lower crude oil prices. On the fiscal front,
deficit is expected to massively overshoot the Budget estimate
of 3.5% to come in at 6.7% in FY21, the combined fiscal deficit is expected to rise
to double digits as tax collections are expected to take a huge hit owing to economic
disruptions caused by the nationwide lockdown. On the external front, current
account deficit is expected to narrow further in the wake of lower crude oil prices
and weak demand, falling sharply from -1% in FY20 to -0.5% in FY21 (vs. -0.7% in
the previous round).
Figure 71: Annual forecasts (median) for FY21

FY21
Forecasts issued on
07-Aug-19 04-Oct-19 05-Dec-19 06-Feb-20 03-Apr-20 04-Jun-20
# of respondents 32 29 41 40 25 24
Real GDP at constant prices (% YoY) 7.2 7.0 6.4 5.9 5.5 -1.3
PFCE (% YoY) 8.0 7.0 6.4 6.1 5.5 -1.2
GFCF (% YoY) 9.1 7.4 6.5 5.3 2.6 -7.5
Real GVA at basic prices (% YoY) 7.1 6.7 6.3 5.7 5.3 -1.1
Agriculture & allied activities (% YoY) 3.4 3.4 3.2 3.2 3 2.6
Industry (% YoY) 7.1 6.2 5.5 4.0 2.9 -5.3
Services (% YoY) 8.0 7.8 7.5 7.2 6.8 0
Combined CPI inflation (avg, %) 4.0 3.9 4.0 4.2 4.2 4.1
Core CPI inflation (avg., %) 4.4 4.4 4.2 4.2 4.1 3.4
Wholesale inflation (avg, %) 3.7 2.8 2.7 3.2 2.2 0.2
WPI non-food mfg. products (avg, %) 3.3 2.1 1.4 1.2 1.0 0.0
Bank credit (% YoY) 14.0 12.9 11.5 10.2 9.3 4.9
Combined fiscal deficit (% of GDP) 6.0 6.0 6.3 6.4 6.5 11.2
3.2 3.3 3.5 3.5 3.6 6.7
Merchandise exports (% YoY) 7.1 6.3 5.0 4.9 -0.6 -13.7
Merchandise imports (% YoY) 7.4 7.1 5.5 5.1 -2.9 -17.4
Current account balance (% of GDP) -2.1 -2.0 -1.8 -1.5 -0.7 -0.5
8
Twenty-five panelists participated in the 63rd round of the survey conducted during March 2020 (Mar 6-19, 2020). The survey results are summarized
and consolidated in terms of their median forecasts.
48/116
Market Pulse
Modest MSP hikes and a normal monsoon to support farm incomes

The Government announced a hike in minimum support prices (MSP) for 14 kharif crops early this month. While MSP for
paddy was raised by a meagre 2.9% the lowest in the last 10 years, MSP hike in cotton was a tad better at 5%, better
than ~2% hike in the previous year. Average MSP hike in coarse cereals was marginally lower than last year at 4.5% (2.7
to 7.5%), while pulses saw an average hike of 3.6% (2.1 to 5.3%) vs. 1.7% in the previous year. Average MSP hike in
oilseeds was much better at 6.2% (3.6 to 12.7%), with nigerseed seeing the maximum hike of 12.7%. While the hikes
have been in-
all-India weighted average Cost of Production (CoP), measured as A2+FL 9, five (paddy, jowar, bajra, tur, cotton) out of
14 crops have seen a hike that is lower than the YoY increase in CoP and four have seen a similar hike as the increase in
CoP. Moreover, only bajra, maize, tur and urad have MSPs fixed at levels higher than 1.5x the average cost of production,
implying expected returns to be more than 50% for the farmers for these crops. That said, while MSP is effective in rice
given heavy government procurement, it is not as effective for other crops given very low procurement levels.
We view these hikes as modest in nature particularly for paddy where cost of production is expected to rise meaningfully
cultivation given it is a water-intensive crop and we have more than adequate buffer stocks. Prof. Ashok Gulati, the
The Impact of COVID-
19 on the agricultural economy of India and the way ahead here for the detailed report) pointed to wheat and rice
procurement potentially rising to double the required levels by June 2020. For instance, the Haryana Government has
been urging farmers to diversify from rice to pulses and maize which consume less water. Nevertheless, agri sector is
expected to emerge as the only silver lining in the current bloom and doom scenario, with our expectations of agri GDP
growth in FY21 pegged at 2.8%. Kharif sowing activity has started on an encouraging note, with actual sown area rising
by 39% YoY as of June 19th, albeit off a low base. Stable MSP hikes, coupled with expectations of a normal monsoon,
should help keep farm incomes stable this year, notwithstanding the COVID-19 outbreak.
Figure 72: MSP hikes for Kharif crops for the marketing season 2020-21
Kharif Marketing Season 2019-20 Kharif Marketing Season 2020-21
Crops A2+FL MSP MSP as % A2+FL Recommended MSP as %
% YoY % YoY
(Rs/qtl) (Rs/qtl) of A2+FL (Rs/qtl) MSP (Rs/qtl) of A2+ FL
Paddy-Common 1208 1,815 3.7 150 1,245 1868 2.9 150
Paddy-Grade A 1,835 3.7 1888 2.9
Jowar-Hybrid 1698 2,550 4.9 150 1,746 2620 2.7 150
Jowar-Maldandi 2,570 4.9 2640 2.7
Bajra 1083 2,000 2.6 185 1,175 2150 7.5 183
Ragi 2100 3,150 8.7 150 2,194 3295 4.6 150
Maize 1171 1,760 3.5 150 1,213 1850 5.1 153
Tur (Arhar) 3636 5,800 2.2 160 3,796 6000 3.4 158
Moong 4699 7,050 1.1 150 4,797 7196 2.1 150
Urad 3477 5,700 1.8 164 3,660 6000 5.3 164
Groundnut 3394 5,090 4.1 150 3,515 5275 3.6 150
Sunflower seed 3767 5,650 4.9 150 3,921 5885 4.2 150
Soybean (Yellow) 2473 3,710 9.1 150 2,587 3880 4.6 150
Sesamum 4322 6,485 3.8 150 4,570 6855 5.7 150
Nigerseed 3960 5,940 1.1 150 4,462 6695 12.7 150
Cotton (Medium Staple) 3501 5,255 2.0 150 3,676 5515 4.9 150
Cotton (Long Staple) 5,550 1.8 5825 5.0
Source: CMIE Economic Outlook, CACP, NSE
9
Cost of Production (CoP) measured as A2 + FL is the actual paid out cost plus imputed value of family labour. A2+FL cost includes all expenses in
cash and kind on account of hired human labour, bullock labour, machine labour, seed, insecticides & pesticides, manure, fertilizers, irrigation charges
and miscellaneous expenses including family labour.
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Market Pulse
Figure 73: Growth in MSP of common-grade Paddy Figure 74: Growth in MSP of cotton (medium staple)
% YoY Growth in MSP of common-grade Paddy % YoY Growth in MSP of Cotton (medium staple)
25.0 Growth in Paddy MSP (% YoY) 45.0 Growth in Cotton MSP (% YoY)
Average hike 40.0 Average hike
20.0 35.0
30.0
15.0
25.0
Average: 6.9% 20.0

10.0
15.0
5.0 10.0 Average: 6.4%

5.0
0.0 0.0
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY05
FY14
FY00
FY01
FY02
FY03
FY04
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Source: Commission for Agricultural Costs and Prices (CACP), CMIE Economic Outlook, NSE.
Figure 75: Growth in MSP of hybrid jowar Figure 76: Growth in MSP of bajra
% YoY Growth in MSP of hybrid jowar % YoY Growth in MSP of bajra
Growth in hybrid jowar MSP (% YoY)
60.0 45.0 Growth in bajra MSP (% YoY)
Average hike Average hike
40.0
50.0
35.0
40.0 30.0
25.0
30.0
20.0
20.0 15.0
Average: 9.9% Average: 8.5%
10.0
10.0
5.0
0.0 0.0
FY14
FY21
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY15
FY16
FY17
FY18
FY19
FY20
FY02
FY19
FY00
FY01
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY20
FY21
Figure 77: Growth in MSP of maize Figure 78: Growth in MSP of ragi
% YoY Growth in MSP of maize % YoY Growth in MSP of ragi
Growth in maize MSP (% YoY) Average hike
40.0 60.0 Growth in ragi MSP (% YoY) Average hike
35.0
50.0
30.0
40.0
25.0
20.0 30.0
15.0
20.0
Average: 7.6% Average: 11.1%
10.0
10.0
5.0
0.0 0.0
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY06
FY21
FY00
FY01
FY02
FY03
FY04
FY05
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
50/116
Market Pulse
Figure 79: Growth in MSP of tur (arhar) Figure 80: Growth in MSP of moong
% YoY Growth in MSP of tur (arhar) % YoY Growth in MSP of moong
60.0 50.0 Growth in moong MSP (% YoY)

Growth in tur MSP (% YoY) Average hike
Average hike
45.0
50.0 40.0
35.0
40.0
30.0
30.0 25.0
20.0
20.0 15.0
Average: 10.1%
Average: 9.2% 10.0
10.0
5.0
0.0 0.0
FY06
FY21
FY00
FY01
FY02
FY03
FY04
FY05
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Figure 81: Growth in MSP of urad Figure 82: Growth in MSP of groundnut
% YoY Growth in MSP of urad % YoY Growth in MSP of groundnut
50.0 40.0 Growth in groundnut MSP (% YoY)

Growth in urad MSP (% YoY) Average hike
Average hike
45.0 35.0
40.0
30.0
35.0
30.0 25.0
25.0 20.0
20.0 15.0
15.0 Average: 8.1%
Average: 9.2% 10.0
10.0
5.0 5.0
0.0 0.0
FY11
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Figure 83: Growth in MSP of sunflower seed Figure 84: Growth in MSP of soybean (yellow)
% YoY Growth in MSP of sunflower seed % YoY Growth in MSP of soybean (yellow)
50.0 Growth in sunflower seed MSP (% YoY) 35.0 Growth in yellow soybean MSP (% YoY)
Average hike Average hike
45.0
30.0
40.0
35.0 25.0
30.0
20.0
25.0
20.0 15.0
15.0 10.0 Average: 7.8%

Average: 8.7%
10.0
5.0
5.0
0.0 0.0
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY06
FY21
FY00
FY01
FY02
FY03
FY04
FY05
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
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Market Pulse
Figure 85: Growth in MSP of sesamum Figure 86: Growth in MSP of nigerseed
% YoY Growth in MSP of sesamum % YoY Growth in MSP of nigerseed
80.0 Growth in sesamum MSP (% YoY) 100.0 Growth in nigerseed MSP (% YoY)
Average hike
Average hike 90.0
70.0
80.0
60.0
70.0
50.0
60.0
40.0 50.0
30.0 40.0
30.0
20.0
20.0 Average: 11.3%
Average: 9.7%
10.0
10.0
0.0 0.0
FY04
FY13
FY00
FY01
FY02
FY03
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY10
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Figure 87: MSP over A2 + FL cost for Kharif crops

Kharif crops FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Paddy-Common 82 61 54 36 39 38 41 39 50 50 50
Jowar-Hybrid 16 8 20 18 12 7 8 9 50 50 50
Bajra 52 52 51 63 50 43 44 50 97 85 83
Maize 46 36 44 52 43 41 41 36 50 50 53
Ragi 5 2 6 12 5 -2 0 2 50 50 50
Tur (Arhar) 107 93 39 39 40 43 56 64 65 60 58
Moong 53 51 28 19 18 21 29 30 50 50 50
Urad 96 87 39 37 35 34 40 65 63 64 64
Groundnut 41 28 29 47 24 22 25 41 50 50 50
Sunflower seed 36 26 25 23 20 16 14 18 50 50 50
Soybean (Yellow) 50 43 30 51 48 47 50 44 50 50 50
Sesamum 38 34 45 54 22 14 19 30 50 50 50
Nigerseed 46 21 2 54 17 16 14 4 50 50 50
Cotton (Medium Staple) 54 44 83 49 49 38 34 23 50 50 50
52/116
Market Pulse
Economic fallout of COVID-19 severe than anticipated, says World Bank10 and IMF11
The World Bank and the International Monetary Fund (IMF), in their recent publications viz. Global Economic Prospects
(GEP) and World Economic Outlook (WEO) June Update respectively, significantly reduced global growth forecasts citing
a much sharper economic fallout of COVID-19 and attendant mitigation measures on the global economy than
anticipated earlier. While the IMF now projects global economy to contract by 4.9% in 2020 vs. 3% contraction predicted
in April 2020 WEO, the World Bank expects an even sharper contraction of 5.2% the deepest global recession since
the second World War and nearly three times as steep as the Global Financial Crisis (GFC). Recovery is expected to be
moderate and gradual, with the IMF and World Bank expecting global economy to grow at 5.4% and 4.2% respectively,
despite aggressive policy intervention. India is also expected to slip into recession, as estimated by the IMF as well as
the World Bank, as stringent lockdown measures have adversely impacted consumption and business activity. In the
absence of a medical solution, economic uncertainty and downside risks to growth forecasts are huge. The IMF as well
as the World Bank called for stronger multilateral and policy cooperation to support healthcare systems, provide liquidity
to fiscally constrained economies and address trade and technological tensions to ensure a robust global recovery.
• Global recession in 2020 to be the worst since the World War II: In the recent
WEO Update and GEP publications, the IMF and the World Bank sharply slashed World Bank/IMF expects
global growth forecasts, citing a much more severe impact of COVID-19 outbreak global economy to contract
and attendant mitigation measures on an already-fragile global economy in the first by 4.9%/5.2% in 2020 and
half than envisaged earlier. This is reflected in several high frequency indicators recover modestly to grow
including global trade, consumer confidence, manufacturing activity, at 5.4%/4.2% in 2021.
unemployment rate and Q1 GDP growth. The IMF expects global growth to now
contract by 4.9% in 2020 vs. 3% projected in April. The World Bank expects a
deeper recession, with the growth estimate for 2020 pegged at -5.2% in the
baseline scenario the deepest recession in eight decades and almost three times
as steep as seen during the Global Financial Crisis.
The recession caused by the pandemic is expected to have a lasting damage on the
global economy through lower investments, rising unemployment and de-linking of
global supply chains. Emerging economies with weaker healthcare infrastructure
and higher dependence on global trade, tourism and commodity exports are likely
to get much more severely hit.
• Recovery expected to be moderate and gradual: Both the IMF and the World Bank
expect recovery to be slow and gradual, supported by sizable fiscal, monetary, and
financial sector policies announced thus far as well as expected in future. The IMF
expects global economic growth to rebound to 5.4% in 2021 vs. 5.8% projected in
April 2020, with the new forecast lower by nearly 6.5 percentage points than the
pre-COVID-19 projections of January 2020. The World Bank on the other hand
expects an even slower recovery, expecting global economy to grow at 4.2%
• Policy intervention far more aggressive than the GFC: Countries across the globe
have provided sizable fiscal and monetary support to alleviate the economic shock
caused by the pandemic. Global central banks have cut policy rates and taken a
slew of measures, including asset purchase programs, to inject liquidity into the
system, targeting vulnerable sectors of the economy. Moreover, initiation of swap
lines for several emerging markets have eased dollar liquidity. This, in turn,
provided much-needed stability to financial markets, with strengthened risk-on
10
World Bank, Global Economic Prospects, June 2020: https://www.worldbank.org/en/publication/global-economic-prospects
11
IMF, World Economic Outlook Update, June 2020: https://www.imf.org/en/Publications/WEO/Issues/2020/06/24/WEOUpdateJune2020
53/116
Market Pulse
sentiments leading to renewed foreign capital inflows into emerging markets.

Governments have also provided large-scale fiscal stimulus that already far
exceeds than that executed during the GFC, which in turn may lead to global debt
to GDP ratio rising from 70% currently to as high as 90% in FY21, as per the IMF.
• India also expected to slip into recession: The IMF and World Bank have now
joined other international agencies including Asian Development Bank and OECD The IMF and World Bank
expect the Indian economy
(Organization for Economic Cooperation and Development) in estimating a
to contract by 4.5% and
recession for India in FY21. The IMF now expects the India economy to contract by
3.2% respectively in FY21.
4.5% in FY21, translating into the sharpest downward revision among other large
emerging and developing economies, thanks to a sharp rise in COVID-19 cases and
an extended and stringent lockdown. Growth is expected to rebound to 6% in FY22
as projected by the IMF. The World Bank ex -3.2% in
FY21, recovering to 5.8% in the next financial year. Stringent containment
measures have heavily curtailed business activity, with contracting global growth
and rising stress in the financial sector further adding to the woes.
• Economic uncertainty and downside risks huge: In the absence of a medical

solution, economic uncertainty is huge and risks to the growth forecasts are heavily
tilted to the downside. A longer-than-expected pandemic and consequent
extension of control measures amid delays in the development and roll-out of
vaccines, inadequate policy efficacy, a prolonged disruption to economic activity
leading to financial stress and a retreat from global value chains may further deepen
the recession or delay the recovery. Activity may remain weak beyond the near-
term, thereby leading to social unrest. In the downside scenario, assuming an
additional three-month of stringent lockdown measures, the World Bank projects
global growth to contract by almost 8% in 2020, recovering to a modest 1.3% in
2021. In the upside scenario, which assumes lifting of restrictions by the end of
second quarter in advanced economies and somewhat later in emerging and
developing economies, contraction in global growth may improve to -4%, as per the
World Bank, even as it is still twice the pace of fall seen in 2009, and rebound to
around 5% in 2021.
• A step up in health and economic policy action as well as strengthened global

cooperation crucial: The World Bank as well as the IMF highlighted the need for
strengthened global coordination and cooperation between governments,
multilateral institutions, and the private sector in the areas of public health and
economic policy. Policy actions are needed to improve the healthcare
infrastructure, particularly in countries with rapidly ageing societies. Multilateral
cooperation is needed to provide liquidity assistance for countries dealing with
health crisis as well as facing fiscal constraints. Governments should avoid
implementing protectionist policies and must instead cooperate to resolve trade
and technological tensions that may further derail the global recovery.
54/116
Market Pulse
Figure 88: IMF World Economic Outlook GDP and trade volume growth projections
2019 Ápr-20 (% YoY) Jun-20 (% YoY) Change (pp)
Countries
(% YoY) 2020E 2021E 2021E 2021E 2020E 2021E
Real GDP growth
World 2.9 -3.0 5.8 -4.9 5.4 -1.9 -0.4
Advanced Economies 1.7 -6.1 4.5 -8.0 4.8 -1.9 0.3
United States 2.3 -5.9 4.7 -8.0 4.5 -2.1 -0.2
Euro Area 1.3 -7.5 4.7 -10.2 6.0 -2.7 1.3
Germany 0.6 -7.0 5.2 -7.8 5.4 -0.8 0.2
France 1.5 -7.2 4.5 -12.5 7.3 -5.3 2.8
Italy 0.3 -9.1 4.8 -12.8 6.3 -3.7 1.5
Spain 2.0 -8.0 4.3 -12.8 6.3 -4.8 2.0
Japan 0.7 -5.2 3.0 -5.8 2.4 -0.6 -0.6
United Kingdom 1.4 -6.5 4.0 -10.2 6.3 -3.7 2.3
Emerging Markets and Developing Economies (EMDEs) 3.7 -1.0 6.6 -3.0 5.9 -2.0 -0.7
China 6.1 1.2 9.2 1.0 8.2 -0.2 -1.0
India 4.2 1.9 7.4 -4.5 6.0 -6.4 -1.4
Russia 1.3 -5.5 3.5 -6.6 4.1 -1.1 0.6
Brazil 1.1 -5.3 2.9 -9.1 3.6 -3.8 0.7
Mexico -0.3 -6.6 3.0 -10.5 3.3 -3.9 0.3
South Africa 0.2 -5.8 4.0 -8.0 3.5 -2.2 -0.5
World Trade volume (goods & services) 0.9 -11.0 8.4 -11.9 8.0 -0.9 -0.4
Source: IMF World Economic Outlook Update, June 2020
Figure 89: IMF World Economic Outlook GDP and trade volume growth projections
2019 Jan-20 (% YoY) Jun-20 (% YoY) Change (pp)
Countries
(% YoY) 2020E 2021E 2021E 2021E 2020E 2021E
Real GDP growth
World 2.4 2.5 2.6 -5.2 4.2 -7.7 1.6
Advanced Economies 1.6 1.4 1.5 -7.0 3.9 -8.4 2.4
United States 2.3 1.8 1.7 -6.1 4.0 -7.9 2.3
Euro Area 1.2 1.0 1.3 -9.1 4.5 -10.1 3.2
Japan 0.7 0.7 0.6 -6.1 2.5 -6.8 1.9
Emerging Markets and Developing Economies (EMDEs) 3.5 4.1 4.3 -2.5 4.6 -6.6 0.3
China 6.1 5.9 5.8 1.0 6.9 -4.9 1.1
India 4.2 5.8 6.1 -3.2 3.1 -9.0 -3.0
Russia 1.3 1.6 1.8 -6.0 2.7 -7.6 0.9
Brazil 1.1 2.0 2.5 -8.0 2.2 -10.0 -0.3
Mexico -0.3 1.2 1.8 -7.5 3.0 -8.7 1.2
South Africa 0.2 0.9 1.3 -7.1 2.9 -8.0 1.6
World Trade volume (goods & non-factor services) 0.8 1.9 2.5 -13.4 5.3 -15.3 2.8
Source: World Bank Global Economic Prospects, June 2020
55/116
Market Pulse
Figure 90: Global per capita GDP growth Figure 91: Share of economies in recession
%
0 Global per capita GDP growth % Proportion of economies in recession*
0 100
92.9
-2 -0.8 -0.5 -0.8 -1.3 -0.3
-4 -2.1 80
-3 -2.9
-6 -4.4
-8 -6.7 -6.2
60
-10
-12
40
-14
-16
-15.4
-18 20
-17.6
-20
0
1871 1901 1931 1961 1991 2021
Source: World Bank Global Economic Prospects June 2020. *Defined as an annual contraction in per capita GDP. Sample includes 183 economies though the sample size
varies significantly by year. Shaded areas refer to global recessions. Data for 2020 and 2021 are World Bank forecasts.
Figure 92: Consensus forecasts for global GDP growth Figure 93: Consensus forecasts of GDP growth for 2020
% Consensus forecasts of global GDP growth * % Consensus forecasts of GDP growth for 2020,
6
4 Feb-June'20
1991 2009 2020
3
2
0
0
-2 -3
-4 -6
World Advanced economies EMDEs

-6 -9
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Feb Mar Apr May Jun
Note: Average GDP growth for 2020, based on 59 economies (including 32 advanced
Year t-1 Year t economies and 27 EMDEs) for which data for consensus forecasts are available,
advanced weighted by GDP in constant 2010 U.S. dollars for 2019. Growth is computed each
economies only due to data availability business day as a moving average of the latest revised forecasts.
Source: Consensus Economics, World Bank Global Economic Prospects June 2020.
Figure 94: Consensus forecasts of GDP growth for 2009 Figure 95: Changes in consensus forecasts of GDP growth
% Consensus forecasts of GDP growth for 2009, % Changes in consensus forecasts of GDP growth
8 2009 (Jul'08-Jul'09) 2020 (Feb-Jun'20)
Jul'08-Jul'09 0
-2
4
-4
0
-6 -5.3 -5.4 -5.3
-6.1
-8
-4 -7.5
-8.2
World Advanced economies EMDEs -10
World Advanced economies EMDEs
-8
Note: Average GDP growth for 2020, based on 59 economies (including 32 advanced
Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 economies and 27 EMDEs) for which data for consensus forecasts are available,
weighted by GDP in constant 2010 U.S. dollars for 2019. Growth is computed each
economies only due to data availability business day as a moving average of the latest revised forecasts.
Source: Consensus Economics, World Bank Global Economic Prospects June 2020.
56/116
Market Pulse
Impact of COVID-19 on global business activity, confidence and financial markets
The charts below depict the adverse impact that COVID-19 has had on business activity
globally, consumer confidence, global trade and financial markets, that has been much
worse than the Global Financial Crisis. The measures undertaken to contain the spread of
the outbreak including lockdown, travel restrictions and social distancing led to a sharp
drop in consumption and business activity. Global supply chain disruptions and demand
contraction led to cancellations of export orders, thereby hurting global trade. Global
trade, average of import and export volumes, is expected to below the lowest level seen
in the post-World War II history. Manufacturing and Services PMI, a forward-looking
indicator of economic activity, fell deep into the contraction zone. Financial markets fell
sharply in the beginning but later gained support from aggressive policy intervention.
Commodities fell sharply amid weak demand outlook, with IEA (International Energy
Agency) expecting drop in oil demand in 2020 to be the worst since 1965.
Figure 96: Consumer confidence in major advanced Figure 97: Change in global activity indicators in 2020
economies %
Change in global activity indicators in 2020
Z-score Consumer confidence in major advanced 0
economies
2
-25
0
-2
-50
-4 United States
Euro Area -75
-6 Japan
-8 -100
Air pollution Retail and Flight Open Table
-10 recreation cancellations reservations
2017 2018 2019 2020* mobility (inverted)
Source: Haver Analytics, World Bank Global Economic Prospects June 2020. Source: Air Quality Open Data Platform, Airportia, Google, OpenTable, World Bank
*2020 data are as of the most recent monthly observation, which is May 2020.
Figure 98: Container shipping growth and new export Figure 99: Global manufacturing and Services Purchasing
orders
% Container shipping growth and new export Index, Index, Global Manufacturing and Services PMI
orders (3MMA) 50+=expansi 60
Manufacturing Services
8 60
50
4 55
0 50 40
-4 45
30
Container shipping
-8 New export orders (RHS) 40
20
-12 35
Jul-16
Jul-17
Jul-18
Jul-19
Oct-16
Oct-17
Oct-18
Oct-19
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Apr-16
Apr-17
Apr-18
Apr-19
Apr-20
Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr-
18 18 18 18 19 19 19 19 20 20
Source: Haver Analytics, World Bank Global Economic Prospects June 2020.
57/116
Market Pulse
Figure 100: Global equity Figure 101: htened volatility

% Cumulative decline in MSCI ACWI Index* Inde Stock market volatility indexes (as of May 29,
relative to the peak (As of May 28, 2020) 2020)
0 100 2020 high Feb'20 avg. High during GFC
-10
-20 75
-30
2000 50
-40
2008
-50
2020 25
-60
0 60 120 180 240 300 360
Days 0
Note: * MSCI ACWI Index is a global market capitalization weighted index EMDEs Euro Area United States
representing equity markets in 23 advanced economies and 26 EMDEs
Source: Bloomberg, World Bank Global Economic Prospects June 2020.
Figure 102: Accumulated daily EMDE* portfolio flows Figure 103: YTD change in commodity prices
% of GDP Accumulated daily FII portfolio flows into %
YTD changes in commodity prices (Jan-May 2020)
EMDEs (% of GDP, As of May 28, 2020)
25
COVID-19 2018 sell-off 9.9
0.2
Taper tantrum Global financial crisis
0
0.0
-25 -9.5 -9.1

-0.2 -14.4
-21.9 -20
-27.4 -26.8
-0.4 -50
-50.7
-0.6
-75
Natural gas
Gold
Platinum
Oil
Food
Silver
Base metals
Coal
Natural rubber
-0.8
-1.0
0 10 20 30 40 50 60 70 80 90
Days
Note: * EMDE: Emerging Market and Developing Economies
Note: Figure shows the change in the monthly average of commodity prices between
The dates for the start of each episode are as follows: COVID-19, Jan 20, 2020;
Jan Price changes for ld Bank
2018 sell-off, May 2, 2018; Taper tantrum, May 21, 2013; Global financial crisis, Sep
Pink Sheet indexes. Oil price is unweighted average of Brent, WTI and Dubai prices.
7, 2008. Sample includes 10 EMDEs due to data availability. Data are calculated
using nominal U.S. dollar GDP for the corresponding year of each episode.
Source: World Bank.
Figure 104: Oil prices during past episodes of stress Figure 105: 10 largest declines in oil demand since 1965
Index, 100=t Oil prices during past episodes of stress % 10 largest declines in oil demand since 1965
120 0
Previous recessions 9/11 COVID-19 -0.2 -0.2
-1.0 -0.8 -0.7
100 -2 -1.4
-2.7
80 -4 -3.1
-4.1
60 -6
-8
40
-8.6
-10
20
2020*
1980
1981
1982
1974
2009
1975
2008
1983
1993
t t+15 t+30 t+45 t+60 t+75 t+90

Days
Note: Start dates for events are the first trading day before a major event occurred: Note: * Data for 2020 are IEA (International Energy Agency) estimates.
Sep 10, 2001 for 9/11 and Jan 22, 2020 for COVID-19. Shaded area indicates range
over the four global recessions: 1974, 1981, 1990, and 2008.
Source: Bloomberg, BP Statistical Review, IEA, World Bank.
58/116
Market Pulse
Policy intervention has been much more aggressive as compared to the Global Financial Crisis
Figure 106: Movement in global policy rates Figure 107: Cumulative change in policy rates in AEs
# of countries Movement in global policy rates % Cumulative change in policy rates in advanced
Countries loosening policy Countries tightening policy economies (AEs)
15 4 0.1
Average policy rates (RHS) (percentage points, As of May 28, 2020)
10
5 3
0 -0.2
5
2
10
15 -0.5
20 1
25
30 0 -0.8
May-08
May-18
May-28
Mar-09
Mar-19
Mar-29
Feb-18
Feb-28
Apr-08
Apr-18
Apr-28
Jul-18
Jul-19
Jan-18
Oct-18
Jan-19
Oct-19
Jan-20
Apr-18
Apr-19
Apr-20
Note: Average policy rates are weighted using 2018 U.S. dollar GDP. Sample includes Note: Average changes in policy rates are weighted by 2018 GDP at 2010 prices and
13 advanced economies and the Euro Area and 21 EMDEs. market exchange rates. Sample includes 19 advanced economies.
Source: Bank of International Settlements, ECB, World Bank.
Figure 108: Unconventional monetary policy in major Figure 109: Fiscal support measures in major AEs
AEs % of GDP Fiscal support measures in major advanced
% of GDP Unconventional monetary policy in AEs 45 economies (AEs)
16 Total stimulus (as of May 28, 2020)
COVID-19 (Jan-May'20) GFC
Global financial crisis
12
30
8
15
4
0 0
United States Euro Area Japan Japan US Euro Area UK
Note: "COVID-19" reflects increases in central bank balance sheets since Jan and Note: Total of measures either planned or under consideration as of May 28, 2020. Share
are expressed as a share of 2019 nominal GDP. "GFC" asset purchases reflect the of 2019 nominal GDP. Global financial crisis indicates fiscal measures implemented over
increase in central bank balance sheets between Aug as a share of the period 2008-09.
2008 nominal GDP.
Source: Haver Analytics, Bloomberg, IMF, World Bank.
Figure 110: Monetary policies across AEs Figure 111: Fiscal policies cross AEs
# Cumulative number of monetary policies announced # Cumulative number of fiscal policies announced
120 700
Swap lines Interest rate changes Fiscal stimulus Credit facilities
100 Asset purchases 600 Loan guarantees
500
80
400
60
300
40
200
20
100
0
0
30-Jan
9-Apr
9-May
19-Apr
29-Apr
19-May
27-May
9-Feb
10-Mar
20-Mar
30-Mar
19-Feb
29-Feb
9-Apr
30-Jan
19-Apr
29-Apr
9-May
19-May
27-May
9-Feb
10-Mar
20-Mar
30-Mar
19-Feb
29-Feb
Note: Sample includes 27 advanced economies and the Euro Area. Last observation Note: Sample includes 27 advanced economies and the Euro Area. Last observation is
is May 27, 2020 May 27, 2020.
Source: Yale Program on Financial Stability, World Bank.
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Figure 112: Monetary policy in EMDEs Figure 113: Cumulative number of macroprudential and
Number Monetary policy actions in EMDEs other monetary policies announced in EMDEs
EMDEs loosening policy rates # Cumulative number of macroprudential and
20 other monetary policies in EMDEs
EMDEs tightening policy rates
Macroprudential policies Liquidity measures
0 800 Interest rate changes Asset purchases
600
-20
400
-40
200
-60
Sep-08
May-20
Nov-08
Oct-08
Mar-20
Jan-09
Jan-20
Feb-20
Dec-08
Apr-20
23-Jan
7-Apr
22-Feb
8-Mar
23-Mar
22-Apr
7-May
22-May
7-Feb
GFC COVID-19
Note: Sample includes 72 EMDEs (Emerging Market and Developing Economies. Last Note: Sample includes 26 EMDEs. Last observation is May 28, 2020.
observation is May 2020
Source: Haver Analytics, World Bank.
Figure 114: Central bank asset purchases in EMDEs

% of GDP
Central bank asset purchases in EMDEs
4 (As of May 29, 2020)
3.4
3
2.4
2 1.7 1.7
1.3
1.0
1
0.5
0
Colombia
India
Chile
Thailand
Turkey
Indonesia
Philippines
Note: Announced central bank asset purchases, expressed relative to nominal LC GDP in 2019.
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Insights
Invited article: COVID-19 and prioritizing the important over the habitual
Kubra Koldemir Sustainability Researcher @ Argüden Governance Academy
Richard Betts Sustainability Director @ KPMG
Dr. Erkin Erimez Partner @ ARGE Consulting
Climate change is the biggest threat to our planet... We can save Earth. It's going to take collective action from big
Jeff Bezos
Covid-19 has shown humankind many lessons. One of the lessons to be learned is that
sometimes, through a major crisis like Covid-19, we may have to lose or delay something
we had been waiting for and looking forward to for a very long time. On an individual level,
many of us had set some personal or professional goals for 2020. When Covid-19 hit, we
regretfully had to accept that some of those personal or professional objectives had to be
postponed not only for a few days or months, but in some cases as long as
For some of us planned events could not take place because large gatherings across the
globe have been cancelled. For others it came as a result of losing our mobility. Almost
overnight, we all shut ourselves away in our homes being unwilling even to go to the
nearest grocery store, let alone flying to another town, to another country, or to another
continent.
The Covid-19 experience has indeed imparted us with many lessons: importance of being
prepared for an unexpected event; significance of early action; getting immediate access
to information and equipment; ability to rely on trustworthy relationships and importance
of international coordination. Another core lesson shown is that sometimes we take
things too much for granted while we have them readily available. For example, how often
do we use as an excuse being swamped with our daily priorities or work responsibilities
in order to postpone things that may be the most important in our lives and least to be
neglected. We often think short-term and consider our priorities for the upcoming days or
months. At the same time, we forget to place great emphasis exactly on those things,
which play the highest role in building our long-term purposeful planning. That is because
The same attitudes that sometimes dominate our personal behaviour and short-term
thinking may apply to corporations, organizations, and governments. And this is how
disasters strike us in the most unexpected ways. Only after we have lost what we took for
granted, do we question ourselves about our past actions. Experts have been warning us
of the possibility of a global pandemic for years, yet few organizations and governments
took it to heart. Experts have been talking about climate change for years, yet leaders
postpone actio
future consequences of social issues, yet organizations have made little progress towards
In reality, not paying attention to climate change is the same thing as disregarding our
principle that holds our society together and knowingly letting our societies fall apart.
have taken things for granted. We are

dealing with a public health crisis that has spurred an economic and financial crisis, but it
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has also led to a crisis of confidence and trust. The crisis has become a spotlight on all
those issues in our present system as mentioned above whether they are inequalities
in the form of health disparities, or structural, gender, or racial inequities. Also, the crisis
has provided us with a vivid imagination of how traumatized we will be before the next
disasters. Science is making clear these disasters can be expected to become a lot more
s and we
should not have taken things for granted while it used to be so much easier to take action
for the futu
-looking action we intend
to take now has to happen while we are simultaneously fighting the fallout of the
coronavirus together with the rest of the world.
COVID 19 LESSONS FOR CLIMATE CHANGE
We are living in times of unprecedented change and where the rate of change is
accelerating. We are facing disruption driven by both gradual stresses, such as global
warming, sudden shocks such as extreme weather events, and the Covid-19 pandemic.
Given this context, corporations, governments, and individuals will all need to improve
their resilience to be better equipped to deal with ever faster change and disruption.
In a complex, interconnected world, pinpointing a sole root cause, such as for Covid-19,
is clearly problematic. Recent scientific reports have, however, highlighted how
unsustainable practices, such as environmental degradation and rampant wildlife
trafficking greatly increase the risk of infectious zoonotic diseases such as Covid-19.
Wide-scale destruction of the natural environment has often resulted in short-term
economic gains. However, indirectly, it has increasingly removed the buffer between
ourselves and many natural environments. As a result, we are coming into more frequent
contact with new pathogens. Humans have not been exposed to these previously or
evolved effective defense mechanisms against them.
At one level, Covid-

surprise. Yet, at another level, there have, in fact, been many warning signs such as the
SARS and Ebola virus epidemics earlier this century. In addition, the 2020 risk report from
the World Economic Forum, published before C-19 became a global pandemic, identified
infectious diseases as one of the top 10 risks facing the global economy. In a similar vein,
there have been many scientific warnings in recent years over the severe risks posed by
climate change. Arguably, however, our short-termism has been a key reason why,
collectively, we have failed to make sufficient progress. We are genetically hard-wired to
focus on the short-term. This trait enabled our distant ancestors to deal effectively with
the key threats they faced when they were at risk of immediate danger from a predator or
natural disaster. Today, the manifestations of this short-termism still permeate much of
our civilization. Although short-term risks are clearly still critically important, many of the
top issues now facing us, such as C-19 and climate change, are systemic risks. They
require us to also consider the longer-term consequences that are often broader and
indirect.
In the past year, we have indeed seen extreme events from Australia to the Amazon to
the Arctic that have highlighted how a warming world is a problem for us all now. C-19
has underscored how rather than waiting until the next crisis it is far better to act now. As
just one example, though forest fires in Australia are an annual event, the deadliest
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bushfires in the last 200 years have occurred in 1851, 1939, 1983, 2009, and now 2019-
2012. The years between them are shrinking rapidly. Previously, the 2009 fires, in which
430,000 hectares were burnt, were regarded as the deadliest. However, the latest 2019-
2020 fires are estimated as having burnt over 40 times the size of those fires and an area
of 186,000 square kilometres13 (an area larger than Greece). The full costs of the latest
disaster, including social costs such as increased unemployment, will not be fully known
COULD COVID 19 INDUCE PROPER ACTION FOR CLIMATE CHANGE?
It is clear we should no longer sit around and wait, but collectively raise the bar in terms
of rapidly reducing carbon emissions. As the famous Roman Emperor and philosopher
Marcus Aurelius is attributed with having said, what we do now echoes through eternity.
What we collectively do now in the next few years will decide the kind of world we leave
to our children and the next generations.
Until Covid-19, many companies have focused on cost reductions and efficiency
improvements, which has contributed to extensive outsourcing and complex global
supply chains. However, C-19 has shown how vulnerable supply chains can be if
efficiencies and cost reductions are taken to extremes, especially in a context of rapid
change and disruption. In the light of a systemic risk like C-19, it seems likely that we will
start to see a move towards more resilient and localized operations. Also, there may be
an acceleration in the trend towards more responsible and purposeful business. If supply
chains and businesses become more resilient, they will be better placed to deal with
accelerating disruption and to maintain long-term viability.
C-19 has also demonstrated the enormous potential of new communication technologies
that have allowed many companies to cope more effectively with the Covid-19
restrictions. The new technologies are currently causing a transformation with ever faster
digitalization within corporations. The speed at which new communication technologies
are causing change could also be used to the benefit of facilitating multi-stakeholder
collaboration. Additionally, enabling effective remote working could give many
companies the opportunity to achieve sustained reductions in their carbon emissions
through reduced commuting from now on.
C-19 has also shown examples of the power of international cooperation. Where
knowledge has been shared, countries at an earlier stage in the pandemic response have
been able to learn from the experiences in countries already affected. Therefore, they
could implement measures more effectively. Similarly, there is also clearly enormous
potential for effective international collaboration in tackling climate change. To be
effective, this cooperation needs to be aligned with the latest climate science including
the IPCC 2018 Special Report on Global Warming of 1.5 degrees 14 as well as with the UN
Sustainable Development Goals.
Again, as individuals we should not simply wait around for governments to take action
and consider ourselves powerless till that has happened. It is true that at one level, global
agreement and collaboration between states provides a market signal and framework.
12
https://theconversation.com/with-costs-approaching-100-billion-the-fires-are-australias-costliest-natural-disaster-12943
13
https://en.wikipedia.org/wiki/2019 20_Australian_bushfire_season
14
https://www.ipcc.ch/sr15/
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Yet, at another level, as highlighted by the recent rapid progress globally in electric
vehicles, being spearheaded by Tesla and others, corporations have an essential role to
play through innovation and roll out of clean tech. At yet another level, the momentum
that activists such as Greta Thunberg and others have helped create show that as
individuals there is plenty of tangible impact we can achieve.
GLOBAL STOCK EXCHANGES ACTING AS ENABLERS FOR CLIMATE CHANGE
The scientific consensus is clear that in order to stand a good chance of avoiding a global
climate crisis we need to reach net zero carbon emissions by 2050 at the very latest. We
have to achieve an annual reduction of at least around 8% every year from this year until
2030. Due to the C-19 restrictions, the latest estimates from the IEA indicate that in
2020, despite the global disruption, emissions will reduce by only up to this minimum
threshold. Hence, this highlights the scale of the challenge facing us.
Insufficient progress on climate change by global corporations was also highlighted by an

ce
Academy, which evaluates companies through a governance lens. According to the study,
only 53% of leading ESG-compliant global corporations included in this research had
aligned their overall strategy with SDG 13 (Climate Action) 15.
In recent years, we have already started to see many important initiatives focused on
climate change driven by the investor and business communities such as CDSB, CDP and
TCFD. However, it would be too optimistic to think that climate change and other material
ESG issues could be dealt with effectively by these private stakeholder groups alone.
Clearly, support is also needed from the eco-system of stakeholders including global
exchanges and regulatory agencies acting in tandem to provide momentum. Influential
financial intermediaries such as global stock exchanges can indeed function as great
enablers for climate change management and decarbonization. They can facilitate the
uptake of climate-related disclosure, risk management and ambitious emissions
reduction.
Driving ESG Integration by setting Sustainability Guidelines:
First of all, many global exchanges promote climate change disclosure through their
established sustainability disclosure guidelines: They recommend corporations to
disclose their carbon footprint alongside their energy, water and waste management
performance. To name a few such stock exchanges, Nasdaq in May 2019 launched a new
global environmental, social and governance (ESG) reporting guide for public and private
companies. Initially it was introduced in 2017 as a voluntary support program for
ide includes the latest third-party
reporting methodologies widely adopted by the industry and aims to help both private
and public companies navigate the evolving standards on ESG data disclosure.16 SET
(Stock Exchange of Thailand) also offers guidelines to corporations and conducts a
corporate sustainability assessment to screen an ESG Stock List, where they have a
dedicated section of questions in the questionnaire on corporate policies, strategies and
actions about climate change. In a similar way, BVC (Colombia Stock Exchange) has a
prestigious Investor Relations committed program with a comparably dedicated set of
15
https://sgscorecard.argudenacademy.org/findings-and-good-practices/guidance
16
https://www.nasdaq.com/ESG-Guide
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ESG and climate change related questions. In spite of not being compulsory, many large
corporations listed on the Exchange aspire to be part of it because of its reputation. This
program also makes it mandatory for corporations to have a sustainability report.
Likewise, JSE (Johannesburg Stock Exchange) established specific guidelines as their
listed companies are required to report in line with the King IV corporate governance code
on an apply and explain basis. The King Code of Corporate Governance is a globally
renowned governance code developed in South Africa led by retired Supreme Court Judge
Mervyn King and overseen by the King Committee housed by the Institute of Directors of
Southern Africa.
Influencing flow of funds into ESG integration:
Secondly, many exchanges push for the flow of funds through ESG indices for equities
and through green bonds for fixed income. Nasdaq for example extends a number of
sustainability indices including OMX GES Ethical indexes, NASDAQ Clean Edge US Index,
OMX CRD Global Sustainability Index. Nasdaq also launched the first exchange-listed and
ESG compliant index future in the world. For fixed income, Nasdaq Nordic launched one
Sustainable Bond Markets.17 In a similar way, JSE encourages climate change disclosures
via the FTSE/JSE Responsible Investment index, and ESG index whose methodology
incorporates TCFD recommendations under the Climate Change theme. For fixed income,
JSE has a dedicated segment for green bonds. This will become the Sustainability
uly 2020
on. NSE (National Stock Exchange of India) also exercises influence on addressing climate
Index,
ve to
participate in ESG scoring to be in the ESG index, then they need an ESG score of at least
50% to be included in the Enhanced Index and must have demonstrated exceptionally
good governance to be included in the ESG Sector Leader Index. 18 B3 (Bolsa do Brasil)
provides a set of indices too that track performances of companies concerned about
sustainability best practices. In this context, they also have an index dedicated to climate
-the-counter products (Green
Bonds, CBIO.19 Finally, BIST (Borsa Istanbul) exercises impact on climate change
management through its sustainability index called BIST sustainability index.
Collective Action by Global Exchanges for Climate Change:
Finally, global stock exchanges often foster sustainability through collaborative action.
For example, in addition to its existing climate change initiatives, Hong Kong Stock
Exchange announced plans last week to launch the HKEX Sustainable and Green
pioneering new information platform is expected to be the first
of its kind in Asia and will act as a central hub for data and information on sustainable and
green finance investmen 20
In a similar fashion, SET has initiated
partnership initiatives regarding climate change. In collaboration with their stakeholders,
they offer carbon disclosure training for listed companies free-of-charge. They also have
a framework ca
17
https://www.nasdaq.com/sustainability/offerings
18
https://www1.nseindia.com/products/content/equities/indices/thematic_indices.htm
19
http://www.b3.com.br/en_us/b3/sustainability/esg-products-and-services/presententation/
20
https://www.hkex.com.hk/News/News-Release/2020/200618news?sc_lang=en
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suppliers to promote sustainable sourcing and SET Stewardship. Finally, they collaborate
Change by Eco Even

annual educational ESG training programs, which include a climate change specific event
and collabora
are working with other partners to create an investor-centric sustainability reporting
proposal for public companies and stock exchanges. 21 Finally, Colombia Stock Exchange
has recently signed a commitment with TCFD underlining its leadership on climate change
management.
IN CONCLUDING:
Going forward, let us use our collective C-19 experience. This way, rather than going back
to the unsustainable way things were pre-COVID, we learn from it. Then we can start to
build a future that is sustainable, inclusive, fair and resilient and a better future for
everyone, everywhere.
21
https://www.hkex.com.hk/News/News-Release/2020/200618news?sc_lang=en
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Whether higher environmental and social score helped firms to cope up with the Covid-
19 crisis
The importance of Environment and Social (ES) score for firms gained momentum in recent years particularly to improve
their long-term returns and sustainability. In the wake of the Covid-19, while many firms are tackling with several
challenges and surviving through uncertainties, it has become much more important to understand whether firms with
better ES score can tackle the unprecedented outbreak of coronavirus and its adverse impact much more efficiently
than others. Whether their stock prices will perform better than other firms irrespective of their market size, cash to
, dividend yield, volatility and leverage. Are these stocks less volatile than others during the Covid-19
crisis? In other words, whether firms with better ES scores are much more resilient to the adversities in the market.
Albuquerque, et al. (2020) have

Stocks: An Analysis of the Exogenous COVID- 22
Using US data, the study shows companies with high
ES score performed better with significantly higher returns and low volatility than other firms particularly during the
Covid-19 outbreak. The study has also accounted the recent impact of oil price decline, which had adversely affected
firms in the energy sector, by excluding these firms from the analysis. They find even stronger impact of ES score on the
firms may have less adverse impact from the pandemic. The analysis has further shown how firms with high ES ratings
earned an additional return of 0.45% between Feb 24 th (when stock market decline started due to Covid-19) and Mar
17th (before announcing major relief package by the US government) as compared to firms with low ES scores.
that utilizes information from corporate annual reports, sustainability reports,

non-governmental organizations, and news sources for publicly traded
resource use, emissions and innovation to evaluate their Environment score.

The Social score depends on workplace, human rights, community, and product
responsibility. The study has taken the average of Environment and Social
scores to construct the ES score for each firm. Then, Investor based ES score is
estimated as the weighted average of its investo
quarters of 2019 holdings. Further, daily stock returns are taken from Capital IQ
North America Daily and accounting data is taken from Compustat.
Using regression of quarterly log returns on ES scores of firms and other firm
level characteristics, the study found that ES rating has significant impact on
characteristics including
result holds using difference in difference estimation technique as well. They

found that firms with high ES ratings earned an additional return of 0.45%
between Feb 24th (when stock market decline started due to Covid-19) and Mar
17th (before announcing major relief package by the US government) as
compared to firms with low ES scores, for a cumulative effect of 7.2% over the
period.
To examine the resilience hypothesis of ES firms, the study has also examined
how stock returns volatility varies with ES ratings. Using both the standard
deviation of daily raw log returns over the quarter and the standard deviation of
22
https://ecgi.global/working-paper/resiliency-environmental-and-social-stocks-analysis-exogenous-covid-19-market-
crash?mc_cid=02455f15bd&mc_eid=47526d792b
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CAPM-adjusted daily stock returns over the quarter, they show firms with better
ES score had lower stock return volatility than firms with low ES scores.
The recent oil price decline may have adversely affected firms in the energy
sector and these firms also suffer with low ES score in general. The study has
done additional analysis by excluding firms from the energy sector to account
for the adverse impact of crude oil price decline. And, they find even stronger
each industry as well, ruling out the argument that essential firms may have less
adverse impact from the pandemic.
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Market Performance
Market Round-up
Global rally continued in May, but Indian markets faltered amid rising COVID-19 cases
Rally in global equity markets continued for yet another month in May as investor sentiments remained buoyant amid
declining growth in cases in some of the developed economies, lifting of lockdown restrictions and gradual resumption
of business activities. Positive cues around development of COVID-19 vaccine also supported market sentiments.
Meanwhile, policymakers worldwide continued to provide fiscal and monetary support to tide over the near-term
economic ramifications caused by the outbreak. Emerging market equities including India, however, underperformed
on account of renewed US-China tensions. Indian equity markets were particularly impacted by lockdown extension
amid rising number of COVID-19 cases and casualties and weaker-than-expected incoming macro data. The Gov
Rs20trn economic relief package also failed to cheer investor sentiments given limited fiscal spending. While the MSCI
World Index ended the month with a 4.6% return, MSCI Emerging Market Index underperformed with a meagre 0.6%
return. Back home, the Nifty 50 and Nifty 500 Index fell by 2.8% and 2.4% respectively in the month of May, despite
renewed investments by foreign institutional investors (FII) and steady domestic buying. The rally in Indian markets,
however, resumed in June amid positive global cues and sustained FII flows, partly offset by geopolitical tensions.
Gilt curves across developed markets steepened in May on increasing supply of Government papers and growth
concerns. India was no different, with the decline in yields at the short-end being much higher than at the long-end. A
steep 155bps cut in reverse repo rate, coupled with a slew of liquidity easing measures taken by the RBI, including the
LTROs and TLTROs (Targeted Long-term Repo Operations) and a huge surplus systemic liquidity, has brought the shorter
end of the yield curve lower. Indian Rupee remained under pressure in May owing to mounting growth concerns,
reflecting in signific
outlook and strained fiscal balances,
• Domestic equity markets ended in red in May amid rising COVID-19 cases:
The Nifty 50 and Nifty 500
Indian equity markets underperformed the broader EM pack in May, as rising
Index fell by 2.8% and 2.4%
number of COVID-19 cases and casualties, lockdown extension and
respectively in May. The
strengthening growth concerns weighed on investor sentiments, notwithstanding markets, however, resumed
improving global cues. India, at ~440k cases as of June 23rd, has now the fourth its rally in June amid positive
highest number of COVID-19 cases in the world, with total casualties at ~14k. The global cues and sustained
FII buying.
markets given limited fiscal boost in the near-term. The emergence of tensions
Market volatility came off for
between the US and China also kept Indian equity markets on the side-lines. The
the second month in a row in
Nifty 50 and Nifty 500 Index ended the month of May 2.8% and 2.4% lower May.
respectively. The markets, however, resumed the rally in June, on improving
global cues and sustained buying by foreign institutional investors. As of June
23rd, 2020, the Nifty 50 and Nifty 500 Index traded ~14% and ~13% below
December 2019 levels respectively. The Mid- (Nifty Mid-cap 100) and Small-cap
(Nifty Small-cap 100) indices also ended lower by 1.7% and 1.8% respectively in
May. Market volatility index, India VIX, fell 11.1% in May and a further 2.9 in June
thus far, even as it still remains significantly higher than last year (152% YTD).
In cash markets, average daily turnover increased by 4.6% MoM to Rs527bn

nearly 45% higher than the average daily turnover during FY2019-20 and 18%
higher than the YTD (Jan-May 2020) average. Average daily derivative turnover
also improved in May, rising by 7.5% MoM after contracting in the previous month,
touching an average of Rs 1,011bn. This is ~9% higher than the average daily
turnover during FY2019-20 and 2.4% higher than the YTD average.
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The sell-off Indian equity markets in May was largely led by Banks which reported
a loss of 10.4%. Information Technology and Real Estate also reported modest
losses of 0.7% and 3.8% respectively. All other sectors ended in green, with gains
led by Automobiles (+5.4%), Pharma (+4.7%), FMCG (+2.2%), Media (+1.6%) and
Metals (+1.1%).
• Fixed income market rallied on continued monetary easing: Fixed income

Indian fixed income markets
markets remained strong for yet another month amid continued liquidity injection rallied in May amid
by global central banks. While yields at the short-end remained largely steady, continued monetary easing
long-end inched up amid huge supply of Government paper and growth concerns. by the RBI and indication of
Corporate debt, particularly in the US, outperformed safe haven assets, thanks to more. The 10-year yield
strengthened risk-on environment amid aggressive policy interventions. Yields in ended the month 10bps
India came off but at a much sharper pace in the short-end than in the long-end lower at 6.0%.
resulting in further steepening of the yield curve. A steep 155bps cut in reverse
repo rate, coupled with a slew of liquidity easing measures taken by the RBI,
including the LTROs and TLTROs (Targeted Long-term Repo Operations) and a
huge surplus systemic liquidity, has brought the shorter end of the yield curve
lower. While the 10-year G-sec yield declined by 10bps in May and is down 65bps
YTD (as of June 23rd) to 5.9%, the 1-year and 5-year G-sec yields have fallen by a
much higher 185bps and 95bps YTD respectively.
On the global front, while China and Germany 10-year bond yields inched up by
20bps (-23bps YTD as of June 23rd) and 14bps (-22bps YTD) in May to close the
month at 2.7% and -0.4% respectively, Japan and US 10-year yields rose
marginally ending the month 5bps and 2bps higher at 0.01% (+3bps YTD) and
0.64% (-120bps YTD) respectively.
• FIIs turned into strong buyers in Indian equities in May but remained sellers
Equity markets saw buying
in Indian debt: After remaining sellers over the previous two months, foreign from foreign as well as
institutional investors (FIIs) turned strong buyers in Indian equities in May, with domestic institutional
net inflows at US$2.0bn the highest in six months (Source: Refinitiv investors in May.
Datastream), as ample liquidity injection by global central banks found its way
into riskier asset classes such as EM equities. FII buying gained further strength
in June, with net FII inflows at US$2.9bn in June thus far (as of June 23rd). The
selling in debt, however, continued for the seventh month in a row in May with net
outflows of US$3.5bn, even as outflows came off in June thus far. Domestic
institutional investors (DIIs) also resumed buying in Indian equities in May after
being modest sellers in April, with net outflows at Rs123bn.
• Rally in global equity markets continued in May: Rally in global equity markets
Developed markets
continued for the second consecutive in May as investor sentiments remained
outperformed emerging
buoyant amid declining growth in cases in some of the developed economies,
indices. While MSCI
lifting of lockdown restrictions and gradual resumption of business activities.
World gained 4.6% in May,
Positive cues around development of a potential COVID-19 vaccine also MSCI EM moved up by only
supported market sentiments. Meanwhile, policymakers worldwide continued to 0.6%.
provide fiscal and monetary support to tide over the near-term economic
ramifications caused by the outbreak. Emerging market equities, however,
underperformed on account of renewed US-China tensions. While the MSCI World
Index ended the month with a 4.6% return, MSCI Emerging Market Index
underperformed with a meagre 0.6% return.
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US: The positive momentum in US equity markets extended in May. After

registering the best monthly returns since 1987 in April, the S&P 500 Index and
Dow Jones Index went up by another 4.5% and 4.3% in May as investor
sentiments strengthened over gradual re-opening of the economy and positive
cues around the development of COVID-19 vaccine, partly offset by renewed US-
China geopolitical tensions. The market rallied despite weak incoming macro
data as investors derived confidence from aggressive policy interventions and
chose to overlook near-term macro challenges.
On the macro front, the unemployment rate jumped to 14.7% in April the highest
since 1939, falling only moderately to 13.3% in May. The economy shrank 5% in
the first quarter as per second estimate the biggest quarterly decline since the
Global Financial Crisis, led by a sharp decline in consumer spending. The
Manufacturing and Services PMI indicated continued weakening of activity in May.
Industrial production fell a record 11.2% in April but bounced back to 1.4% in
May as activity resumed in some sectors.
Europe: European markets also ended the month of May in green, as the daily
COVID-19 infection rate came of meaningfully and economic activity resumed
post lifting of restrictions. The announcement of a EUR750bn recovery fund or
5.4% of EU GDP as part of the recovery plan submitted by the European
Commission also provided a boost to investor sentiments. Of this, EUR500 would
be spent as grants and EUR250bn as loans to EU countries that would require
funds. On the policy front, while the ECB in the recent policy review meeting
doubled the size of its COVID-19 related bond purchases even as interest rates
were left unchanged, the Bank of England added another £100bn to its bond
buying program. While the FTSE 100 rose by 3.0% in May, DAX and CAC 40
increased 6.7% and 2.7% respectively.
On the macro front, consumer and business confidence improved, supported by

easing of lockdown restrictions. The Eurozone economy contracted by 3.8% QoQ
in Q1, with Germany contracting by 2.2%. Services and Manufacturing PMI also
improved, leading to an improvement in the Composite PMI to three-month high
of 30.5, even as it still remains much below the 50 mark. In the UK, Q1 GDP fell
by 2% QoQ the worst since 2008.
Asia: Unlike western developed markets, Emerging Asian markets ended the
month in red. While the Hong Kong market (Hang Seng Index), Indian (Nifty 50
Index) and Chinese market (SSE Composite Index) fell by 6.8%, 2.8% and 0.3%
respectively in May, the Japanese market (Nikkei 225 Index) ended the month
with an 8.3% return.
Incoming macro data worsened for India, with industrial production contracting
by 18.3%/55.5% in March/April, merchandise exports and imports shrinking by
60%/60% and 36.5%/51.1% YoY in April/May 2020. The manufacturing PMI for
April stood at an all-time low of 27.4 and services PMI at 5.4, recovering only
marginally to 30.8 and 12.6 in May. Although certain economic activities were
allowed to resume in green and orange zones, major consumption centres in
tput
recovered further from +3.9% in April to +4.4% in May as it continues to emerge
from the crisis.
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Market Pulse
• Crude prices surged in May amid reviving economic activity and production
Oil prices recovered
curbs: After falling sharply during April-May 2020, crude oil prices rallied in May, meaningfully from their
with the Brent crude ending the month 39% higher at US$35/bbl. This was largely March lows due to
on the back of easing supply amid production curbs by the OPEC+ and improving coordinated production cuts
demand as economies worldwide gradually removed lockdown restrictions. by oil producing economies.
Safe haven commodities gold and silver ended the month gaining 1.6% and
18.7% from April. Other hard commodities, including aluminium, copper, lead,
zinc, tin and nickel all moved up in May as economic activity picked up.
• INR remained weak amid growth concerns: INR remained weak for yet another
Strengthening growth
month, ending May at 75.6 vs. 75.1 in the previous month. This is largely on concerns and foreign capital
account of strengthened growth concerns in the wake of rising number of cases outflows from debt markets
in India, reflected have contributed to rupee
by global multilateral institutions and rating agencies and massive foreign capital weakness.
outflows from debt markets.
negative As
of June 23 , the INR has fallen 6.0% since the beginning of the year.
rd
72/116
Market Pulse
Market performance across asset classes

Figure 115: Performance across equity indices, fixed income, currency and commodities
Indicator Name May-20 1M ago 3M ago 12M ago 1M (%) 3M (%) 6M (%) 12M (%) YTD (%)
Equity Indices
NIFTY 50 9,580 9,860 11,202 11,923 -2.8 -14.5 -20.5 -19.7 -21.3
NIFTY 500 7,822 8,013 9,236 9,805 -2.4 -15.3 -20.3 -20.2 -20.8
MSCI INDIA 1,122 1,147 1,273 1,356 -2.2 -11.8 -17.3 -17.3 -18.1
India Volatility Index (%) 30 34 23 16 -11.1 30.1 117.5 88.1 159.0
MSCI WORLD 2,148 2,053 2,141 2,046 4.6 0.3 -6.3 5.0 -8.9
S&P 500 COMPOSITE 3,044 2,912 2,954 2,752 4.5 3.1 -3.1 10.6 -5.8
DOW JONES INDUSTRIALS 25,383 24,346 25,409 24,815 4.3 -0.1 -9.5 2.3 -11.1
HANG SENG 22,961 24,644 26,130 26,901 -6.8 -12.1 -12.9 -14.6 -18.6
FTSE 100 6,077 5,901 6,581 7,162 3.0 -7.7 -17.3 -15.2 -19.4
NIKKEI 225 21,878 20,194 21,143 20,601 8.3 3.5 -6.1 6.2 -7.5
Fixed Income
India 10YR Govt Yield (%) 6.01 6.11 6.37 7.03 -10bps -36bps -45bps -102bps -54bps
India 5YR Govt Yield (%) 5.43 5.15 5.87 6.67 28bps -44bps -83bps -125bps -93bps
India 1YR Govt Yield (%) 3.62 3.93 5.24 6.26 -31bps -162bps -170bps -264bps -194bps
India 3Month T-Bill Yield (%) 3.31 3.69 5.18 6.26 -38bps -187bps -169bps -295bps -184bps
US 10YR Govt Yield (%) 0.64 0.63 1.13 2.14 2bps -48bps -113bps -150bps -127bps
Germany 10YR Govt Yield (%) -0.45 -0.59 -0.61 -0.20 14bps 17bps -9bps -25bps -26bps
China 10YR Govt Yield (%) 2.71 2.51 2.80 3.30 20bps -9bps -49bps -59bps -47bps
Japan 10YR Govt Yield (%) 0.01 -0.04 -0.15 -0.10 5bps 16bps 9bps 11bps 3bps
Currency
USD/INR 75.6 75.1 72.2 69.7 0.7 4.8 5.4 8.5 5.9
EUR/USD 1.1 1.1 1.1 1.1 1.6 1.3 0.9 -0.2 -0.9
GBP/USD 1.2 1.3 1.3 1.3 -2.0 -3.2 -4.4 -1.9 -6.7
USD/YEN 107.7 106.9 107.9 108.6 0.7 -0.1 -1.6 -0.8 -0.9
USD/CHF 1.0 1.0 1.0 1.0 0.5 0.8 4.0 4.7 0.8
USD/CNY 7.1 7.1 7.0 6.9 1.3 2.2 1.7 3.5 2.6
Commodities
Brent Crude Oil (US$/bbl) 35.4 25.5 50.5 64.9 38.8 -29.9 -43.4 -45.4 -46.6
LME Aluminium (US$/MT) 1,526 1,459 1,677 1,773 4.6 -9.0 -14.8 -13.9 -14.3
LME Copper (US$/MT) 5,352 5,160 5,617 5,806 3.7 -4.7 -8.4 -7.8 -13.0
LME Lead (US$/MT) 1,655 1,610 1,887 1,795 2.8 -12.3 -13.9 -7.8 -13.5
LME Nickel (US$/MT) 12,260 12,124 12,187 11,972 1.1 0.6 -10.0 2.4 -12.1
LME Tin (US$/MT) 15,503 15,274 16,267 18,825 1.5 -4.7 -6.1 -17.7 -9.8
LME Zinc (US$/MT) 1,993 1,934 2,010 2,668 3.0 -0.9 -13.3 -25.3 -12.6
SHC Iron Ore Spot (US$/MT) 102 84 85 106 21.6 20.1 16.7 -3.8 10.3
Gold Spot Price (US$/troy ounce) 1,732 1,705 1,587 1,300 1.6 9.1 18.5 33.2 13.9
Silver Spot Price (US$/troy ounce) 18 15 17 15 18.7 7.1 4.9 22.5 0.1
Platinum Spot Price (US$/ounce) 825 767 871 791 7.6 -5.3 -7.7 4.3 -15.0
Palladium Spot Price (US$/ounce) 1,920 1,986 2,719 1,370 -3.3 -29.4 4.8 40.2 0.0
Source: Refinitiv Datastream, Bloomberg, NSE
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Market Pulse
Figure 116: Performance across NSE sector indices

Indicator Name May-20 1M ago 3M ago 12M ago 1M (%) 3M (%) 6M (%) 12M (%) YTD (%)
Auto 6,219 5,901 6,904 8,176 5.4 -9.9 -23.1 -23.9 -24.6
Bank 19,297 21,535 29,147 31,375 -10.4 -33.8 -39.6 -38.5 -40.0
FMCG 29,297 28,669 29,310 29,850 2.2 -0.0 -5.4 -1.9 -2.7
IT 14,011 14,108 15,213 16,161 -0.7 -7.9 -6.6 -13.3 -10.5
Media 1,178 1,160 1,671 2,204 1.6 -29.5 -35.8 -46.6 -34.7
Metals 1,880 1,860 2,246 2,900 1.1 -16.3 -28.4 -35.2 -32.9
Pharma 9,769 9,327 7,577 8,455 4.7 28.9 19.3 15.5 21.5
Real Estate 180 187 281 284 -3.8 -35.8 -36.2 -36.6 -39.7
Figure 117: NIFTY sector performance over the last month (rebased to 0)
74/116
Market Pulse
Figure 118: India 10Y G-sec yield long-term trend Figure 119: India 10Y G-sec yield last one-year trend
% %
India 10-year benchmark g-sec yield-long-term trend India 10-year benchmark g-sec yield movement over
11 7.3 last 12 months
7.1
10
6.9
9
6.7
8 6.5
6.3
7
6.1
6 5.9
5 5.7
5.5
4
Jul-19
Sep-19
May-20
Nov-19
Oct-19
Mar-20
Jan-20
Jun-19
Feb-20
Aug-19
Jun-20
Dec-19
Apr-20
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-02
Figure 120: India sovereign yield curve

The India sovereign yield curve has steepened over the last few months, with the drop in yields seen only up to three-
year maturity papers, thanks to a steep 155bps cut in reverse repo rate which has effectively become the policy rate in
surplus liquidity conditions. A slew of liquidity easing measures taken by the RBI, including the LTROs and TLTROs
(Targeted Long-term Repo Operations) and a huge surplus systemic liquidity, have brought the shorter-end of the yield
curve lower. The longer-end, however, has remained steady a reflection of strengthened growth concerns, FPI outflows
and a huge demand-supply mismatch amid heavy supply of G-secs. Weak growth environment, coupled with strained
fiscal balances, is likely to continue to put pressure on the long-end of the curve.
% India sovereign yield curve
31-Dec-19 28-Feb-20 29-May-20
8.0
7.2 7.1
6.8
6.6
6.4
5.6
5.1
4.8
4.0
3.2 3.3
2.4
3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y 15Y 19Y 24Y 30Y
Source: Refinitiv Datastream, NSE.
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Market Pulse
Figure 121: Sovereign yield curve across G20 countries as of May 31st, 2020
Dec 2019 3m 6m 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 30y
US 0.14 0.17 0.17 0.16 0.19 0.30 0.49 0.64 1.40
Japan (0.12) (0.19) (0.16) (0.16) (0.17) (0.14) (0.12) (0.12) (0.10) (0.08) (0.03) 0.01 0.50
Germany (0.50) (0.54) (0.58) (0.66) (0.66) (0.66) (0.64) (0.63) (0.55) (0.51) (0.50) (0.45) 0.01
France (0.51) (0.50) (0.52) (0.53) (0.52) (0.51) (0.44) (0.35) (0.25) (0.19) (0.12) (0.08) 0.70
UK 0.08 0.07 0.05 (0.04) (0.04) (0.05) (0.01) (0.03) 0.02 0.05 0.13 0.18 0.58
Italy (0.16) (0.03) 0.15 0.40 0.58 0.82 1.04 1.17 1.23 1.40 1.45 1.49 2.41
Canada 0.19 0.25 0.28 0.29 0.28 0.33 0.40 0.39 0.53 1.12
EU (0.50) (0.54) (0.58) (0.66) (0.66) (0.66) (0.64) (0.63) (0.55) (0.51) (0.50) (0.45) 0.01
Argentina 28.90 49.64 45.81 42.34
Australia 0.29 0.28 0.27 0.33 0.40 0.50 0.61 0.74 0.82 0.90 1.70
Brazil 2.69 2.33 2.63 3.51 4.85 5.76 6.59 6.96
China 1.61 1.84 1.91 2.24 2.69 2.71 3.52
India 3.27 3.43 3.62 4.27 4.58 4.97 5.43 5.67 5.93 6.07 6.12 6.01 6.61
Indonesia 3.53 3.75 5.20 6.51 6.85 7.34 8.04
South Korea 0.59 0.76 0.83 0.99 1.10 1.38 1.53
Mexico 5.27 5.14 5.02 5.18 5.36 5.87 6.15 7.09
Russia 4.88 4.69 4.35 4.69 4.76 5.16 5.31 5.57
South Africa 4.10 5.24 7.65 8.90 10.93
Turkey 7.22 7.58 8.40 8.97 9.18 10.73 12.24
Figure 122: Sovereign yield curve across G20 countries as of May 31st, 2018
Dec 2017 3m 6m 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 30y
US 1.92 2.08 2.23 2.41 2.53 2.66 2.77 2.82 2.99
Japan (0.13) (0.11) (0.14) (0.14) (0.13) (0.12) (0.12) (0.08) (0.06) (0.03) 0.01 0.04 0.72
Germany (0.64) (0.65) (0.65) (0.68) (0.60) (0.46) (0.27) (0.16) (0.02) 0.09 0.22 0.34 1.04
France (0.60) (0.59) (0.59) (0.49) (0.37) (0.23) (0.14) 0.07 0.24 0.38 0.53 0.67 1.60
UK 0.45 0.55 0.52 0.61 0.65 0.82 0.95 1.01 1.06 1.17 1.28 1.23 1.70
Italy (0.37) 0.10 0.56 1.18 1.46 1.85 2.09 2.34 2.51 2.58 2.75 2.84 3.41
Canada 1.29 1.46 1.71 1.92 2.03 2.07 2.12 2.20 2.25 2.26
EU (0.64) (0.65) (0.65) (0.68) (0.60) (0.46) (0.27) (0.16) (0.02) 0.09 0.22 0.34 1.04
Argentina 32.59 20.78
Australia 1.83 1.98 2.10 2.22 2.32 2.44 2.50 2.57 2.62 2.67 3.21
Brazil 6.45 6.54 6.97 7.94 9.30 10.23 10.91 11.22
China 3.19 3.20 3.34 3.45 3.62 3.65 4.09
India 6.42 6.80 7.07 7.55 7.69 7.82 7.83 8.01 8.01 8.03 7.89 7.83 8.13
Indonesia 5.25 5.53 6.52 6.75 6.83 7.06 7.93
South Korea 1.86 2.11 2.20 2.38 2.48 2.69 2.68
Mexico 7.78 7.83 7.93 7.80 7.79 7.79 7.81 7.93
Russia 7.06 7.05 6.52 6.81 6.98 6.88 7.13 7.36
South Africa 6.35 7.10 7.64 8.19 9.05
Turkey 14.18 15.55 16.80 16.10 14.79 13.85
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Market Pulse
Figure 123: Corporate spreads coming off

Corporate bond spreads came off in May and further in June, particularly at the shorter-end, following a sharp spike in
the previous two months. This was largely led by significant easing of liquidity conditions in the economy, thanks to a
slew of measures taken by the Central Bank. The TLTROs have led to an increase in demand for better-rated corporate
bonds by banks thereby reducing the term and liquidity premia.
bps Spreads between AAA-rated corporate bonds and similar maturity G-secs
300 1-year AAA 5-year AAA 10-year AAA
250
200
150
100
50
0
Oct-15
Oct-16
Oct-17
Oct-18
Oct-19
Feb-16
Feb-17
Feb-18
Feb-19
Feb-20
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Aug-15
Dec-15
Apr-16
Aug-16
Dec-16
Apr-17
Aug-17
Dec-17
Apr-18
Aug-18
Dec-18
Apr-19
Aug-19
Dec-19
Apr-20
Figure 124
Surplus liquidity in the banking system came of meaningfully in May 2020 and further in June amid a decline in
outstanding money parked with the RBI under reverse repo operations. This is largely owing to incrementally higher
investments by banks in SLR securities (government securities) over the last couple of months, even as credit offtake
has remained weak, reflecting reduced risk appetite of banks amid strengthening asset quality concerns.
Rs bn
Net lending under RBI's Liquidity adjustment facility
Outstanding amount under repo operations
Outstanding amount under reverse repo operations Figure greater than zero
3000
Net lending under LAF indicates deficit liquidity in
the system
1000
-1000
-3000
Figure less than zero indicates
surplus liquidity in the system
-5000
Surplus liquidity in the banking system

-7000 came off in May 2020 and further in
June as
-9000
May-18
May-19
Jul-18
Sep-18
Sep-19
Nov-19
Oct-18
Mar-19
Jan-18
Feb-18
Jan-19
Jan-20
Feb-20
Jun-19
Apr-18
Dec-18
Aug-19
Jun-20
Apr-20
77/116
Market Pulse
Institutional flows across market segments in India

FIIs net inflows recovered partially in the month of May 2020: After a significant fall in
FIIs net inflows since February due to the unprecedented outbreak of Covid-19, their net
in line with the rally in the securities market globally post several countries including India
announced major relief packages to revive their economies. However, FIIs continue to be
net sellers in the debt segment as India could not contain the virus ever after imposing
strict lockdown for more than 60 days. Total number of cases is increasing exponentially
with a significant rise in fatalities over the month, which has further weakened the
likelihood of a sharp recovery of the Indian economy. This may have raised the downward
risk of market uncertainty and the probability of rising NPAs in the coming months. Hence,
FIIs net outflows in debt rose sharply, as shown in the following chart.
Figure 125: Overall net inflows of FIIs in India
Unlike FIIs, domestic institutional investors (DIIs) increased their net purchases in
equities since
March as well. The situation has, however, changed significantly over the mon
with low net investments in the equity segment mainly due to the uncertainty in the
market amid exponential rise in total number of infected cases and fatalities from the
novel-coronavirus over the month. The situation started improving with a rise in net
investment since May-end with a positive tally in major indices globally.
78/116
Market Pulse
Figure 126: Overall net inflows by DIIs in Indian equity markets
79/116
Market Pulse
Fund mobilisation through NSE

Market Statistics: Primary market
Fund mobilisation through IPO continues to suffer amid market uncertainty:
primary market through the Equity segment continues to suffer as the country could not
contain the overall spread of the coronavirus in major industrial regions even after a
continuous lockdown since March 25. This has deteriorated the growth prospects of the
country and overall uncertainty of the financial market. This has resulted a significant
decline in fund mobilisation through equity se
while one
firm had raised Rs83m through IPO in April. Among other instruments, firms issued
20, vs. Rs9.9bn over the previous month.
Firms prefer debt over equity in the primary market: Debt remains to be the preferred
instrument as compared to equities to mobilise additional funds from the capital market.
Out of Rs819.6bn funds raised through primary market, firms utilised debt instruments to
raise Rs816.6bn through debt, which accounts for almost 100% of total fund raised over
the month, and remaining Rs3.0bn were mobilised through equities. Further, total fund
through debt rose by 56% over the month, mainly attributed by private placement.
Private placement remains to be the most preferred instrument: Over the month, 59
firms raised Rs696.6bn through private placement which is 77% higher than Rs394.4bn
in the previous month, and continues to be the most preferred channel in the primary
market with almost 85% share in the primary market. Besides, government issued G-sec
to raise Rs120bn in May, vs. Rs130bn over the previous month.
Figure 127: Funds mobilised through NSE platform

Particulars May-20 Apr-20
Amount Amount Amount Amount
No. of No. of
Raised Raised Raised Raised
Issues Issues
(Rsm) (US$ m) (Rsm) (US$ m)
Equity
IPOs 1 83 1
Preferential Allotment 7 2,959 39 7 9,870 130
Debt
Public issue of Gsec 1 120,000 1,586 3 130,000 1,706
Private Placement 59 696,623 9,206 30 394,391 5,176
Total 819,582 10,831 534,343 7,013
Note: In case of debt issuances, the above table reports no. of ISINs instead of issues.
Source: NSE.
80/116
Market Pulse
New listings in the month

A single firm got listed in May, while no one raised funds through IPO: This month has
seen only one new listing in the market due to the ongoing nationwide lockdown,
unavoidable global slowdown post the outbreaks of Covid-19, rise in uncertainty, and
therefore, risk of getting lower valuation in the market.
Over the month, only one firm Rajratan Global Wire Ltd got listed at NSE with 2.1% gain
on the listing day, while two others Vertoz Advertising Ltd. and Kapston Facilities
Management Ltd. have been migrated from SME to NSE mainboard.
Figure 128
Listing Market Gross Turnover
Listing Date Security Name Listing
Gain % Cap (Rsm) (Rsm)
14-May-20 Vertoz Advertising Ltd. 4.9 903 2.5 Migrated from SME to NSE Main Board
22-May-20 Rajratan Global Wire Ltd. 2.1 1,893 1.5 New listing
27-May-20 Kapston Facilities Management Ltd. 4.4 987 0.2 Migrated from SME to NSE Main Board
Source: NSE.
81/116
Market Pulse
segments
Long term trends and impact of macro indicators
After a stellar
2017, NSE recorded a roller coaster ride since 2018 amid the rise in uncertainty in the
financial market. The situation has deteriorated further in 2020 in the wake of coronavirus
globally that has risen the probability of a global recession in FY21 post partial/complete
lockdown in several countries depending on the spread of the virus. This has also
increased overall volatility in the securities market and significant ups and downs in
overall FII inflows, which has led to a significant rise in monthly turnover over the last
three months compared to the FY20 and monthly turnover is hovering between Rs9.1trn
and Rs10trn per month.
The overall trend of currency derivatives is quite different, where monthly turnover was
quite high in 2013 due to increase in macroeconomic uncertainty during the Taper
Tantrum. It declined significantly in the following year as government had to put stricter
restrictions on FII limits to minimise currency rate fluctuation. Thereafter, it remained
stable till 2017 and was hovering around Rs2trn on average. It has again started
increasing in 2018 as the Indian government increased the threshold limit of foreign
investment in currency segment, and then, its total turnover remained elevated in 2019
as well toward an average monthly turnover of Rs3.6trn. This has further increased in
2020 partly due to a significant depreciation of INR.
Figure 129 egments
Source: NSE.
Note: Total turnover for derivatives includes gross traded value of futures and total premium turnover of options.
82/116
Market Pulse
declined considerably across all segments due to the strict lockdown amid the
unprecedented coronavirus pandemic, impending global slowdown and rise in market
decline in monthly turnover on YoY basis vs. 3.3% growth in the previous month.
Figure 130: Impact of global slowdown on overall turnover growth across segments
83/116
Market Pulse
Deteriorating growth prospects in India ma

growth: Amid 60-day lockdown in India and continuous rise in Covid-19 positive cases,
adve he last two months.
Figure 131: Growth rates of Cash turnover and economic slowdown in India (IIP and GVA growth)
84/116
Market Pulse
Both CPI and WPI inflation rates started declining in India: Amid low consumption
and export demand, coupled with lower crude oil prices, inflation rates declined since
ease further with the RBI expecting it to fall to sub-4% in the second half of the fiscal.
may have negative impact on total trading volume as well.
Figure 132:
85/116
Market Pulse
over the month of May even as both the FIIs and DIIs increased their net investments over
the month, perhaps due to fall in trading activities by propriatory traders, retailers and
corporates.
Figure 133:
86/116
Market Pulse
Institutional investments through NSE platform

FIIs turned net buyers across After a significant rise in FIIs
net outflows over the previous few months, their net investment through NSE turned
and Currency derivatives markets each. This was in line with the recent recovery in major
indices globally, even as total number of Covid-19 positive cases and number of fatalities
are increasing exponentially over the month. The recent rise in FII inflows was partially
due to the multiple policy actions taken by the government bodies, RBI and the SEBI.
Among major segments,

DIIs turned net sellers in the equity derivatives with Rs42bn net outflows over the month
of May vs. Rs17bn net sales in the previous month. In contrast, their net investment rose
sharply in both Cash market and currency derivatives with Rs 81bn and Rs 3bn net
purchase respectively over the month.
Institutional investments remain muted in interest rate derivatives: DIIs investment

pattern remains similar over the last months with Rs 8bn gross investments, while net
investments remain muted over the months. In case of foreign investments, FIIs gross
investments became negligible in May after a gross sale of Rs 2bn in the previous month.
Figure 134: Foreign and domestic institutional flows (Rsbn)

Month May-20 Apr-20 FY21TD FY20TD FY20 CY20TD
Buy Sell Net Buy Sell Net Buy Sell Net Buy Sell Net Buy Sell Net Buy Sell Net
Cash Market
DII 841 760 81 724 738 (13) 1,566 1,498 68 1,404 1,440 (36) 9,777 8,653 1124 4,783 4,016 767
FII 1,389 1,300 89 1,194 1,243 (48) 2,583 2,542 41 2,276 2,169 107 13,166 14,155 (989) 6,116 6,953 (837)
Futures & Options
DII 716 758 (42) 590 608 (17) 1,306 1,366 (59) 1,542 1,597 (55) 10,242 10,445 (204) 4,048 4,011 37
FII 44,322 44,270 52 35,638 35,520 118 79,960 79,790 169 94,154 93,868 286 664,429 661,886 2,543 260,618 259,796 822
Currency Derivatives
DII 57 54 3 78 82 (5) 135 136 (1) 253 231 23 1,016 1,000 16 405 412 (6)
FII 706 654 52 757 737 20 1,463 1,391 72 1,347 1,238 109 9,144 8,247 897 4,507 4,041 466
Interest Rate Derivatives
DII 4 4 (0) 4 4 (0) 7 7 (0) 30 28 2 174 178 (4) 44 43 1
FII 0 0 0 0 2 (2) 0 2 (2) 4 4 0 47 40 6 11 9 1
Source: NSE*DII Domestic Institutional Investors, FII Foreign Institutional Investors
87/116
Market Pulse
Total turnover in CM and derivatives market

r segments, except Currency derivatives in
May, thanks to more trading days in the month. In the Cash market, total turnover rose by
10.5% to reach Rs10trn in May vs. Rs9trn over the previous month as institutional net
investments jumped up significantly for both FIIs and DIIS.
Similar trends were observed in Equity derivatives as well. After a significant fall in April,
total turnover rose by over 13.5% in both equity futures as well as equity options premium
In contrast, currency segment recorded a fall by 1.2% in futures turnover and 12.2% in
options premium over the month, even as there were more number of trading days.
Figure 135: Total turnover in different segments (Rsbn) during Ja

Segment Jan-20 Feb-20 Mar-20 Apr-20 May-20
Cash Market 8,054 7,969 10,065 9,059 10,006
Equity futures 19,471 18,487 20,974 15,497 17,586
Index futures 5,433 5,393 9,214 5,947 6,406
Stock futures 14,038 13,094 11,760 9,550 11,180
Equity options 1,200 1,156 2,268 1,419 1,616
Index options 991 941 1,985 1,209 1,368
Stock options 209 214 283 210 248
Currency derivatives 3,882 3,982 7,243 3,733 3,687
Currency futures 3,871 3,973 7,220 3,722 3,678
Currency options 11 9 23 11 9
Interest rate derivatives 254 279 298 94 119
Interest rate futures 254 279 298 94 119
Interest rate options 0.03 0.10 0.17 0.02 0.02
Commodity futures 1.1 1.6 0.9 0.6 0.0
Source: NSE. *NA refers to not applicable as Interest rate options w
Average daily turnover in CM and derivatives market

Daily turnover continues to rise in the Cash market: On average, daily turnover rose by
4.6% in the Cash market to reach
month partly due to a partial recovery in the securities market and rise in volatility in the
market after the unprecedented outbreak of COVID-19 globally, and exponential rise in
total number of infected cases in India. However, total turnover may have concentrated
towards large stocks as average turnover continues to decline in the SME over last few
months. Among all major stocks in the cash market, Bharti Airtel, Hindustan Unilever and
Reliance recorded a sharp increase in their total turnover over the month that has partly
increased average daily turnover in the segment.
Figure 136: Average daily turnover in Cash market (Rsm)

Product May-20 Apr-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Cash Market 526,622 503,279 4.6 515,266 348,441 47.9 364,399 447,056
Exchange Traded Funds 2,629 3,024 (13.0) 2,821 2,145 31.5 2,069 2,446
SME Emerge 14 17 (21.8) 15 81 (81.0) 53 34
Sovereign Gold Bonds 15 28 (48.6) 21 4 409.0 10 17
InvITs 40 38 3.5 39 37 5.4 51 58
Mutual Funds (Close Ended) 1 1 (6.9) 1 1 (56.8) 1 1
Source: NSE.
88/116
Market Pulse
Unlike previous month, Stock derivatives recorded a sharp rise in May: In case of Stock
derivatives, daily turnover increased by 10.9% for stock futures turnover and 11.9% for
stock options premium turnover over the month, after a significant rise in net inflows of
FIIs in equity derivatives segment. Among most traded stock derivatives, Bharti Airtel and
Hindustan Unilever recorded a spike in their total trade activities in both futures and
options segment.
Bank In the index

derivatives segment, average daily turnover rose for Bank Nifty in both futures and options
options over the month.
Figure 137: Average daily turnover in Equity derivatives (Rsm)

Single stock derivatives

Stock futures 588,433 530,538 10.9 560,268 616,995 (9.2) 602,216 590,311
Stock options premium 13,076 11,681 11.9 12,397 8,399 47.6 9,245 11,532
Index futures
Bank Nifty 151,592 134,636 12.6 143,343 98,797 45.1 113,155 130,878
Nifty 185,553 195,728 (5.2) 190,503 143,472 32.8 157,060 189,803
Nifty IT 26 34 (22.5) 30 261 (88.6) 121 50
Index options
Bank Nifty 38,697 31,559 22.6 35,224 17,217 104.6 22,493 31,029
Nifty 33,280 35,601 (6.5) 34,409 15,721 118.9 21,090 33,268
Nifty IT 0 0 NA 0 0 (100.0) 0 0
Source: NSE. *premium turnover for options.
89/116
Market Pulse
USDINR remains the major currency pair traded in India, followed by GBPINR and
EURINR. In currency futures, after a sharp rise, USDINR recorded 13.7% fall in May to
In Currency options, USDINR contributed about 100% of total turnover over the month.
Its daily premium turnover declined by 17% over the month to reach Rs517m vs.
Rs625mn in the previous month.
Figure 138: Average daily turnover in Currency derivatives (Rsm)

Currency futures
EURINR 11,184 7,029 59.1 9,166 5,357 71.1 7,000 8,948
EURUSD 128 76 68.2 103 485 (78.8) 472 266
GBPINR 20,611 13,916 48.1 17,359 11,572 50.0 15,368 19,929
GBPUSD 204 130 56.7 168 464 (63.7) 514 438
JPYINR 4,275 3,099 38.0 3,704 2,436 52.0 3,109 3,917
USDINR 167,933 194,693 (13.7) 180,931 159,194 13.7 171,331 200,501
USDJPY 3 1 101.5 2 6 (61.1) 9 5
Currency options
EURINR 0.04 0.00 - 0.02 0.03 (38.0) 0.06 0.13
EURUSD 0.00 0.00 - 0.00 0.00 NA 0.00 0.00
GBPINR 0.01 0.00 - 0.00 0.10 (95.5) 0.25 0.41
GBPUSD 0.00 0.00 - 0.00 0.00 NA 0.01 0.02
JPYINR 0.00 0.00 - 0.00 0.02 (100.0) 0.02 0.00
USDINR 517.72 624.56 (17.1) 569.61 512.70 11.1 548.49 651.49
USDJPY 0.00 0.00 - 0.00 0.00 NA 0.00 0.00

Source: NSE. *premium turnover for options
Liqudity of Interest rate derivatives remains low: In the Interest rate derivatives
segment, 645GS2029 is the most traded instrument in both futures and options segments
with Rs6.6bn and Rs0.9m average daily turnover respectively over the month.
Figure 139: Average daily turnover in Interest rate futures (Rsm)

Interest rate futures (Rsm)
645GS2029 6,572 5,428 21.1 6,016 0 - 8,617 9,855
726GS2029 31 57 (44.9) 44 1,183 (96.3) 7,903 951
795GS2032 0 0 - 0 183 (100.0) 229 34
757GS2033 0 57 (100.0) 28 0 - 44 42
Interest rate options (Rsm)
645GS2029 0.9 0.9 0.3 0.9 NA NA 1.2 3.4
726GS2029 0.0 0.0 - 0.0 NA NA 0.1 0.1

Source: NSE. *Data for only those contracts which were traded in the month of March have been reported in the above table.
90/116
Market Pulse
Turnover of top traded symbols over the month

Figure 140: Top 10 symbols based on total turnover of Cash market (Rs mn)
Symbol May-20 Apr-20 %Change
RELIANCE 682,382 618,897 10.3
HINDUNILVR 625,601 248,325 151.9
BAJFINANCE 414,161 371,451 11.5
HDFCBANK 343,595 363,126 (5.4)
ICICIBANK 335,903 297,946 12.7
AXISBANK 315,064 316,659 (0.5)
BHARTIARTL 299,800 130,452 129.8
HDFC 245,822 238,551 3.0
MARUTI 213,908 171,641 24.6
SBIN 203,234 211,299 (3.8)
Source: NSE
Figure 141: Top 10 symbols based on total turnover of Stock futures (Rs mn)
RELIANCE 886,447 798,870 11.0
BHARTIARTL 583,696 227,385 156.7
HINDUNILVR 482,767 311,185 55.1
ICICIBANK 422,716 412,154 2.6
BAJFINANCE 418,522 377,247 10.9
HDFCBANK 392,569 372,734 5.3
AXISBANK 332,097 335,889 (1.1)
SBIN 327,244 342,850 (4.6)
HDFC 274,437 273,608 0.3
KOTAKBANK 236,514 227,485 4.0
Source: NSE
Figure 142: Top 10 symbols based on total turnover of Stock options (Rs mn)
RELIANCE 33,919 33,811 0.3
BAJFINANCE 14,382 11,518 24.9
BHARTIARTL 13,525 3,375 300.8
ICICIBANK 12,708 11,804 7.7
SBIN 12,224 12,556 (2.6)
AXISBANK 9,748 9,845 (1.0)
HINDUNILVR 8,059 5,282 52.6
MARUTI 7,271 5,065 43.5
HDFCBANK 6,756 6,865 (1.6)
HDFC 5,053 3,775 33.9
Source: NSE
91/116
Market Pulse
Client category-wise participation in total turnover

Over the last six (fiscal) ye
total turnover in cash market
declined from 23% in FY16 to merely 13% in FY21 till May end. Similar trend was seen
for corporates who lost their share from 10% to 4% over the same time period. These
were offset by Others including individual investors, HUFs, trusts, NRIs, etc. with a
share of 52% in FY21 as compared to only 37% in Fy16, while the share of DIIs and
proprietary traders remain stable over the period. In FY21, proprietary traders contribute
22% to total turnover in the cash market, and DIIs contributed 8% over the fiscal till May
end.
In Equity derivatives, there is a significant change in composition of total turnover across
terms of total turnover from 31% in Fy16 to 25% in FY21 till May end, followed by
corporates whose share declined from 14% to 8% over the same period. This overall fall
tably,
rose from 14% to 19% over the same period. However, the share of DIIs remains marginal
during this period, which can be attributed to the regulatory restrictions on their trading
activities in the derivatives segment.
In case of Stock futures, Proprietary traders, Corporates and Others lost their share in the
market, which were mainly compensated by FIIs and DIIs. In FY21, Others traded 31%
of total contracts in stock futures while proprietary traders and FIIs contributed 22% and
32% of total turnover. Remaining 9% traded by corporates and merely 6% transactions
were done by DIIs in the segment.
Similarly, DIIs share in the Options segment remains negligible throughout the period due
to regulatory restrictions on derivative activity. Among others, share of proprietary traders
declined in Index options from 55% in FY16 to merely 34% in FY21 which was partially
offset by Others whose share rose from 25% to 41% over the period. Among other clients,
to 17% over the period.
hare declined in Stock options from 15% in FY16 to 6% in FY21 which

was offset by proprietary traders and Others. Out of total contracts traded in Index
options, around 44% were traded by proprietary traders and 43% by Others in FY21.
DIIs¬ excluding banks do not have much presence in the currency segment as well due
to regulatory obligations. Among other categories, the share of proprietary traders
excluding banks in the segment has declined over the period. Still they capture highest
share in both futures and options. While Others have been able to increase their share in
these segments during this period, and FIIs capture a significant share in Currency futures
since FY19. The distributional pattern is more or less similar for Interest rate futures
where proprietary traders excluding banks contributed 33% of total turnover. Here,
banks capture 22% of total turnover, while share of corporates increased significantly
from 23% in FY16 to 29% market share in FY21.
92/116
Market Pulse
Figure 143: Share of client participation across market segments of NSE in the last five (fiscal) years (%)
Cash Market Equity Derivatives
Corporates DII FII PRO Others Corporates DII FII PRO Others
100% 100%
90% 90%
28
37 80% 36 37 37 38
80% 41 45
40
46 47
52
70% 70%
60% 60%
50% 21 17 50%
49 33
18 42 38
22 23 42 34
40% 40%
22
30% 23 21 30%
16
15 15
20% 13 20% 14 19
10 12 14 18
9 10 12
10% 10 10 10% 0 0 0
8 0 0 0
10 12 11 11 8 8 11 9 8
6 5 4 0%
0%
FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21
Index Futures Index Options

Corporates DII FII Others PRO Corporates DII FII Others PRO
100%
100%
90% 90%
29 26 27 25
31 30
80% 33 34
80% 39
46 45
70% 70% 55
60% 60%
41 41 46
50% 39 40 41 50%
38 41
40% 38
40%
35 37
30% 25
30%
14 16 14 17 18
20% 19 20% 19
1 13 17
1 1 2 2 10 12 10
10% 1 10% 0 0 0 0
14 14 14 13 13 0 0 11
8 10 7 7 9 8
0% 0%
Stock Futures Stock Options
Corporates DII FII Others PRO Corporates DII FII Others PRO
100% 100%
90% 23 22 90%
26 25 25
30
80% 80% 39 37 36 40 42 44
70% 70%
31
60% 33 32 60%
37 38
34
50% 50%
37 37
40% 38 35
40% 39
43
30% 24 28 32 30%
17 21 18
20% 20% 17
3 4 5 15 17 15
3 6 10 6
10% 6 10% 0
16 15 0 0 0 0
13 13 10 10 10 0
9 9 9 8 7
0% 0%
93/116
Market Pulse
Currency Futures Currency Options

Corporates FII Banks Corporates FII Banks
DII ex-banks PRO ex-banks Others DII ex-banks PRO ex-banks Others
100% 100%
15 15 15 16 12 13 14
90% 20 90% 20
28 24
32
80% 80%
70% 70%
60% 49 49 52 47
43 60%
38
50% 50% 78 75 74 52
64
40% 40% 59
30% 14 12 10 7 30%
16
17
20% 1 4 20% 6
15 16 18 2
3 2 2 2 9
10% 19 10% 2 2 2
18 1 3
12 10 10 12 9 2
9 7 8 7 5
0% 0%
Currency Derivatives Interest Rate Futures

Corporates FII Banks Corporates FII Banks
DII ex-banks PRO ex-banks Others DII ex-banks PRO ex-banks Others
100% 100%
4 3 5
8 9 12
14 14 15
90% 18 90%
24
30
80% 80%
70% 48 33
70% 40 51 52
51
60% 60%
60 62 63 55
3
50% 52 50% 3
48 3
2
40% 40% 1 4 22
18
20
30% 16 19
30% 2 20 1
8 0 2
20% 10 8 6 5 20% 3
10 1
1 3 9 9 29
3 10 27 24
10% 10% 23 20 18
14 13 11
10 9 7
0% 0%
Source: NSE.
Note: DII: Domestic Institutional Investors, FII: Foreign Institutional Investors, PRO: Proprietary Traders, Others: includes individual investors, HUFs, trusts, NRIs, etc. We
have considered notional turnover for derivatives. Data for FY21 is for Apr-May 2020.
Figure 144: Share of client participation in Cash market of NSE (%)**

Client
May-20 Apr-20 Change FY21TD FY20TD Change FY20 CY20TD
category
Cash market
Corporates 4.6 4.1 0.5 4.4 5.1 (0.7) 5.3 5.2
DII 8.0 8.1 (0.1) 8.1 10.0 (1.9) 10.2 9.8
FII 13.4 13.6 (0.1) 13.5 15.6 (2.1) 15.2 14.5
PRO 21.6 22.9 (1.2) 22.2 22.8 (0.5) 22.7 22.5
Others 52.3 51.3 1.0 51.9 46.6 5.2 46.5 48.1
Source: NSE. **DII Domestic Institutional Investors, FII Foreign Institutional Investors, PRO Proprietary Traders, Others includes individual investors, HUFs, trusts,
NRIs, etc.
94/116
Market Pulse
Figure 145: Share of client participation in Equity derivatives of NSE (%)**

Client
category
Index Futures
Corporates 7.8 9.0 (1.3) 8.4 14.1 (5.7) 12.5 10.6
DII 0.8 0.7 0.0 0.7 2.4 (1.6) 1.8 1.1
FII 18.9 19.7 (0.8) 19.3 18.9 0.4 18.2 19.2
PRO 25.6 25.1 0.6 25.4 25.3 0.0 26.6 26.0
Others 47.0 45.5 1.5 46.2 39.3 6.9 40.9 43.1
Stock Futures
Corporates 9.0 9.0 (0.0) 9.0 12.0 (3.0) 10.5 9.1
DII 6.0 5.7 0.3 5.9 5.1 0.8 5.9 6.0
FII 31.8 32.5 (0.7) 32.1 27.0 5.2 28.0 30.6
PRO 22.2 21.5 0.7 21.9 24.3 (2.5) 23.2 22.1
Others 31.0 31.2 (0.2) 31.1 31.6 (0.5) 32.3 32.3
Index Options
Corporates 7.8 8.6 (0.8) 8.1 10.4 (2.3) 9.1 8.6
DII 0.0 0.0 0.0 0.0 0.0 (0.0) 0.0 0.0
FII 17.6 16.7 0.8 17.2 19.4 (2.2) 19.2 17.9
PRO 35.2 32.8 2.4 34.1 33.0 1.1 33.4 33.7
Others 39.5 41.9 (2.4) 40.6 37.2 3.3 38.3 39.9
Stock Options
Corporates 6.4 6.9 (0.6) 6.6 10.5 (3.9) 8.3 6.8
DII 0.0 0.0 (0.0) 0.0 0.0 0.0 0.0 0.0
FII 6.6 5.8 0.7 6.3 13.2 (6.9) 10.5 7.9
PRO 44.5 42.4 2.1 43.6 38.8 4.8 42.2 43.8
Others 42.5 44.8 (2.3) 43.4 37.5 6.0 39.0 41.5
Equity Derivatives
Corporates 7.8 8.5 (0.8) 8.1 10.5 (2.4) 9.2 8.6
DII 0.3 0.3 0.0 0.3 0.3 (0.0) 0.3 0.3
FII 17.8 17.2 0.6 17.5 19.5 (2.0) 19.2 18.1
PRO 34.7 32.4 2.3 33.6 32.6 1.0 33.2 33.4
Others 39.4 41.6 (2.2) 40.4 37.0 3.4 38.1 39.7
NRIs, etc. We have considered notional turnover for derivatives.
95/116
Market Pulse
Figure 146: Share of client participation in Currency derivatives of NSE (%)**

Client
category
Currency Futures
Corporates 8.2 9.4 (1.2) 8.8 8.8 0.0 10.1 10.2
FII 17.2 18.1 (0.8) 17.6 16.1 1.5 15.6 16.3
Banks 6.8 8.1 (1.3) 7.5 11.1 (3.6) 10.4 8.7
DII ex-banks 0.2 0.1 0.1 0.2 0.2 (0.0) 0.2 0.1
PRO ex-banks 38.9 36.8 2.1 37.9 44.2 (6.4) 43.3 40.9
Others 28.7 27.5 1.3 28.1 19.7 8.4 20.4 23.7
Currency Options
Corporates 5.5 5.0 0.5 5.3 10.8 (5.5) 8.1 5.2
FII 1.3 2.3 (1.0) 1.8 2.0 (0.2) 2.5 3.0
Banks 2.7 1.9 0.8 2.3 1.7 0.6 1.9 2.0
DII ex-banks 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PRO ex-banks 58.0 59.6 (1.6) 58.8 60.9 (2.1) 60.4 60.7
Others 32.5 31.1 1.4 31.9 24.6 7.2 27.1 29.1
Currency Derivates
Corporates 6.9 7.4 (0.5) 7.1 9.7 (2.6) 9.1 7.8
FII 9.3 10.7 (1.4) 10.0 9.3 0.7 9.0 10.0
Banks 4.8 5.2 (0.5) 5.0 6.5 (1.5) 6.2 5.5
DII ex-banks 0.1 0.1 0.0 0.1 0.1 (0.0) 0.1 0.1
PRO ex-banks 48.4 47.4 0.9 47.9 52.3 (4.4) 51.9 50.3
Others 30.6 29.2 1.4 29.9 22.1 7.8 23.8 26.3
Source: NSE. **DII Domestic Institutional Investors, FII Foreign Institutional Investors, PRO Proprietary Taders, Others includes individual investors, HUFs, trusts,
Figure 147: Share of client participation in Interest rate futures of NSE (%)**
Client category May-20 Apr-20 Change FY21TD FY20TD Change FY20 CY20TD
Interest rate futures

Corporates 30.2 27.4 2.8 28.9 20.4 8.5 18.1 21.0
FII 0.3 0.9 (0.7) 0.6 0.9 (0.3) 1.2 0.9
Banks 21.9 22.6 (0.7) 22.2 21.1 1.0 19.7 19.6
DII ex-banks 3.0 3.5 (0.5) 3.2 5.6 (2.4) 4.3 2.7
PRO ex-banks 32.4 34.7 (2.3) 33.4 46.8 (13.3) 51.6 48.5
Others 12.3 10.9 1.4 11.7 5.2 6.5 5.1 7.3
Interest rate options
Corporates 36.1 44.2 (8.0) 40.1 NA NA 25.3 26.6
FII 0.0 0.0 0.0 0.0 NA NA 0.0 0.0
Banks 16.6 26.2 (9.6) 21.4 NA NA 4.1 4.5
DII ex-banks 0.0 0.0 0.0 0.0 NA NA 0.0 0.0
PRO ex-banks 41.7 22.5 19.3 32.1 NA NA 57.7 56.1
Others 5.5 7.1 (1.6) 6.3 NA NA 12.9 12.8
Interest rate derivatives
Corporates 30.3 27.9 2.4 29.2 20.4 8.8 18.3 21.4
FII 0.3 0.9 (0.6) 0.6 0.9 (0.3) 1.2 0.9
Banks 21.7 22.7 (0.9) 22.2 21.1 1.0 19.3 18.4
DII ex-banks 2.9 3.4 (0.5) 3.1 5.6 (2.4) 4.2 2.5
PRO ex-banks 32.7 34.3 (1.6) 33.4 46.8 (13.4) 51.8 49.1
Others 12.1 10.8 1.3 11.5 5.2 6.3 5.3 7.7
96/116
Market Pulse
Asset category-wise open interest (average daily volume)

Figure 148: Average daily volume of open interest in Equity derivatives (million contracts)
Equity Derivatives
FUTSTK 3,111 2,845 9.4 2,981 4,794 (37.8) 4,294 3,756
OPTSTK 1,179 917 28.5 1,052 1,423 (26.1) 1,490 1,405
Equity Derivatives - Index Futures
Bank Nifty 1.5 1.3 20.5 1.4 1.9 (27.6) 1.7 1.4
Nifty 9.6 11.5 (16.9) 10.5 19.6 (46.4) 17.9 13.7
Nifty IT 0.0 0.0 (7.7) 0.0 0.0 (90.7) 0.0 0.0
Equity Derivatives - Index Options
Bank Nifty 12.6 9.3 35.8 11.0 14.6 (24.9) 14.7 13.4
Nifty 93.5 89.1 4.9 91.4 102.0 (10.5) 104.2 102.9
Nifty IT - - NA - 0.0 (100.0) 0.0 -
Source: NSE
Figure 149: Average daily volume of open interest in Currency derivatives (no of contracts)
Category May-20 Apr-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Futures
EURINR 90,610 82,593 9.7 86,716 60,663 42.9 74,622 93,625
EURUSD 1,740 1,155 50.6 1,456 45,166 (96.8) 34,538 4,325
GBPINR 40,977 47,787 (14.3) 44,285 49,092 (9.8) 74,553 72,366
GBPUSD 1,718 1,060 62.1 1,399 4,626 (69.8) 4,877 2,785
JPYINR 36,991 37,312 (0.9) 37,147 32,725 13.5 49,206 42,331
USDINR 2,839,572 4,654,636 (39.0) 3,721,175 2,620,734 42.0 3,123,879 3,957,848
USDJPY 51 57 (11.8) 54 233 (76.9) 297 177
Options
EURINR 206 6 3296.3 109 965 (88.7) 807 1,128
EURUSD 0 0 NA 0 0 NA 0 0
GBPINR 42 0 NA 22 999 (97.8) 1,770 3,122
GBPUSD 0 0 NA 0 0 NA 3 5
JPYINR 2 2 (5.6) 2 58 (97.3) 170 84
USDINR 2,406,997 2,278,731 5.6 2,344,696 2,564,525 (8.6) 2,932,818 2,998,643
Source: NSE
Figure 150: Average daily volume of open interest in Interest rate derivatives II (no of contracts)
Category May-20 Apr-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Interest rate futures
645GS2029 51,816 64,610 (19.8) 58,031 - NA 67,979 82,806
726GS2029 2,626 3,738 (29.7) 3,166 41,046 (92.3) 89,711 19,274
795GS2032 8,500 8,500 0.0 8,500 27,094 (68.6) 24,646 10,763
757GS2033 8,500 8,500 0.0 8,500 - NA 4,525 6,602
Interest rate options
645GS2029 8,414 5,344 57.4 6,923 NA NA 6,093 17830
726GS2029 0 0 NA 0 NA NA 975 1476
Source: NSE
97/116
Market Pulse
Internet-based trading
Internet based trading gained momentum in recent months partly during 60-day
nationwide lockdown while investors and traders were utilising this platform to trade from
their home. Average daily turnover of internet-based trading recorded a significant rise
across all major segments, as can be seen in the following table. Notably, average
turnover of cash market rose by 2.7% to reach Rs129bn dai
turnover of Equity derivatives rose by 7.4% over the month to Rs 267bn daily. Besides,
internet based daily trading increased sharply in both the Currency and interest rate
derivatives segments by 5.8% and 71.3% over the month to reach Rs44.7bn and Rs1.8bn
respectively in terms of premium turnover, even as premium turnover of currency options
and interest rate options declined by 6.1% and 12.6% over the month.
Figure 151: Average daily turnover of internet-based trading (Rs mn)

Segment May-20 Apr-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Cash Market 128,994 125,639 2.7 127,362 106,317 19.8 90,639 96,237
Equity Derivatives* 266,812 248,366 7.4 257,838 235,314 9.6 217,432 225,164
Index Futures 126,723 124,611 1.7 125,696 78,561 60.0 82,859 100,409
Stock Futures 118,625 103,951 14.1 111,486 144,833 (23.0) 121,620 107,829
Index Options 18,504 17,100 8.2 17,821 9,575 86.1 10,875 14,592
Stock Options 2,960 2,703 9.5 2,835 2,346 20.9 2,078 2,333
Currency Derivatives* 44,726 42,261 5.8 43,528 36,142 20.4 31,717 37,831
Currency Futures 44,620 42,149 5.9 43,420 36,037 20.5 31,610 37,713
Currency Options 105 112 (6.1) 108 105 3.1 108 118
Interest Rate Derivatives* 1,821 1,063 71.3 1,453 1,505 (3.5) 1,495 1,180
Interest Rate Futures 1,821 1,063 71.3 1,453 1,505 (3.5) 1,494 1,179
Interest Rate Options 0.3 0.4 (12.6) 0.4 0.0 NA 0.2 0.6
Source: NSE.
Note: Average trading volume is calculated as the average of gross traded value i.e., buy side turnover + sell side turnover.
*Average gross premium turnover is considered in case of futures and options contracts.
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Market Pulse
Record statistics
NSE hits a record turnover in the cash market on May 29th, 2020 to reach Rs835bn per
day partly due to a rise in uncertainty over the outbreak of Covid-19 and its plausible
implications on the economy, which has raised overall volatility in the market since March.
This had also resulted a sharp increase in total trading across other major segments at
NSE, particularly in Index derivatives segment. Index options recorded its highest ever
premium turnover on March 19th, 2020 to reach at Rs146bn per day while Stoc
premium turnover reached at its all-time high of Rs22bn on March 18th, 2020.
Though other major segments have recorded a significant growth in their average
turnover, they did not cross their previous record levels. Notably, Index futures recorded
their highest turnover of Rs860bn on September 20th, 2019 after the Finance Minister
slashed the corporate tax rate from 30% to 22%.
Figure 152: Segment-wise record turnover till May 31st, 2020

Segment Turnover (Rsbn) Trading Date
Cash market 835 29-May-20
Index futures 860 20-Sep-19
Stock futures 1,954 25-Jan-18
Index options (premium) 146 19-Mar-20
Stock options (premium) 22 18-Mar-20

Source: NSE
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Market Pulse
Spatial distribution of trading activities

Region-wise distribution of new investors registered
except in the northern part of India. Over the month total registration rose by 4% to 423
thousand registration compared to 406 thousand over the previous month. However, it
remained stable over the last five months with a monthly CAGR of merely 0.2% from 419
across
regions. Southern part of the country recorded a highest CAGR of 4% over the period,
while total registration remains same in Eastern region. In contrast, there is decline in
total registration in both Western and Northern parts of the country with a CAGR of -2%
and -1%, respectively over the period.
As a result, share of total registration changed across regions over the period. Out of 423
rn parts contributed around
32% each, followed by southern region with 27% registration, while only 9% of total
investors registered from East India.
Figure 153: Region-wise distribution of new investors registered
Region-wise distribution
600
Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20

500
423
393
400
'000
300
200
124 137 135 136
113
98
100
36 37
0
East India North India South India West India Total
Source: NSE.
Note: East India is Mizoram, Odisha, West Bengal, Assam, Manipur, Arunachal Pradesh, Tripura, Nagaland, Meghalaya, Sikkim, Chhattisgarh; West India Is Maharashtra,
Gujarat, Madhya Pradesh, Daman & Diu, Goa, Dadra & Nagar Haveli; North India Is Bihar, Jharkhand, Uttar Pradesh, Uttarakhand, Haryana, Delhi, Punjab, Jammu & Kashmir,
Himachal Pradesh, Chandigarh And Rajasthan; South India Is Telangana, Kerala, Andhra Pradesh, Tamil Nadu, Karnataka, Pondicherry, Lakshadweep And Andaman &
Nicobar.
Data further shows, total registration remains concentrated in few districts. In May,
around 6.8% of all investors are from Delhi region, which is marginally higher than Mumbai
(~6.7%). Among others, 3.3% of all registration over the month happened in Pune,
followed by Bangalore and Surat with 2.7% and 1.4% of total registration respectively.
Besides, a significant number of investors are registered in Hyderabad, Jaipur and Nashik
over the last month.
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Market Pulse
Figure 154: Number of new investors registered in top 10 districts

50
45 Jan-20 Feb-20 Mar-20 Apr-20 May-20

40
35
31 30
29 28
30
'000
25
20
14
15 12
11 11 11
9
10
6 5 6 5 5 5 6 5 5
5 4
0
Mumbai Delhi-NCR Pune Bangalore Surat Hyderabad Nashik K. V. Jaipur Ahmedabad
(MH/TN/RG) Rangareddy
Source: NSE
Note: Top 10 d
101/116
Market Pulse
Region-wise distribution of individual investor turnover in the cash market

Western region contributed largest share over the period in terms of turnover and trade
volumes in the Cash market with around 36.2% of total turnover by retail investors and
around 30.3% of retail turnover and 29.1% of retail volume, followed by the Southern and
Eastern India. Region-wise distribution of total turnover by retail investors in the Cash
market remains somewhat similar over the last six months, as shown in the following
charts.
Figure 155: Region-wise distribution of individual Figure 156: Region-wise distribution of individual
100% 100%
38.7 38.9 39.6 39.3 36.0 36.2
90%
80% 80% 43.2 41.7 41.6 39.3 39.8

43.9
70%
60% 25.5 25.6 60%

24.3 23.6 23.7 24.0
50% 22.6 22.6
21.1 22.0 21.9 20.4
40% 40%
28.6 28.9 28.1 28.4 30.2 30.3
30%
26.8 27.1 27.2 27.5 29.3 29.1
20% 20%
10%
8.4 8.6 8.7 8.3 8.4 8.0 8.9 9.2 9.2 8.2 8.8 8.6
0% 0%
Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20
East India North India South India West India East India North India South India West India
Source: NSE.
Besides, the distributional pattern of total turnover and trade volume across major
districts over the last five months has shown that top 10 districts contributed ~41% of
and Delhi have contributed around 21.6% of total turnover over the month, which is
marginally lower than 21.8% in the previous month, while Bangalore and Ahmedabad
contributed 4.4% and 3.5% respectively, followed by Pune (3.2%) over the month.
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Market Pulse
Figure 157: Top 10 districts based on Cash turnover of individual investors
Jan-20 Feb-20 Mar-20 Apr-20 May-20

16
13.6
14
% of Cash turnover of individual investors
11.6
12
10.0
10 9.3
6
4.4 4.4 4.3
4 3.5 3.2
3.0
2.4 2.5
2.1
1.6 1.5 1.6 1.5 1.5 1.6 1.5
2
0
Mumbai Delhi - NCR Bangalore Ahmedabad Pune Hyderabad Surat Chennai Kolkata Jaipur
(MH/TN/RG)
Source: NSE.
Note: Individual investors inc
Figure 158: Top 10 districts based on individual investors traded

14.0
13.1
Jan-20 Feb-20 Mar-20 Apr-20 May-20
11.9
% of traded volume of individual investors in cash
12.0
10.0
8.4 8.6
8.0
market
6.0
4.8
3.8 3.8 3.6 3.5 3.6
4.0
2.0 1.9 1.7 2.1

1.7 1.6 1.5 1.5 1.4
2.0 1.3
-
Mumbai Delhi - NCR Ahmedabad Bangalore Pune Surat Hyderabad Kolhata Jaipur Chennai
(MH/TN/RG)
Source: NSE
Note: Individual investors include Individual / Prop
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Market Pulse
Investment through mutual funds in India

The overall trend of total investments through mutual funds in India shows that total
number of mutual fund schemes declined significantly over the first half of FY20 before
again reversed with a significant fall in total number of schemes to reach 1,829 by
partly due to weak macroeconomic outlook and a sudden spike in market uncertainty
which has led to a significant fall in market returns as well.
The sudden fall in total number of cases has resulted in an overall decline in the average
AUM of these schemes from Rs28.3trn in
attributed to strengthened risk aversion in the wake of an exponential rise of COVID-19
cases and total number of fatalities in India. The decline in average AUM in March and
April has completely wiped out the growth seen in the previous fiscal year. However, the
schemes, with the average AUM increasing marginally to Rs24trn.
Figure 159: Monthly trend of total schemes and average AUM

AAUM for the month (Rstrn) - RHS No. of Schemes
2,000 30
25
1,950
20
1,900
15
1,850
10
1,800
5
1,750 0
Source: AMFI. *AAUM-Average Asset under Management.
Data further reveals that there were several ups and downs in net investments of mutual
funds over th
which deteriorated
weakened globally due to COVID-19 pandemic. Later, net investment of MFs continued
to rise over the next two months to reach Rs708bn over the month of May as securities
market recovered partially across major economies.
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Market Pulse
Figure 160: Monthly trend of total investment through mutual funds

Fund mobilized during the month (Rsbn)
Repurchase/Redemption during the month (Rsbn)
Net Inflow (+ve)/Outflow (-ve) for the month (Rsbn) - RHS
25,000 2,000
1,500
20,000 1,000
500
15,000
0
(500)
10,000
(1,000)
5,000 (1,500)
(2,000)
0 (2,500)
Source: AMFI.
Monthly trend of total investment remains quite volatile through new MF schemes as well.
Amid an unprecedented coronavirus pandemic, rise in market uncertainty and an
impending global recession, only five new schemes were launched in April and funds
worth Rs2bn got mobilised through these new schemes. This has further declined in May,
with only one scheme getting launched, mobilising just Rs0.2bn.
Figure 161: Monthly trend of total investment through new schemes

Funds mobilized through new schemes (Rsbn) - RHS No. of new Schemes
25 250
20 200
15 150
10 100
5 50
0 0
Source: AMFI.
105/116
Market Pulse
Policy developments
India
Policy measures by the SEBI during the month
May 6th, 2020 Relaxations relating to procedural matters pertaining to Rights issues opening up to July
31st, 2020
1. Failure to dispatch letter of offer, application form and other issue material to shareholders
by the issuer through registered post or speed post or courier services due to prevailing
Covid-19 situation shall not be treated as non-compliance during the said period. The same
may be undertaken by electronic mode as provided in the ICDR Regulations.
2. The issuer may publish the dispatch advertisement in additional newspapers, over and
above those required in Regulation 84, websites of the issuer, registrar, lead manager and
stock exchanges, television, radio, internet etc.
3. SEBI has issued guidelines with respect to credit of rights entitlements to physical
shareholders who have not been able to open demat accounts due to the ongoing Covid-19
lockdown.
4. In order to ensure that all eligible shareholders can apply to rights issue, the issuer shall,
along with lead manager, registrar and other registered intermediaries, institute an optional
mechanism (non-cash mode only) to accept applications instead of the current ASBA facility
mandated in the regulations.
5. The above mechanisms (mentioned in 3 & 4) shall only be an additional option and not a
replacement of the existing process. The mechanisms shall have adequate checks and
balances, online investor help desk and facilitate subscription in efficient manner.
May 12th, 2020 Relaxation in relation to compliance with certain provisions of SEBI LODR
Following MCA circular dated April 8th and 13th, 2020 regarding relaxations for companies,
including conducting Extraordinary General Meeting (EGM) and Annual General Meeting (AGM)
during the calendar year 2020 through Video Conferencing or through other audio-visual means
and dispensing of printing and dispatching of physical annual reports to shareholders, SEBI has
relaxed provisions related to the following in the LODR
1. Sending physical copies of annual reports to shareholders
2. Requirement of proxy for general meetings
3. Requirement of dividend warrants/cheques
4. Publication of advertisements in the newspaper
5. Publishing quarterly consolidated financial results
May 14th, 2020 Relaxation with respect non-compliance with Minimum Public Shareholding (MPS)
requirements
SEBI circular dated October 10th, 2017 lays down procedures to be followed by the recognised
stock exchange/depositories with respect to MPS non-compliant listed entities, their promoters
and directors including levy of fines, freeze of promoter holding etc. SEBI has decided to relax
applicability of the circular for listed entities for whom the deadline to comply with MPS
requirements falls between the period from March 1 st, 2020 to August 31st, 2020. Recognised
stock exchanges are advised not to take any penal action as per the above circular
May 14th, 2020 Relaxations relating to Takeovers and Buy-back procedures
In reference to the Covid-19 lockdown, SEBI has decided to grant one-time relaxations
pertaining to open offers and buy-back tender offers opening up to July 31st, 2020. The
relaxations include:
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Market Pulse
1. The acquirer/company publish the letter of offer and tender form on the websites of the
company, registrar, stock exchanges and the managers to offer
2. The acquirer/company shall undertake adequate steps to reach out to shareholders through
other means such as ordinary post or SMS or audio-visual advertisement etc. containing all
the requisite details
3. The acquirer/company may publish dispatch advertisement in additional newspapers over
and above the ones required as per the regulations.
4. Procedure for inspection of material documents shall be provided electronically by the
acquirer/company and the manager to offer.
May 15th, 2020 Relaxation in timelines for compliance with regulatory requirements
In view of the lockdown imposed by the Government due to the Covid-19 situation, SEBI has
decided to extend the timelines for certain regulatory requirement under circular nos.
SEBI/HO/MIRSD/DOP/CIR/P/2020/61, SEBI/HO/MIRSD/DOP/CIR/P/2020/62 and
SEBI/HO/MIRSD/DOP/CIR/P/2020/68. All other conditions specified in the above circulars shall
continue to remain applicable.
May 20th, 2020 Advisory on disclosure of material impact of COVID-19 pandemic on listed entities
Listed entities are required to disclose material events to the exchanges that affect their
operations. In this respect some listed entities have made disclosures regarding shutdown of
operations owing to the lockdown measures resulting from the Covid-19 pandemic. A few
entities have also disclosed measures taken by them towards sanitisation and safety. Under the
advisory issued by SEBI, listed entities are encouraged to evaluate the impact of the Covid-19
pandemic on their businesses, performance and financials both quantitatively and qualitatively
to the extent possible and disclose this information to all investors so that they have access to
timely, adequate and updated information.
May 20th, 2020 Listing of Mutual Fund schemes that are in the process of winding up
Under the current Mutual Fund regulations, all closed-ended schemes and units of segregated
portfolio are required to be listed on recognised stock exchanges. Schemes that are in the
process of winding up before they cease to exit can be listed and traded on a recognised stock
exchange. The units of such listed schemes shall be in demat form initially. AMCs shall enable
transfer of units that are held in the form of Statement of Account (SoA) and unit certificates.
Stock exchanges in consultation with SEBI are required to develop detailed modalities or trading
and settlement of units of MF schemes that are under the process of winding up. The AMC, its
sponsor, employees of AMC and Trustee shall not be permitted to buy or sell units of such
schemes that are under the process of being wound up.
May 21st, 2020 Review of post-default curing period for Credit Rating Agencies (CRAs)
According to the existing provisions, after a company corrected the default, the rating could not
be upgraded and continued to be under sub-investment grade due to post-default curing period
of 90 days for the rating to move from default to speculative grade and 365 days from default to
investment grade. Considering the current situation due to Covid-19 and the possibility that
default cases may increase, SEBI has decided to revise the policy. CRAs may deviate from the
said period of 90 days on a case to case basis, subject to the CRAs framing a detailed policy in
this regard. Cases of deviations from stipulated 90 days, if any, shall be placed before the Ratings
Sub-Committee of the board of the CRA, on a half yearly basis, along with the rationale for such
deviation.
May 25th, 2020 Extension of implementation of c
/ Re-
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Market Pulse
In wake of the Covid-19 situation, the date of implementation of the said circular has been
extended from June 1st, 2020 to August 1st, 2020. Accordingly, the trading member (TM)/clearing
member (CM) shall be required to close all existing demat accounts tagg
st
, 2020. However, provisions regarding holding of Power of
Attorney by TM/CM not to be considered as equivalent to the collection of margin by TM/CM in
respect of securities held in the demat account of the client, shall be applicable from June 1st,
2020.
Global
SEC provides temporary, conditional relief to allow small businesses to pursue
expedited crowdfunding offerings23 (SEC, May 4th, 2020)
SEC has announced to provide temporary, conditional relief for established smaller,
previously established businesses directly or indirectly affected by COVID-19 that may
look to meet their urgent funding needs through a Regulation Crowdfunding offering. This
will expedite the offering process for eligible companies by providing relief from certain
rules with respect to the timing of a company's offering and the financial statements
required. A company must meet enhanced eligibility requirements and provide clear,
prominent disclosure to investors about its reliance on the relief.
SEC adopts amendments to improve financial disclosures about acquisitions and

dispositions of businesses24 (SEC, May 21st, 2020)
The SEC has voted to adopt amendments to its rules and forms to improve for investors
the financial information about acquired or disposed businesses, facilitate more timely
access to capital, and reduce the complexity and costs to prepare the disclosure. The
amendments will require the financial statements of the acquired business to cover no
more than the two most recent fiscal years. The SEC also amended the significance tests
in t -02(w), Securities Act Rule 405, and
Exchange Act Rule 12b-2 to improve their application and to assist registrants in making
more meaningful determinations of whether a subsidiary or an acquired or disposed
business is significant.
23
https://www.sec.gov/news/press-release/2020-101
24
https://www.sec.gov/news/press-release/2020-118
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Market Pulse
Comparison of trading activities across major exchanges globally

In this edition, we have analysed the trading pattern in the securities market in different segments across exchanges
globally. The analysis uses data from W -
total of 97 exchanges; where 55 from the EMEA region, 24 from Asia-Pacific and the rest from the Americas region. The
segments across exchanges based on domestic market
capitalisation and its trading activity in the cash/spot markets and different derivatives markets Equity, Index
derivatives and Currency segments. Key takeaways of the analysis are:
• NSE is the 14th largest exchange globally, based on domestic market

capitalisation (DMC):
unprecedented coronavirus pandemic. Among Indian stock exchanges, BSE held

12th
globally with US$28trn, followed by Nasdaq-US and Japan stock exchange. Among
others, Shanghai, Euronext, Hong Kong and Euronext are few more leading
exchanges worldwide.
Recently, Saudi Stock Exchange (Tadawul) became one of the largest exchanges
listing of the oil company Saudi Aramco gest

IPO. Many top exchanges recorded a sharp fall in DMC on YoY basis amid ongoing
global slowdown owing to Covid-19. However, NYSE and Nasdaq US recorded a
sudden spike in their market cap with a growth of 25% and 10% respectively on
YoY basis, while Indian exchanges, LSE group, Euronext registered sharp fall in
their respective market caps. Besides, Hong Kong and Shenzhen stock exchanges
maintained 3% growth in their market cap each.
• In the Cash market, NSE gained three positions to become the second largest
exchange globally: In Apr NSE became second largest exchange globally in
terms of number of trades in the Cash market (vs. fifth in the previous month), while
Shanghai Stock Exchange (SSE) slipped to fifth over the month. However, Shenzhen
Stock Exchange (SZSE) still maintains its top position globally with 526mn trades
over the month, even as it recorded 23% fall in the number of trades on MoM basis.
All major exchanges recorded a sharp decline in their trading volumes except Korea
Stock Exchange. Data also reveals the volatility of total trades has increased
significantly across all exchanges particularly over the last four months.
• NSE retained its top position in equity index options with ~70% of trade share
x options market recorded a sharp
the market over the last two years in terms of total number of contracts traded in
the segment. Other exchanges contributes a minor portion in the market globally
over the last two years, while Korea Stock Exchange and CBOE Global hold second
and third positions with merely 9% and 6% market share respectively, followed by
Deutsche Boerse AG.
• NSE holds fifth position in stock options: Distibution of total trade volume is quite
diverse across exchnages for Stock options vs. Stock futures. In stock options,
Nasdaq-
CBOE Global where 88m contracts were treaded over the month. B3 - Brasil Bolsa
109/116
Market Pulse
Balcão maintained its third position with 66m contracts traded over the month,
while NSE ranked fifth with 12.6m contract trade over the month.
• NSE became the third largest exchange in the Stock futures segment: Korea
Stock Exchange topped in the stock futures segment over the last two years in
terms of total number of contracts traded, followed by Borsa Istanbul Exchange,
NSE and Moscow Stock Excnange. NSE became third largest exchnage globally in
terms of total number of contracts trades in stock futures with 19.5m contracts
• in the Equity index futures

th
segment in terms of total number of contracts traded: B3 - Brasil Bolsa Balcão

retains top position in the Equity index futures market over the last two years,
barring few months in 2018 in terms of number of contracts traded. B3 - Brasil
share in Apr e previous month. Among others, CME group holds

second position with 14% market share, followed by Deutsche Boerse (6%) and
as it recorded a sharp fall in the trading volume.
• NSE holds top position in the currency options market: NSE topped in the
Currency options with 63% contracts traded in April; however, the exchange has
lost its top position in Futures to Moscow Stock Exchange since February. Among
other exchanges in India, BSE also contributed significant share in the global
market. It retained second position in Currency options and fourth position in
Currency futures with 26% and 9% market shares respectively.
Figure 162: Market Cap and number of trades in different products of top ranked exchanges (Ap -Ap )*
a. Domestic market capitalization (US$bn)* b. Number of trades - Cash market (mn)
800
NYSE SZSE NSE
KRX CBOE Global
Nasdaq - US
700 SSE Nasdaq - US
JPX
SSE
600
HKEX
Euronext
500
SZSE
LSE Group
Apr'20 Apr'19 Apr'18 400
Tadawul
TMX Group
300
DBAG
BSE
200
SIX
NSE
100
0 5,000 10,000 15,000 20,000 25,000 30,000 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20
110/116
Market Pulse
c. Number of contracts traded - Stock futures (mn) d. Number of contracts traded - Stock options (mn)
160
Nasdaq - US Cboe Global Markets
KRX BIST NSE MOEX DBAG B3 - Brasil Bolsa Balcão MIAX
140 NSE DBAG
120 HKEX
120
100 90
80
60
60
40
30
20
0 0
Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20
e. Number of contracts traded - Stock index futures f. Number of contracts traded - Stock index options
(mn) (mn)
B3 - Brasil Bolsa Balcão CME Group NSE KRX CBOE DBAG TFE
450 525
DBAG JPX
400 MOEX SGX
450
KRX NSE
350
375
300
300
250
200 225
150
150
100
75
50
0
0
Apr-18 Oct-18 Apr-19 Oct-19 Apr-20
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Market Pulse
g. Number of contracts traded - Currency futures (mn) h. Number of contracts traded - Currency options
(mn)
MOEX B3 - Brasil Bolsa Balcão NSE BSE JSE MOEX TASE

NSE BSE
120 100
CME Group
100
80
80
60
60
40
40
20
20
0
0
Source: WFE monthly statistics.
Note: *ASX - Australian Securities Exchange, BIST - Borsa Istanbul, BME - Spanish Exchanges, BSE - BSE India Limited, HKEX - Hong Kong Exchanges and Clearing, ISE -
International Securities Exchange, JPX - Japan Exchange Group Inc., JSE - Johannesburg Stock Exchange, KRX - Korea Exchange, LSE London Stock Exchange, MOEX -
Moscow Exchange, NSE - National Stock Exchange of India Ltd., NYSE New York Stock Exchange, SGX - Singapore Exchange, SSE - Shanghai Stock Exchange, SZSE -
Shenzhen Stock Exchange, TMX TMX Group, TSE - Tehran Stock Exchange, TFE - Taiwan Futures Exchange, Tadawul - Saudi Stock Exchange (Tadawul), TASE - Tel-Aviv
Stock Exchange, MIAX - Miami International Securities Exchange, DBAG - Deutsche Boerse AG.
Only WFE member exchanges are included in the analysis.
112/116
Market Pulse
Economic calendar for major countries (July 2020)

Reuters Prior
Date Country Indicator Name Period Unit
Poll Period
1 Jul 2020 China (Mainland) Caixin Mfg PMI Final Jun 50.7 Index (diffusion)
1 Jul 2020 India IHS Markit Mfg PMI Jun 30.8 Index (diffusion)
1 Jul 2020 Russia Markit Mfg PMI Jun 36.2 Index (diffusion)
1 Jul 2020 Euro Zone Markit Mfg Final PMI Jun 46.9 Index (diffusion)
1 Jul 2020 United Kingdom Markit/CIPS Mfg PMI Final Jun 50.1 Index (diffusion)
1 Jul 2020 United States Markit Mfg PMI Final Jun 49.6 Index (diffusion)
1 Jul 2020 United States ISM Manufacturing PMI Jun 47.6 43.1 Index
2 Jul 2020 Euro Zone Unemployment Rate May 7.3 %
2 Jul 2020 United States Non-Farm Payrolls Jun 2,509k Person
2 Jul 2020 United States Unemployment Rate Jun 12.2 13.3 %
2 Jul 2020 United States International Trade $ May -49.4B USD
2 Jul 2020 United States Factory Orders MM May 6.4 -13.0 Percent
3 Jul 2020 Japan Services PMI Jun 26.5 Index (diffusion)
3 Jul 2020 China (Mainland) Caixin Services PMI Jun 55.0 Index (diffusion)
3 Jul 2020 India IHS Markit Svcs PMI Jun 12.6 Index (diffusion)
3 Jul 2020 Euro Zone Markit Serv Final PMI Jun 47.3 Index (diffusion)
9 Jul 2020 China (Mainland) CPI YY Jun 2.4 %
10 Jul 2020 India Industrial Output YY May 55.5 %
10 Jul 2020 India Imports - USD Jun 22.2B USD
10 Jul 2020 India Exports - USD Jun 19.05B USD
13 Jul 2020 India CPI Inflation YY Jun 5.9 %
14 Jul 2020 United Kingdom GDP Estimate YY May -24.5 %
14 Jul 2020 United Kingdom Industrial Output YY May -24.4 %
14 Jul 2020 United Kingdom Manufacturing Output MM May -24.3 %
14 Jul 2020 United Kingdom Manufacturing Output YY May -28.5 %
14 Jul 2020 United Kingdom ILO Unemployment Rate May 3.9 %
14 Jul 2020 Euro Zone Industrial Production YY May -28.0 %
14 Jul 2020 United States CPI MM, SA Jun -0.1 %
14 Jul 2020 China (Mainland) Exports YY Jun -3.3 %
14 Jul 2020 China (Mainland) Imports YY Jun -16.7 %
15 Jul 2020 United Kingdom CPI YY Jun 0.5 %
15 Jul 2020 United States Industrial Production YY Jun -15.3 %
16 Jul 2020 China (Mainland) Industrial Output YY Jun 4.4 %
16 Jul 2020 China (Mainland) GDP YY Q2 -6.8 %
16 Jul 2020 Euro Zone ECB Refinancing Rate Jul 0.0 %
16 Jul 2020 Euro Zone ECB Deposit Rate Jul -0.5 %
17 Jul 2020 Euro Zone HICP Final MM Jun -0.1 %
20 Jul 2020 Japan Exports YY Jun -28.3 %
20 Jul 2020 Japan Imports YY Jun -26.2 %
20 Jul 2020 Russia Unemployment Rate Jun 6.1 %
21 Jul 2020 Japan CPI, Overall Nationwide Jun 0.1 %
30 Jul 2020 Euro Zone Unemployment Rate Jun %
30 Jul 2020 United States GDP Advance Q2 %
31 Jul 2020 Euro Zone GDP Flash Prelim YY Q2 %
31 Jul 2020 India Infrastructure Output YY Jun %
Source: Refinitiv Datastream
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Market Pulse
Annual Macro Snapshot

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
National income
GDP (Current) (Rs trn) 76.3 87.4 99.4 112.3 124.7 137.7 153.9 171.0 189.7 203.4
GDP (Current) Growth (%) 19.9 14.4 13.8 13.0 11.0 10.5 11.8 11.1 11.0 7.2
GDP (Constant) Growth (%) 8.5 5.2 5.5 6.4 7.4 8.0 8.3 7.0 6.1 4.2
GVA (Constant) Growth (%) 8.0 5.2 5.4 6.1 7.2 8.0 8.0 6.6 6.0 3.9
Agriculture growth (%) 8.8 6.4 1.5 5.6 -0.2 0.6 6.8 5.9 2.4 4.0
Industry growth (%) 7.9 3.6 3.3 3.8 7.0 9.6 7.7 6.3 4.9 0.9
Services growth (%) 7.8 5.9 8.3 7.7 9.8 9.4 8.5 6.9 7.7 5.5
Per Capita GDP (Curr) (Rs) 64,372 71,609 80,518 89,796 98,405 1,07,341 1,18,489 1,30,124 1,42,963 1,51,677
Prices
CPI Inflation (%) 10.1 9.3 5.9 4.9 4.5 3.6 3.4 4.8
CPI Rural (%) 10.7 9.6 6.1 5.5 5.0 3.6 3.0 4.2
CPI Urban (%) 9.5 9.1 5.4 4.1 4.0 3.6 3.9 5.4
WPI Inflation (%) 9.5 8.9 6.9 5.2 1.2 -3.7 1.7 3.0 4.3 1.7
Primary articles (%) 17.9 9.8 11.4 9.9 2.2 -0.4 3.5 1.3 2.8 6.8
Fuel & power (%) 12.3 13.9 7.1 7.1 -6.1 -19.7 -0.2 8.1 11.6 -1.8
Manuf. prods (%) 5.7 7.3 5.3 3.0 2.5 -1.8 1.4 2.8 3.6 0.3
Money, banking & interest rates
Money supply (M3) growth (%) 16.1 13.5 13.6 13.4 10.9 10.1 10.1 9.2 10.5 8.9
Aggregate deposit growth (%) 15.9 13.5 14.2 14.1 10.7 9.3 15.3 6.2 10.0 6.0
Bank credit growth (%) 21.5 17.0 14.1 13.9 9.0 10.9 8.2 10.0 13.3 3.4
Non-food credit growth (%) 21.3 16.8 14.0 14.2 9.3 10.9 9.0 10.2 13.4 3.2
Cash Reserve Ratio (%, eop) 6.0 4.8 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
Bank Rate (%, eop) 6.00 9.50 8.50 9.00 8.50 7.75 6.75 6.25 6.50 4.65
Public Finance
GOI rev. receipts growth (%) 37.6 -4.7 17.0 15.4 8.5 8.5 15.0 4.4 8.2 19.1
Tax receipts growth (%) 27.0 12.1 16.5 9.9 9.3 16.9 17.9 11.8 8.4 4.0
GOI Expenditure growth (%) 16.9 8.9 8.1 10.6 6.7 7.6 10.3 8.4 8.1 16.6
Subsidies growth (%) 22.7 25.7 18.0 -1.0 1.4 2.3 -11.1 -4.4 -0.7 18.2
Interest expense growth (%) 9.8 16.7 14.7 19.5 7.5 9.7 8.8 10.0 10.2 7.3
External transactions
Exports growth (%) 40.7 21.9 -1.8 4.9 -1.5 -15.5 5.1 10.1 8.8 -5.2
POL exports growth (%) 47.8 34.9 8.7 4.3 -10.7 -46.1 3.4 18.8 24.5 -11.8
Non-POL exports (%) 39.3 19.3 -4.2 5.1 0.8 -8.6 5.4 9.0 6.6 -4.1
Imports growth (%) 28.5 32.4 0.2 -8.4 -0.3 -15.0 1.0 21.2 10.5 -8.0
POL exports growth (%) 21.9 46.4 5.7 0.7 -16.4 -40.1 5.3 25.0 29.9 -7.5
Non-POL exports growth (%) 31.3 26.8 -2.3 -13.0 9.1 -3.8 -0.2 20.1 4.5 -8.1
Net FDI (US$bn) 11.3 21.9 19.8 21.6 31.3 36.0 35.6 30.3 30.7 38.4
Net FII (US$bn) 30.3 17.2 26.9 4.8 42.2 -4.1 7.6 22.1 -0.6 -2.7
Trade Balance DGCI&S (US$bn) -118.6 -183.4 -190.1 -134.0 -137.5 -118.2 -108.5 -162.1 -184.1 -160.5
Current Acc. Balance (US$bn) -78.2 -87.8 -32.4 -26.7 -22.1 -15.2 -48.7 -57.2
Forex Reserves (US$bn) 304.8 294.4 292.6 303.7 341.4 355.6 370.0 424.4 411.9 475.6
Exchange rate (USDINR) 45.57 47.95 54.45 60.50 61.15 65.46 67.09 64.45 69.89 70.88
114/116
Market Pulse
Our latest reports on the markets and the economy
Sr. No. Date Report

1. 16-Jun-20 Macro Review: India monthly trade
2. 15-Jun-20 Macro Review: IIP and Inflation
3. 04-Jun-20 Impact of COVID-19 on Agriculture: NSE webinar key takeaways
4. 01-Jun-20 Macro Review: Q4FY20 GDP
5. 31-May-20 Market Pulse May 2020: A monthly review of Indian economy and markets
6. 29-May-20 India Ownership Tracker March 2020
7. 22-May-20 Macro: Review: RBI Monetary Policy

8. 17-May-20 Macro Review: India COVID-19 Stimulus Package (Fifth Tranche)
9. 16-May-20 Macro Review: India COVID-19 Stimulus Package (Fourth Tranche)
10. 15-May-20 Macro Review: India COVID-19 Stimulus Package (Third Tranche)
11. 14-May-20 Macro Review: India COVID-19 Stimulus Package (Second Tranche)
12. 13-May-20 Macro Review: India COVID-19 Stimulus Package (First Tranche)
13. 13-May-20 Macro Review: IIP and Inflation
14. 30-Apr-20 Market Pulse April 2020: A monthly review of Indian economy and markets
15. 27-Apr-20 COVID-19: India Macro and Market Outlook
16. 17-Apr-20 RBI response to COVID-19

17. 16-Apr-20 Macro Review: India monthly trade
18. 14-Apr-20 Macro Review: IIP and Inflation
19. 14-Apr-20 Key takeaways from RBI Monetary Policy Report

20. 27-Mar-20 India policy response to COVID-19
21. 20-Mar-20 Market Pulse March 2020: A monthly review of Indian economy and markets
22. 16-Mar-20 Macro Review: Q3FY20 Balance of Payments
23. 11-Mar-20 A deep dive into Investment in India
24. 09-Mar-20 India Ownership Tracker December 2019

25. 02-Mar-20 Macro Review: Q3FY20 GDP
26. 29-Feb-20 Quarterly Briefing: Takeover and Corporate Governance in India

27. 20-Feb-20 Market Pulse February 2020: A monthly review of Indian economy and markets
28. 06-Feb-20 Macro Review: RBI Monetary Policy

29. 01-Feb-20 Decoding the Union Budget FY2020-21
30. 20-Jan-20 Market Pulse January 2020: A monthly review of Indian economy and markets
31. 08-Jan-20 Macro Review: FY20 GDP Advance Estimates
32. 01-Jan-20 Macro Review: Q2FY20 Balance of Payments
115/116
Market Pulse
Economic Policy & Research
Tirthankar Patnaik, PhD tpatnaik@nse.co.in +91-22-26598149
Prerna Singhvi, CFA psinghvi@nse.co.in +91-22-26598316
Runu Bhakta, PhD rbhakta@nse.co.in +91-22-26598163
Ashiana Salian asalian@nse.co.in +91-22-26598163
We gratefully acknowledge the valuable contribution of Sayonee Baliarsingh, Rhythm Ahuja, Pravalika Rangisetti and
Akash Sherry to this report.
Marketing
Rajesh Jaiswal rjaiswal@nse.co.in +91-22-26598380
Disclaimer
This report is intended solely for information purposes. This report is under no circumstances intended to be used or
considered as financial or investment advice, a recommendation or an offer to sell, or a solicitation of any offer to buy
any securities or other form of financial asset. The Report has been prepared on best effort basis, relying upon information
obtained from various sources, but we do not guarantee the completeness, accuracy, timeliness or projections of future
conditions provided herein from the use of the said information. In no event, NSE, or any of its officers, directors,
employees, affiliates or other agents are responsible for any loss or damage arising out of this report. All investments are
subject to risk, which should be considered prior to making any investment decisions. Consult your personal investment
advisers before making an investment decision.
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June 2020

NATIONAL STOCK EXCHANGE OF INDIA LIMITED

Published by Economic Policy and Research, National Stock Exchange of

Copyright © 2020 by National Stock Exchange of India Ltd. (NSE)

Any/all Intellectual Property rights in this report including without

Asset category-wise open interest (average daily volume) ............................................................................ 97

sovereign rating by one notch to Baa3 thus

Dr. Tirthankar Patnaik

Story of the month

Long-term trend in Indian equity markets

Source: CMIE Prowess, NSE

Concentration in Indian equity market

3000 Nifty 500 Index Listed universe Nifty 50 Index

Rise in concentration in the last three years:

Source: CMIE Prowess, NSE

Average = 25% 25%

Source: CMIE Prowess, NSE

Sector-wise analysis of size and trading activity

Figure 10: Sector-wise composition of listed universe in terms of market capitalisation

Source: CMIE Prowess, NSE

Figure 11: Sector-wise share in trading activity in listed universe

Figure 12: Sector composition of Nifty 50 universe in terms of market capitalisation

Figure 13: Sector-wise share in trading activity in Nifty 50 universe

Source: CMIE Prowess, NSE

Nifty 500 universe

Figure 15: Sector-wise trading activity in Nifty 500 universe

Chart of the month

Google COVID-19 Community Mobility Trends

Source: Google COVID-19 Community Mobility Reports, NSE.

Source: Google COVID-19 Community Mobility Reports, NSE.

Source: Google COVID-19 Community Mobility Reports, NSE.

Source: Google COVID-19 Community Mobility Reports, NSE.

-10 Lockdown 3.0

State-wise mobility trends point to a stricter adherence to the lockdown restrictions by

Apple Mobility Trends

Source: Apple mobility data, NSE

Source: Apple mobility data, NSE

Figure 31: Consumer price inflation in May 2020 (%YoY)

Figure 32: India inflation vs. interest rates

Source: Refinitiv Datastream, NSE

Figure 33: India consumer price inflation (CPI)

Figure 34: Category-wise contribution to India consumer price inflation (CPI)

Source: Refinitiv Datastream, NSE

Source: Refinitiv Datastream, NSE

Figure 37: India wholesale price inflation (WPI)

Source: Refinitiv Datastream, NSE

Industrial production contracts sharply in April

Figure 38: India industrial production for April 2020 (%YoY)

Sector- Mining 14.4 (27.4) (1.4) 5.1 1.6 2.8

Figure 39: India industrial production (3MMA)

Source: Refinitiv Datastream, NSE

Figure 40: Long-term industrial production trend (12MMA)

Source: Refinitiv Datastream, NSE

Figure 41: India industrial production use-based goods (3MMA)

Source: Refinitiv Datastream, NSE

Figure 42: India eight-core sector growth (3MMA)

Source: Refinitiv Datastream, NSE

Manufacturing and Services PMI

Source: CMIE Economic Outlook, NSE

Lockdown continues to hurt imports; exports witness a modest recovery

▪ Unlike exports, imports

▪ resulting in trade deficit contracting to more than 11-year lows: A sharper

Figure 44: India monthly trade balance for May 2020