NSEPulse May 2020 - 1 PDF

May 2020
Volume 2, Issue 5
Market Pulse
A monthly review of Indian markets
Market Pulse
May 2020 | Vol. 2, Issue 5
Indian
A Monthly Review
Economy and
Markets
Volume 2, Issue 5
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
Who owns India Inc.? FII ownership shrinks sharply; DMF share rises further ...................................... 3
Chart of the month ........................................................................................................................................................ 21
Coronavirus pandemic: Exponential spread, but fatalities in check ............................................................ 21
Market Round up ........................................................................................................................................................... 30
Macro economy .............................................................................................................................................................. 33
Atmanirbhar Package: Empowerment over entitlement and near-term spending................................... 33
RBI cuts policy rates by a further 40bps; eases liquidity and financial stress .......................................... 42
Food inflation rises in April amid supply bottlenecks ...................................................................................... 47
Industrial production contracts sharply in March ............................................................................................. 52
Trade deficit contracts to near four-year lows, reflecting the severity of lockdown impact.................. 57
FY20 fisc overshoots RE by 80bps to 4.6%; revenue receipts in April fall sharply................................... 61
Q4FY20 GDP growth at a 11-year low of 3.1%; FY20 at 4.2%, revising FY21E to -6.0% ....................... 66
Insights ............................................................................................................................................................................ 76
Invited article: Earning trust through long-term integrated thinking .......................................................... 76
The impact of COVID-19 on the agricultural economy of India and the way ahead ................................. 83
Did restrictions on short-selling decline risks in the equity market? ........................................................... 86
Market performance across asset classes .............................................................................................................. 91
Market Statistics: Primary market ............................................................................................................................ 96
Funds mobilisation in the primary market .......................................................................................................... 96
New listings in the month ........................................................................................................................................ 97
Market Statistics: Secondary market ....................................................................................................................... 98
Institutional flows across market segments ...................................................................................................... 98
Segment-wise total turnover................................................................................................................................ 101
Average daily turnover ........................................................................................................................................... 101
Turnover of top traded symbols during the month.......................................................................................... 104
................................................................................................ 105
Client category-wise participation in total turnover ...................................................................................... 111
Region-wise distribution of new investors registered ................................................................................... 116
Region-wise distribution of individual investor turnover in the cash market .......................................... 118
Asset category-wise open interest (average daily volume) .......................................................................... 120
Market Pulse
Internet-based trading .......................................................................................................................................... 121

Investment through mutual funds in India ....................................................................................................... 122
Policy developments .................................................................................................................................................. 124
Comparison of trading activities across major exchanges globally ................................................................ 126
Economic calendar for major countries (June 2020) .......................................................................................... 130
Annual Macro Snapshot ............................................................................................................................................. 131
Market Pulse
Executive Summary
In the wake of the coronavirus: Markets and Macro stall; Slowdown here to stay
The specter of the COVID-19 pandemic continues to haunt us three months after initial worries surfaced in China, and
then spread across the world. At the risk of sounding repetitious, one must record that the fight against the novel
Coronavirus continues for now. As the number of cases continues to rise, the economic consequences of lockdown
restrictions force a rethink on the way forward, with substantial relaxation across the country on various economic
activities, like domestic flights, railways and e-commerce, to name a few, with more on the cards. Lots to read in the
Macro section this month, including revised expectations of FY21 growth, in the wake of new GDP data. The econ
downward trajectory is here to stay for a while.
Our Chart of the Month showcases some of the salient features of the pandemic across Indian states. Indian markets
have followed global peers in April on the hope trade (the S&P 500 rising 12.5% in the best monthly rally since 1987),
but the rally fizzled as the number of infections continued to rise, concentrating in major urban areas with a
disproportionate impact on output. The benchmark Nifty 50 and Nifty 500 Index rallied by 14.7% and 14.5%
respectively in the month of April, followed by a soft May, down 2.8% to 9580.
Fixed income markets rallied as global central banks stepped up policy measures through rate cuts and asset purchasing
programs to cushion the economic shock from the coronavirus pandemic. The Government and RBI announced a slew
of policy measures amounting to Rs20trn or 10% of GDP to cushion the economic shock from the pandemic. Excess
systemic liquidity and reverse repo rate cut brought down yield across various tenors. Indian Rupee recovered from its
all-time low of 77 against the dollar on April 21st to end the month at 75.1, as RBI intervened by selling dollars. The
Indian rupee has fallen 6.1% since the beginning of the year amid heavy FII selling in equity as well as debt markets.
Our story of the month features quarterly shareholding in the Indian listed corporate universe. Reminiscent of similar
events before, any significant move in markets reflects in ownership shifting across major institutional groups. March
2020 saw the steepest sequential fall in FPI on the back of the record outflows in the quarter, with the part of the space
ceded taken up by domestic investors. Mutual funds ownership reached a record high on the back of SIP inflows (that
eventually subsided in April). The quarter also saw a rising concentration of ownership into larger companies in a risk-
off environment. Foreign institutional selling in equities was the highest ever in a month in March at US$16bn but has
abated since then with April (+US$904m) and May (+US$1.7bn) seeing modest inflows. It has been a different story in
debt, however, with selling resuming in May (-US$3.2bn) after some positive inflows in April (+US$1.7bn).
-
reliant India) in a mix of measures that could broadly be categorized into fiscal spend, monetary measures and long-
term reforms, adding up to ~10% of GDP. Five tranches announced over an equal number of days focused on all crucial
sectors and segments of the economy including MSMEs, Power, Agriculture, Coal, Defence, Civil
Aviation and Healthcare, to name a few. Besides actual fiscal outgo on higher MGNREGS spending, extended EPF
contribution and food grain distribution amongst others, the package proposed a series of structural changes, including
amendments to the Essential Commodities Act and the APMC structure in Agriculture, measures to enhance ease of
doing business, opening up of notified strategic sectors to private companies and privatisation of PSEs in non-strategic
sectors and modifications to labour laws.
Given truly tight fiscal conditions (FY20 fiscal deficit has been revised to 4.59% from the earlier 3.8% of GDP, as we
shall see in the Macro section), much of the government's support has been through its credit line, in the form of
guarantees. Overall, the policy strategy has favoured empowerment of various segments across multiple sectors over
entitlements and near-term spending. Such an approach may be driven by fiscal constraints and its impact may be low
in the short-term but would be significant in the long-term if carried out in a time-bound manner.
lowered policy rates even further with another 40bps cut in the overnight repo rate to 4.0% (with
commensurate cuts on the reverse repo, and the bank/MSF rates), anticipating weaker economic conditions ahead in
FY21, but stopped short of providing an estimate of GDP growth, or headline inflation. The extended nature of the
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Market Pulse
lockdown means that initial estimates of national income for FY21 (Our estimate at 0.8%) is now revised lower to -6.0%,
the lowest India has seen since 1979. While the 4th quarter (FY20) numbers (At 3.1%, the lowest in over four years,
taking the FY20 GDP growth figure to 4.2% provide some guidance on the slowdown both pre- and
during COVID-19 the significant revisions to figures of earlier quarters point are confusing. Amidst the gloom, Agri
growth at 5.9% stood out.
To understand this sector better, we hosted a webinar on May 27th, featuring an eminent panel of experts consisting of
Prof. Ashok Gulati, the Infosys Chair Professor for Agriculture at ICRIER, Dharmakirti Joshi, the Chief Economist at
CRISIL and Simon Wiebusch, the Chief Operating Officer for the Crop Science Division of Bayer in India, Bangladesh and
Sri Lanka. We summarize key takeaways from the discussion in this report.
Sharp movements in markets usually attract regulatory action that takes the form of raising margin requirements, a ban
on short-selling, or outright restrictions on trading in the form of reduced market timings. This month we feature
an interesting paper (in our Insights section) by the World Federation of Exchanges that takes a hard look at the
consequences of a ban on short-selling across multiple markets across the world. The authors examine to the extent to
which such bans meet the policy objectives of lower volatility, and find limited justification posed by empirical evidence.
Our invited article this month from the Arguden Academy features a truly germane topic of interest these days in the
field of corporate governance, the loss of and therefore the need to recognize importance of trust in field of finance in
general and in fund management in particular. Rising awareness about conservation and use of limited resources poses
increased responsibility on investors, fund managers for stewardship of sustainable action.
Our Market Pulse report last month had expressed hope that India had managed to avoid the worst of the outbreak thus
far, with ~30,000 cases and ~1000 dead. A month later compels us to make a more sober assessment, as the number
of affected cases and the number of lives lost have both risen 5x, with India well and truly in the top 10 most affected
countries globally. The total number of affected cases globally has risen from 3m in the same period to over
5.6m. However, many countries across the world have seen the peak of the outbreak and the number of recoveries
covery rate at 40%+ should also rise substantially in the next few weeks, going by global
evidence.
We hope you find this issue of the Market Pulse 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

Who owns India Inc.? FII ownership shrinks sharply; DMF share rises further 1
In this edition of 2
, we extend our analysis of ownership trends and patterns in Indian
companies to include the data available for the quarter ending Mach 2020. We note 1) A contraction in the Government
ownership to all-time low levels, reflecting efforts to expand public ownership and garner higher revenues; 2) An
increase in private promoter ownership amidst a sharp market sell-off in the March quarter; 3) The steepest sequential
(QoQ) drop in FII3 (foreign institutional investors) ownership since 2001, reflecting the record high FII outflows during
the quarter; 4) A rise in DMF (domestic mutual funds) ownership for yet another quarter, touching new record high,
thanks to sustained SIP inflows, even as other domestic institutional investors remained on the side-lines; 5) FIIs
maintained their out-sized bet on Financials4 despite a drop in portfolio allocation to the sector and turned incrementally
cautious on Consumer Staples; 6) DMFs increased their underweight 5 (UW) position on Consumer Staples and IT, but
remained positive on the investment theme with a strong overweight (OW) position on Industrials; 7) Incrementally
higher concentration of institutional money in larger companies, reflecting a heightened risk-off environment.
▪ Private promoters raise stake amid market sell-off; Government Who owns India Inc.? NSE-listed in
share declines to all-time low levels: Promoter ownership rose Retail, Others, Pvt.
meaningfully in the March quarter as a sharp equity market sell-off Banks, FIs & 8.4 6.0 promoters,
Insurance,
provided an opportunity to promoters to increase their stakes. Nearly 5.5
44.4
20% of the NSE-listed universe saw promoter acquiring shares in the

FIIs,
March quarter, resulting in total buying of ~Rs119bn. Government 20.8
ownership (promoter and non-promoter), however, has come off
further and is currently hovering at all-time low levels, reflecting the DMFs, Govt.,
7.9 6.9
expand public partnership in the ownership
of CPSEs (Central Public Sector Enterprises) and augment its FII ownership in NSE-listed companies
resources for higher expenditure towards economic development. % FII share in NSE-listed universe
30 FII share ex-Financials
▪ FIIs ownership drops sharply amidst record-high outflows: FII
ownership fell by a huge 210bps, 136bps and 133bps QoQ to 26.3%, 20
21.6% and 20.8% in the Nifty 50, Nifty 500 and the overall NSE-
10
listed universe respectively, marking the steepest sequential (QoQ)
decline since the beginning of the analysis (2001). In fact, the FII 0
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
ownership in Nifty 50 is now the lowest in the last six years. This
reflects the record-high foreign capital outflows of US$7bn in the
March quarter due to flight of capital to safe havens amid DMF ownership in NSE-listed companies
strengthening concerns of an ensuing global recession. Rs bn SIP inflows %
300 18
DMF share in NSE-listed cos
The overall FII sector positioning has remained steady in the March
quarter. The out-sized bet on Financials was maintained with a 200 13
reduced absolute portfolio allocation, largely explained by a 100 8

significant underperformance of the sector with respect to the index.
Consumer Staples, Materials and Industrials continued to remain the 0 3
Sep-16
Sep-17
Sep-18
Sep-19
Mar-17
Mar-18
Mar-19
Mar-20
Jun-16
Jun-17
Jun-18
Jun-19
Dec-16
Dec-17
Dec-18
Dec-19
most under-owned sectors, reflecting the FIIs cautious view on
Source: CMIE Prowess, AMFI, NSE.
1
This is an excerpt of our detailed report on the topic released on May 29 th. Please click here to access the report.
2
The report examines ownership trends and patterns in Indian companies listed on the NSE since 2001. The report also
analyses ownership trends of institutional investors in top 10% listed companies by market capitalization to gauge investment concentration.
3
FII ownership includes ownership through depository receipts held by custodians.
4
Sector weights and comparisons here are based on the respective indices as benchmarks.
5
in the index. An
OW/UW position on a sector implies a more than 100bps higher/lower allocation to the sector than its weight in the Index. A neutral position on a
sector implies an allocation to the sector within +/-
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Market Pulse
▪ DMF share inches up further to touch new record-high: DMFs FII and DMF portfolio OW/UW in Nifty 500 vs.
continued to ride on the SIP wave, as their ownership in the Nifty 500 the index (March 2020)
and the overall NSE-listed universe inched up further by 18bps and bps
-245
14bps QoQ to 8.1% and 7.9% respectively in the March quarter the Cons. Staples -291
39 FIIs
highest since the beginning of the analysis (2001). DMF ownership in IT -254
DMFs
Energy 61
Nifty 50 remained steady at 8.4%. Despite a sharp market correction -139
Financials 769
amid a worsening Coronavirus scare, retail participation through the -98
Realty 24
SIP route has remained unscathed. In fact, SIP inflows in the month -15
Cons. Disc. -142
of March were the highest ever despite a 23% fall in the Indian equity 69
Comm Svcs. 68
markets (Nifty 50) during the month, translating into cumulative 82
Materials -262
inflows of Rs10trn in FY20, +8% YoY. Direct retail participation in 97
Healthcare -118
136
equity markets, however, has remained broadly steady for quite -8
Utilities 157
some time now. -190
Industrials 251
Sector-wise, DMFs have maintained their OW position on Financials -500 0 500 1000
within the Nifty 50 space but remained cautious on smaller
banks/NBFCs given a modest UW position on the sector in the Nifty FII and DMF holding in top 10% companies
500 Index. Un by market cap
story with an OW position on Industrials, Utilities and Materials. % FIIs DMFs
100
However, DMFs echo the FIIs view on consumption, with a big UW
92
position on Consumer Staples. 84
▪ Concentration of institutional ownership to larger companies 76

68
rises: The drop in FII ownership in the overall NSE-listed universe
60
excluding Nifty 500 stocks was much higher than that in Nifty 500 in
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
the quarter ending March 2020. Further, an increase in DMF
ownership in the NSE-listed space last quarter was led by Nifty 500
Source: CMIE Prowess, NSE.
companies; excluding Nifty 500, DMF ownership in the NSE-listed
universe fell meaningfully in the March quarter. Moreover, the top
10% companies by market cap accounted for 93% of the FII holding,
up ~450b
of 86.7% of their investments made towards top 10% companies, it
has risen by a sharp 276bps QoQ and is now hovering at near 17-
year high levels.
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Market Pulse
Ownership pattern March 2020

Ownership pattern of the NSE-listed universe (March 2020): Total promoter ownership
in the NSE-listed universe shot up by ~110bps QoQ to near 5-year high of 50.9%, largely
led by a 100bps QoQ jump in private promoter ownership (Indian and foreign combined) March quarter saw a huge
to a 14-year high of 44.4% as promoters rushed to raise their stakes in their companies jump in private promoter
amid a sharp sell-off seen in the March quarter. Around 360 out of 1,784 listed companies ownership as a sharp
market sell-off provided an
saw promoters acquiring shares in the March quarter, resulting in total buying of
opportunity to promoters to
~Rs119bn. Government ownership (promoter as well as non-promoter) in the NSE-listed
raise their stakes.
space, however, has been coming off since 2010, in-
garner higher revenues through the disinvestment route, with the share in the March
quarter falling by 126bps QoQ to 14-year low of 6.6%.
Amongst institutional investors, FII ownership fell by a huge 133bps QoQ to a five-quarter
low of 20.8%, marking the highest sequential decline on a quarterly basis over the last 19 FII ownership in the March
years reflecting the surge in foreign capital outflows in the March quarter (US$7bn the quarter saw the highest
highest ever). This was largely owing to a huge decline in FII ownership in Financials and QoQ decline in the last 19
years reflecting record
understandably so given the big overweight position on the sector, even as FII ownership
high foreign capital
in the listed universe excluding Financials has inched up on a sequential basis.
outflows.
modest 14bps QoQ to 7.9% the highest since the beginning of the analysis (2001). The
share of Banks, Financial Institutions and Insurance inched up by a modest 10bps QoQ to
5.5% but is a mere 32bps above lowest share in the last two decades. Individual retail
investors holding remained broadly steady at 8.4%.
In terms of floating stock, FII ownership fell by 174bps QoQ to 42.5% in the March quarter
following a strong 350bps rise in 2019, marking the highest sequential decline on a
quarterly basis in more than 11 years and is now 3.2pp shy of the highest share since
2001 (in March 2014). That said, FIIs continue to remain the biggest owners of India Inc.
after promoters. DMFs also continue to increase their share in the NSE-listed floating
stock, with current ownership at 16.1% (+63bps QoQ) being the highest since the
beginning of the analysis (2001). Retail ownership has seen the highest QoQ gain of 49bps
in the last four years to 17.2%, even as it is just 68bps above the lowest share in the last
two decades.
Figure 1: NSE-listed universe: Ownership pattern by Figure 2: NSE-listed universe: Ownership pattern by
total market cap (%, March 2020) free float market cap (%, March 2020)
Retail, 8.4 Non-promoter
Non-promoter Other non-institutional
corporate, 3.3 Other non-institutional Govt., 0.8
non-promoters, 2.4
non-promoters, 4.8
Other institutional DMFs, 16.1
Private Indian
Retail, 17.2
Banks, FIs & promoters, 33.2
Insurance, 5.5
Non-promoter
corporate, 6.7
FIIs, 20.8
Other institutional
non-promoters, 0.8
Govt., 6.9
Banks, FIs &
Insurance, 11.2 FIIs, 42.5
DMFs, 7.9 Foreign
promoters, 11.1
Source: CMIE Prowess, NSE. *FII ownership includes ownership through depository receipts held by custodians.
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Market Pulse
Figure 3: Top 20 companies by value of shares bought by promoters in the March quarter
Promoter stake (%) Shares bought
Companies Sectors
Dec-19 Mar-20 QoQ chg. (bps) Number (mn) Value (Rsmn)*
Tata Consumer Products Consumer Staples 34.5 34.7 23 102.2 30,129
Vinati Organics Materials 74.0 74.0 4 38.1 29,490
Piramal Enterprises Health Care 46.1 46.1 1 12.2 11,429
Mphasis Information Technology 52.2 56.2 399 7.5 4,971
Tata Steel Materials 33.1 34.4 129 15.5 4,188
H C L Technologies Information Technology 60.0 60.3 35 9.6 4,170
D F M Foods Consumer Staples 38.3 73.9 3568 17.9 3,123
Hindustan Foods Consumer Staples 61.9 62.6 76 4.9 2,767
Bajaj Electricals Consumer Discretionary 62.7 63.2 50 7.7 2,054
Tata Chemicals Materials 31.1 34.6 351 8.9 1,999
GMR Infrastructure Industrials 63.6 65.3 172 103.7 1,695
Adani Ports & Special Economic Zone Industrials 62.5 62.8 33 6.7 1,680
JSW Steel Materials 42.0 42.3 38 9.2 1,344
Sun Pharmaceutical Inds. Health Care 54.6 54.7 13 3.1 1,085
JBM Auto Consumer Discretionary 62.0 67.5 550 6.6 924
Maruti Suzuki Consumer Discretionary 56.2 56.3 7 0.2 905
Tata Power Utilities 36.2 37.2 101 27.3 896
Godrej Industries Industrials 61.4 62.2 82 2.8 781
Bajaj Auto Consumer Discretionary 53.5 53.7 13 0.4 777
Music Broadcast Communication Services 73.9 74.1 12 51.5 768
Source: CMIE Prowess, NSE. * Value of shares bought in the March quarter is based on the quarter-end price.
Figure 4: NSE-listed universe: Ownership trend across key stakeholders by total market cap over last three years
Private Indian Foreign Domestic Banks, FIs Non-promoter
% Govt. FIIs * Retail
promoters promoters MFs & Insurance corporate
Jun-17 30.4 10.1 9.2 5.3 6.1 20.9 5.1 9.4
Sep-17 31.0 10.0 9.1 5.6 5.9 20.9 5.6 9.4
Dec-17 31.5 10.4 9.4 5.9 5.7 19.8 5.4 9.2
Mar-18 31.3 10.1 9.4 6.1 5.6 20.1 5.6 9.0
Jun-18 31.4 9.5 9.7 6.4 5.7 20.5 5.2 8.7
Sep-18 32.0 9.2 9.5 6.4 5.8 20.4 5.1 8.6
Dec-18 31.3 9.1 10.0 7.0 5.8 20.4 5.0 8.7
Mar-19 31.5 9.2 9.2 7.2 5.5 21.0 5.0 8.6
Jun-19 31.4 9.3 9.3 7.3 5.5 21.3 4.7 8.4
Sep-19 32.2 7.9 10.1 7.7 5.5 21.8 3.6 8.5
Dec-19 32.2 8.2 9.8 7.8 5.4 22.2 3.5 8.4
Mar-20 33.2 6.9 11.1 7.9 5.5 20.8 3.3 8.4
QoQ change 101bps -126bps 133bps 14bps 10bps -133bps -17bps 6bps
Source: CMIE Prowess, NSE. *FII ownership includes ownership through depository receipts held by custodians
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Market Pulse
Figure 5: NSE-listed universe: Long-term ownership trend across key stakeholders by total market cap
% Ownership trend of listed companies across key stakeholders by total market cap
Promoters DMFs FIIs Banks, FIs & Insurance Non-promoter corporate Retail
60
50
40
30
20
10
0
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Ownership pattern of the Nifty 50 universe (March 2020): Overall promoter ownership
Private promoter ownership
in the Nifty 50 Index also increased sharply by 2pp QoQ to 44% in the quarter ending
in the Nifty50 Index rose
March 2020. This was largely on account of a sharp 3.1pp QoQ increase in private sharply in the March quarter
promoter ownership, Indian and foreign combined, to a 14-year high of 37.8%, as a sharp while that of Government
equity market sell-off provided an opportunity to promoters to increase their stakes. continued to decline.
Within the Nifty 50 universe, 12 companies saw a jump in the promoter stake in the March
quarter, translating into total promoter buying of Rs16bn. Government ownership,
however, declined for yet another quarter and is currently hovering at a 14-year low of
6.4% (-108bps QoQ).
Institutional ownership has fallen for the Nifty 50 universe as well, down by 219bps QoQ
FII share in the Nifty50
to 44.05%, largely led by a 210bps QoQ fall in FII holding to a six-year low of 26.3%. In floating stock fell by 195bps
fact, the sequential decline in FII ownership in the Nifty 50 universe is the steepest since QoQ, while that of DMFs rose
the period of the analysis on this sample (2006). That said, FII share excluding Financials by 55bps to 15%.
actually rose by 40bps QoQ in the March quarter. DMF ownership, on the other hand,
remained steady at 8.4%, thanks to steady SIP inflows. The share of Banks, Financial
Institutions and Insurance fell for yet another quarter by 11bps QoQ to near 12-year lows
of 7.1%. Retail ownership has remained steady over the last few years, with current share
at 7.8% being just 66bps shy of their share in the overall NSE-listed space.
In terms of floating stock, FII share in the Nifty 50 Index fell by 195bps QoQ to 47.0% in
the March quarter, following a 277bps increase in 2019 and is now 4.8pp lower than the
peak share since 2006. Share of DMFs in the floating Nifty50 stock, however, rose by
55bps QoQ to all-time high of 15%, translating into a total increase of ~6.2pp over the last
three years.
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Market Pulse
Figure 6: Nifty 50: Ownership pattern by total market Figure 7: B: Nifty 50: Ownership pattern by free float
cap (%, March 2020) market cap (%, March 2020)
Non-promoter Retail, 7.8 Other non-institutional Other non-institutional
corporate, 3.1 non-promoters, 2.9 non-promoters, 5.1
DMFs, 15.0
Other institutional Retail, 13.9
Private Indian
non-promoters, 0.3
promoters, 28.1 Non-promoter
Banks, FIs & corporate, 5.6
Insurance, 7.1
Other institutional
non-promoters,
0.5
Govt., 6.4
FIIs, 26.3 Banks, FIs &
Insurance, 12.7
Foreign FIIs, 47.0
promoters, 9.7
DMFs, 8.4
Figure 8: Nifty 50: Ownership trend across key stakeholders by total market cap over the last three years
Jun-17 23.4 11.6 7.6 5.3 8.7 27.6 4.2 7.1
Sep-17 24.0 11.5 7.8 5.8 8.1 28.0 5.0 7.2
Dec-17 24.2 11.3 8.1 6.2 8.1 27.1 4.9 7.0
Mar-18 24.1 10.6 7.8 6.4 8.0 27.6 5.1 7.0
Jun-18 26.0 9.5 6.9 6.7 7.8 27.4 5.2 7.4
Sep-18 27.2 9.5 6.2 6.7 7.8 26.6 5.2 7.3
Dec-18 26.1 9.0 6.6 7.4 7.8 27.0 5.2 7.6
Mar-19 26.5 8.7 6.3 7.6 7.6 27.4 4.9 7.6
Jun-19 26.8 9.0 6.3 7.7 7.5 27.5 4.5 7.5
Sep-19 27.0 7.6 7.7 8.2 7.4 27.8 3.5 7.7
Dec-19 27.2 7.4 7.5 8.4 7.2 28.4 3.3 7.7
Mar-20 28.1 6.4 9.7 8.4 7.1 26.3 3.1 7.8
QoQ change 96bps -108bps 217bps 1bps -11bps -210bps -17bps 11bps
8/133
Market Pulse
Figure 9: Nifty 50: Long-term ownership trend across key stakeholders by total market cap
% Ownership trend of Nifty 50 universe key stakeholders by total market cap
Promoters DMFs FIIs
60 Banks, FIs & Insurance Non-promoter corporate Retail
50
40
30
20
10
0
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Ownership pattern of the Nifty 500 universe (March 2020): In-line with Nifty 50,
Promoter ownership in the Nifty 500 Index increased by 121bps QoQ to five-year high of Private promoter ownership
50.5%, a tad lower than the promoter holding in the overall NSE-listed universe. While inched up in the Nifty 500
private promoter ownership, Indian and foreign combined, increased by 253bps QoQ to universe, in-line with Nifty50
14-year high of 43.9%, government ownership fell by 131bps QoQ to all-time low of and overall NSE-listed space.
6.9%. Within the Nifty 500 universe, 93 companies saw an increase in shares owned by
private promoters in the March quarter, translating into total buying of ~Rs103bn.
FII share in the Nifty500
floating stock fell sharply in
a modest 18bps QoQ to 8.1%, marking the new high since 2001, FII ownership fell by the March quarter the
steepest fall since the GFC.
136bps QoQ to 21.6% nearly 164bps shy of the peak share since 2001. This was largely
led by Financials; excluding Financials, FII share went up by 35bps QoQ to a six-quarter DMF share, however, inched
high of 13%. The share of Banks, Financial Institutions and Insurance fell by a modest up further in the March
7bps QoQ to 5.5% the lowest in the last two decades. Retail investors owned 8.1% of quarter to remain at all-time
the Nifty 500 Index as of March-end, up by a modest 13bps QoQ, but has broadly high level.
remained at these levels for five years now.
In terms of floating stock, FII ownership in the Nifty 500 Index fell by 163bps QoQ to
43.6%, following a 330bps increase in 2019, marking the steepest QoQ decline since the
Global Financial Crisis. DMF ownership of the Nifty 500 floating stock, however, has
improved by 75bps QoQ to a two-decade high of 16.4%. Retail ownership also rose by
66bps QoQ to a 10-quarter high of 16.4% of the Nifty 500 free float stock.
9/133
Market Pulse
Figure 10: Nifty 500: Ownership pattern by total market Figure 11: B: Nifty 500: Ownership pattern by free float
cap (March 2020) market cap (March 2020)
Non-promoter Other non-institutional Non-promoter
Retail, 8.1 Other non-institutional
corporate, 3.1 non-promoters, 2.3 non-promoters, 4.7 Govt., 0.8
Other institutional
DMFs, 16.4
non-promoters, 0.4
Private Indian
Banks, FIs & Retail, 16.4
promoters, 32.8
Insurance, 5.5
Non-promoter
corporate, 6.2
FIIs, 21.6 Other institutional
non-promoters, 0.7
Govt., 6.9
Banks, FIs &
Insurance, 11.1 FIIs, 43.6
Foreign
DMFs, 8.1
promoters, 11.2
Figure 12: Nifty 500: Ownership trend across key stakeholders by total market cap over last the three years
Jun-17 29.5 10.8 9.2 5.5 6.5 22.3 4.6 8.4
Sep-17 29.9 10.7 9.1 5.8 6.2 22.4 5.1 8.4
Dec-17 30.2 10.7 9.2 6.2 6.1 21.6 4.9 8.2
Mar-18 30.1 10.1 9.2 6.4 6.0 22.0 5.1 8.2
Jun-18 30.4 9.6 9.3 6.6 6.0 21.8 5.1 8.2
Sep-18 31.3 9.7 9.1 6.6 6.0 21.3 5.0 8.1
Dec-18 30.7 9.5 9.5 7.1 6.1 21.3 4.9 8.2
Mar-19 30.9 9.6 8.8 7.3 5.7 21.8 4.9 8.1
Jun-19 30.9 9.6 8.9 7.5 5.7 22.1 4.6 8.0
Sep-19 31.7 8.1 9.9 7.9 5.7 22.5 3.5 8.1
Dec-19 31.8 8.3 9.6 7.9 5.6 22.9 3.3 8.0
Mar-20 32.8 6.9 11.2 8.1 5.5 21.6 3.1 8.1
QoQ change 97bps -131bps 155bps 18bps -7bps -136bps -25bps 13bps
Figure 13: Nifty 500: Long-term ownership trend across key stakeholders by total market cap
% Ownership trend of Nifty 500 universe key stakeholders by total market cap
Promoters DMFs FIIs Banks, FIs & Insurance Non-promoter corporate Retail
70
60
50
40
30
20
10
0
Mar-11
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
10/133
Market Pulse
Sector-wise ownership pattern and allocation to key stakeholders

Sector-wise ownership of the Nifty 50 universe (March 2020): In the quarter ending
Industrials has the highest
March 2020, Information Technology had the highest promoter ownership at 56.6% (-
DMF ownership within the
31bps QoQ), followed by Communication Services at 56.1% and Energy at 51.8% (-92bps
Nifty50 universe, followed by
QoQ). Utilities and Energy remained the top sectors in terms of Government ownership at Utilities and Financials
52.7% (-290bps QoQ) and 18.3% (-285bps QoQ) respectively. DMF ownership is the
FIIs are the biggest non-
highest in Industrials at 14.3% (-22bps QoQ), followed by Utilities at 14.3% (+221bps
promoter owners of
QoQ) and Financials at 12.5% (+55bps QoQ). FIIs are the biggest non-promoter owners Financials in the Nifty 50
of Financials at 44.8% (-49bps QoQ), followed by Communication Services at 25.0% (- universe as well, followed by
40bps QoQ) and Consumer Discretionary at 22.9% (-138bps QoQ). In terms of overall Communication Services and
foreign ownership (including foreign promoters), Consumer Staples leads with a 64.4% Consumer Discretionary.
(+526bps QoQ) foreign share, followed by Financials at 45.0% (-79bps QoQ) and
Communication Services at 42.4% (+37bps QoQ).
Figure 14: Nifty 50: Sector-wise ownership pattern across key stakeholders (March 2020)
% Sector-wise ownership of the Nifty 50 universe
Private Indian promoters Govt. Foreign promoters
DMFs FIIs* Banks, FIs & Insurance
Non-promoter corporate Retail Others**
100 3.6 2.3
3.1 6.7 5.2
4.7 11.5 7.0 8.3 11.5
9.7 5.2 8.7 9.6
90 3.1 2.5 9.2
1.4 6.4
7.6 7.2 5.5 6.3
80 7.5 4.0 15.2
25.0 7.0 5.7 19.7
10.1 1.5 20.7
70 21.9
22.9 17.3
14.3 19.1 16.6
60 9.4 44.8 5.4 14.3
6.3 1.6 7.7
6.6 4.8 -
50 11.4 3.1
17.4
18.3 21.1
40 18.6 4.3
30 12.5
5.9 14.3 55.0 52.7
50.0 47.2
20 38.7 5.9 38.2
33.7 5.2
24.2
10 18.0 14.3
0 -
Comm Svcs. Cons. Disc. Cons. Staples Energy Financials Healthcare Industrials IT Materials Utilities
Source: CMIE Prowess, NSE.
* FII ownership includes ownership through depository receipts held by custodians. **Others include other institutional and
non-institutional non-promoter investors.
11/133
Market Pulse
Figure 14: Sector allocation of the Nifty 50 universe for key stakeholders (March 2020)
Private Banks, FIs Non-
% Foreign Domestic
Indian Govt. FIIs* & promoter Retail
promoters MFs
promoters Insurance corporate
Communication Services 5.9 0.0 7.6 4.8 4.1 2.8 4.3 0.4
Consumer Discretionary 5.1 5.6 11.5 4.7 5.2 6.3 2.7 7.5
Consumer Staples 0.0 0.0 72.5 8.1 7.7 19.9 34.3 20.7
Energy 18.5 44.5 0.0 11.7 12.9 15.6 15.3 13.9
Financials 16.7 24.3 0.5 38.8 44.4 20.2 20.6 27.8
Health Care 3.5 0.0 1.2 3.5 1.9 2.5 3.3 3.0
Industrials 1.3 0.1 1.3 4.3 2.0 5.8 1.2 4.8
Information Technology 36.7 0.1 3.0 12.2 14.8 16.9 2.8 12.6
Materials 12.3 0.2 2.4 6.8 4.8 5.9 15.0 8.2
Utilities 0.0 25.2 0.0 5.2 2.3 4.1 0.5 0.9
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
DMFs reduced their exposure to Financials but maintained an overweight stance:

DMFs maintained a huge OW
DMFs bps QoQ to 38.8% in the March quarter position on Financials
but the overweight (OW) stance with respect to the index was maintained, even as the despite a reduction in
OW position has come off over the last few quarters. This has come at the expense of allocation and have
increase in exposure to Consumer Staples and IT, even as DMFs have maintained a huge incrementally turned more
underweight position on these sectors, and incrementally more so, for yet another cautious on Consumer
quarter. While DMFs reduced their OW position on the Industrials sector, they have turned Staples and IT.
incrementally more bullish on Communication Services.
Figure 15: DMF sector allocation of the Nifty 50 universe Figure 16: DMF sector-wise OW/UW in Nifty 50 relative
(March 2020 vs. December 2019) to sector weight in the index (March 2020)
% DMF sector allocation of the Nfity 50 universe bps DMF sector-wise OW/UW in Nifty 50
38.8
Financials -222
44.6 Cons. Staples
-315
12.2
IT -211
10.7 IT
-288
Energy 11.7 Dec-19
11.4 Energy -149
-116
8.1
Mar-20
Cons. Staples -153
6.4 Cons. Disc.
-93
6.8
Materials Mar-20 Materials 22
6.4
27
Utilities 5.2 Dec-19 78
4.4 Healthcare
78
4.8
Comm Svcs. Industrials 120
3.1 92
4.7 56
Cons. Disc. Comm Svcs.
5.2 134
4.3 262
Industrials Financials
5.0 229
3.5 197
Healthcare Utilities
2.9 250
0 10 20 30 40 50 -400 -300 -200 -100 0 100 200 300

Source: CMIE Prowess, NSE
12/133
Market Pulse
Figure 17: DMF vs. Nifty 50 Sector-wise OW/UW trend (bps)

bps Sector-wise OW/UW trend for DMFs vs. Nifty 50 Index
Communication Services Consumer Discretionary Consumer Staples Energy
2,000 Financials Health Care Industrials Information Technology
Materials Utilities
1,500
1,000
500
-500
-1,000
-1,500
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
Sep-19
Mar-20
FIIs retained a huge OW position on Financials for yet another quarter: Overall sector
FIIs have maintained their
positioning for FIIs in the Nifty 50 index has been unchanged on a sequential basis in the
out-sized bet on Financials in
March quarter. In-line with DMFs, a sharp fall in share prices of Financial sector
the Nifty 50 universe and
companies led to FII allocation to the sector falling by 552bps QoQ, as evident in an have turned incrementally
x. FIIs have retained their huge more cautious on Consumer
OW position on Financials for yet another quarter. Despite an increase in exposure to Staples.
Consumer Staples, partly driven by relative outperformance, FIIs have turned
incrementally more bearish on the sector. FIIs have also maintained an UW stance on
Materials and Industrials for yet another quarter, with marginal changes.
Figure 18: FII sector allocation of the Nifty 50 universe Figure 19: FII sector-wise OW/UW in Nifty 50 relative to
(March 2020 vs. December 2019) sector weight in the index (March 2020)
% FII sector allocation of the Nfity 50 universe bps FII sector-wise OW/UW in Nifty 50
Financials 44.4 -316

50.0 Cons. Staples -362
IT 14.8 -144
12.3 Industrials -133
12.9
Dec-19
Energy -68
12.5 Healthcare -85 Mar-20
Cons. Staples 7.7
5.5 Cons. Disc. -49
-42
Cons. Disc. 5.2
6.2 -32
Mar-20 Utilities -41
Materials 4.8
4.6 Dec-19 -44
IT -24
Comm Svcs. 4.1
3.1
Energy -36
2.3 2
Utilities 2.1
Comm Svcs. 48
Industrials 2.0 60
2.3
Financials 799
Healthcare 1.9 793
1.4
0 20 40 60 -500 -250 0 250 500 750 1000

13/133
Market Pulse
Figure 20: FII vs. Nifty 50 Sector-wise OW/UW trend (bps)

bps Sector-wise OW/UW trend for FIIs vs. Nifty 50 Index
Materials Utilities
1,500
1,000
500
-500
-1,000
-1,500
Sep-06
Sep-09
Sep-12
Sep-15
Sep-18
Mar-08
Mar-11
Mar-14
Mar-17
Mar-20
Jun-07
Jun-10
Jun-13
Jun-16
Jun-19
Dec-08
Dec-11
Dec-14
Dec-17
Sector-wise ownership of the Nifty 500 universe (March 2020): As of March 2020, Real
Estate sector had the highest promoter shareholding at 67.4% (-27bps QoQ), followed Sector-wise, Industrials leads
in terms of DMF ownership
by Information Technology at 57.4% (-7bps QoQ), and Materials at 57.2% (+155bps
within the Nifty 500 universe,
QoQ). Utilities, Energy, Financials and Industrials had the highest Government ownership in-line with the Nifty 50 and
at 34.4% (-60bps QoQ), 17.5% (-281bps QoQ), 9.8% (-108bps QoQ) and 9.5% (-81bps overall listed space.
QoQ) respectively.
FIIs are the biggest non-
promoter owners of
In terms of DMF ownership, Industrials sector leads at 11.0% share (+11bps QoQ),
Financials in the Nifty 500
followed by Utilities at 10.3% (+153bps QoQ) and Financials at 10.3% (+55bps QoQ).
universe as well, followed by
FIIs remained the biggest non-promoter owners of Financials at 35.2% (+12bps QoQ), Communication Services and
followed by Communication Services at 24.5% (-10bps QoQ), Energy at 21.8% (+32bps Energy.
QoQ) and Real Estate at 20.4% (-28bps QoQ).
In terms of overall foreign ownership (including foreign promoters), Consumer Staples

leads with a 50.7% foreign share (+330bps QoQ), followed by Communication Services at
40.4% (+110bps QoQ) and Financials at 37.9% (+15bps QoQ).
14/133
Market Pulse
Figure 21: Nifty 500: Sector-wise ownership pattern across key stakeholders (March 2020)
% Sector-wise ownership of the NSE 500 universe
Private Indian promoters Govt. Foreign promoters
DMFs FIIs* Banks, FIs & Insurance
Non-promoter corporate Retail Others**
100 2.2 3.0 1.6 2.4 2.2 3.3 2.8 3.6
4.5 4.8 5.4
3.2 7.1 8.2 2.1
3.9 9.7 10.5 10.2 5.6 9.2
90 10.0 7.0
4.5 6.0
7.0
80 5.1 3.6 4.6 20.4
7.3 6.7
24.5 18.0
15.9 19.9 12.5
70 17.7 21.8 14.0 4.0
14.3
35.1 7.6 10.3
60 9.6
5.1 9.3 5.6
8.9 6.6 11.0 3.1
50 5.1
15.8
17.5 10.3
40
34.4
3.0 66.2
30 9.8 9.5
52.2
47.1
20 39.6 41.6
34.3
29.9
24.1 25.4
10 19.0 20.7
0
Comm Cons. Disc. Cons. Energy Financials Healthcare Industrials IT Materials Reality Utilities
Svcs. Staples
Source: CMIE Prowess, NSE. * FII ownership includes ownership through depository receipts held by custodians.
**Others include other institutional and non-institutional non-promoter investors.
Sector allocation of the Nifty 500 universe for key stakeholders (March 2020): The
table below shows the sector allocation for key stakeholders in Nifty 500 companies as of
March 2020. The concentration of Government ownership in Financials, Energy and
Utilities sector is at 79.1%, a tad higher than that in the overall listed universe. In case of
institutional investors, DMFs have a much lower allocation to Financials sector at 31.1%
than FIIs at 39.8%, even as both have seen a dip in allocation in the March quarter owing
to sharp fall in share prices of Financial companies.
15/133
Market Pulse
Figure 22: Sector allocation of the Nifty 500 universe for key stakeholders (March 2020)
Private Banks, Non-
% Foreign Domestic
Indian Govt. FIIs* FIs & promoter Retail
promoters MFs
promoters Insurance corporate
Communication Services 4.0 0.0 4.7 3.9 3.7 2.3 3.4 0.9
Consumer Discretionary 7.0 3.3 13.3 8.4 6.3 7.1 8.2 9.1
Consumer Staples 8.1 0.7 45.9 8.9 9.3 18.6 24.9 18.1
Energy 10.8 26.1 0.2 8.4 10.5 13.1 10.1 9.1
Financials 17.9 34.6 6.0 31.1 39.8 20.0 23.1 24.6
Health Care 8.0 0.0 7.5 7.2 4.7 4.1 5.9 7.9
Industrials 4.9 8.5 9.3 8.5 4.1 7.6 4.9 7.7
Information Technology 20.6 0.8 5.7 9.0 11.9 14.0 2.6 8.9
Materials 14.5 7.5 6.3 9.4 5.8 8.4 13.9 11.4
Real Estate 1.8 0.0 0.1 0.4 0.8 0.1 0.5 0.6
Utilities 2.4 18.5 1.0 4.8 3.1 4.7 2.5 1.7
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
DMFs remained cautious on smaller financial companies: DMFs allocation to

DMFs remained cautious on
Financials declined by 514bps QoQ in the March quarter, in line with the fall in the smaller banks and NBFCs.
in the relative UW position being maintained. This The OW stance on Industrials
was retained despite a cut in
cautious view on smaller banks and NBFCs for yet another quarter. allocation.
DMFs have continued to play the investment theme in the economy, maintaining a strong Under-owned sectors for
OW position on Industrials within the Nifty 500 space for yet another quarter, even as the DMFs remained Consumer
Staples, IT and Energy.
extent of OW positioning has come off meaningfully over the years. While DMFs turned
incrementally more bullish on Utilities and Healthcare, they turned more cautious on
Consumer Staples and IT, despite an increase in absolute allocation to the sectors,
thanks to the outperformance of these sectors with respect to the overall market in the
March quarter.
Figure 23: DMF sector allocation of the Nifty 500 Figure 24: DMF sector-wise OW/UW in Nifty 500
universe (March 2020 vs. December 2019) relative to sector weight in the index (March 2020)
% DMF sector allocation of the Nfity 500 universe bps DMF sector-wise OW/UW in Nifty 500
31.1 Cons. Staples -232
Financials 36.3 -291
9.4 IT -188
Materials 9.2 -254
9.0 Energy -149

IT -139 Dec-19
8.0
8.9 Financials -82 Mar-20
Cons. Staples 6.8 -98
8.5 Realty -20

Industrials 9.0 Mar-20 -15
8.4 Cons. Disc. 60

Energy Dec-19 69
8.3
8.4 Comm Svcs. 41
Cons. Disc. 9.3 82
7.2 Materials 104

Healthcare 5.6 97
4.8 Healthcare 95
Utilities 4.1 136
3.9 Utilities 114

Comm Svcs. 2.9 157
0.4 Industrials 256

Realty 0.5 251
0 10 20 30 40 -400 -300 -200 -100 0 100 200 300

16/133
Market Pulse
Figure 25: DMF vs. Nifty 500 Sector-wise OW/UW trend (bps)
bps Sector-wise OW/UW trend for DMFs vs. Nifty 500 Index

1,500
Financials Health Care Industrials Information Technology
Materials Real Estate Utilities
1,000
500
-500
-1,000
-1,500
Sep-06
Mar-08
Sep-09
Mar-11
Sep-12
Mar-14
Sep-15
Mar-17
Sep-18
Mar-20
Jun-07
Jun-10
Jun-13
Jun-16
Jun-19
Dec-08
Dec-11
Dec-14
Dec-17
FIIs maintained a huge OW stance on Financials in the Nifty 500 Index as well: The
FIIs are largely playing the
relative sector positioning of FIIs in the Nifty 500 Index has remained broadly stable in India growth story through
the March quarter. The out-sized bet of FIIs on Financials was maintained for yet another Financials, with an out-sized
quarter but with a 510bps QoQ lower exposure of 39.8% the lowest in the last six OW position on the sector in
quarters, weight in the index. the Nifty 500 Index.
Financials aside, FIIs have a neutral or negative stance on all other sectors. Contrary to Apart from Financials, FIIs
DMFs, FIIs have perennially remained negative on the investment theme in the economy, have maintained a neutral or
UW on all other sectors.
maintaining their UW stance on Industrials and Materials since 2006. FIIs have also
ly so
given the weak domestic and global demand environment and are underweight on both
Consumer Staples and Discretionary sectors. While they have turned incrementally
cautious on Healthcare within the Nifty 500 Index, they have maintained a neutral stance
with respect to the Index on Communication Services, Energy, Information Technology,
Real Estate and Utilities.
17/133
Market Pulse
Figure 26: FII sector allocation of the Nifty 500 Figure 27: FII sector-wise OW/UW in Nifty 500 relative
universe (March 2020 vs. December 2019) to sector weight in the index (March 2020)
% FII sector allocation of the Nfity 500 universe bps FII sector-wise OW/UW in Nifty 500
Financials 39.8
44.9 -254
Materials -262
IT 11.9
10.1 -217
Cons. Staples -245
Energy 10.5
10.1 Industrials -205 Dec-19
-190
Cons. Staples 9.3 Mar-20
7.0 Cons. Disc. -139
-142
Cons. Disc. 6.3
7.3 Healthcare -91
-118
Materials 5.8
5.7 Mar- Utilities -4
-8
4.7 20
Healthcare 3.7 Realty 25
24
Industrials 4.1 15
4.4 IT 39
Comm Svcs. 3.7 34
3.0 Energy 61
Utilities 3.1 56
2.9 Comm Svcs. 68
Realty 0.8 780
0.9 Financials 769
0 10 20 30 40 50 -400 -200 0 200 400 600 800 1000

Figure 28: FII vs. Nifty 500 Sector-wise OW/UW trend (bps)
bps Sector-wise OW/UW trend for FIIs vs. Nifty 500 Index
Materials Real Estate Utilities
1,500
1,000
500
-500
-1,000
Sep-06
Mar-08
Sep-09
Mar-11
Sep-12
Mar-14
Sep-15
Mar-17
Sep-18
Mar-20
Jun-07
Jun-10
Jun-16
Jun-19
Jun-13
Dec-08
Dec-11
Dec-14
Dec-17
18/133
Market Pulse
Institutional ownership concentration analysis
Institutional money gets incrementally more concentrated in large-caps amidst a

risk-off environment: The charts below depict how institutional money is largely
concentrated in the larger companies and the trend has strengthened in the March quarter
in the wake of a sharp drop in investor risk appetite. As of March 2020, while FII
ownership (including ownership through depository receipts) of the floating stock of Nifty
50/Nifty 500 fell by 195bps/163bps QoQ to 47.0%/43.6%, the ownership in the listed
universe excluding the Nifty 500 companies declined by a much higher 274bps remained
steady at 5.6% the lowest in last three years.
DMFs have also incrementally turned more cautious on smaller companies as reflected in
the sharp decline in their ownership in listed companies excluding Nifty 500 (-243bps
QoQ to 8.9% of the floating stock in March 2020). Moreover, their share in the floating
stock of Nifty 500 Index is nearly 140bps higher than that in the Nifty 50 Index, signalling
a relatively more diversified portfolio allocation.
Figure 29: Institutional ownership of floating stock across indices and stock universe (Mar 2020 vs. Dec 2019)
% Institutional ownership of free float market cap across universes
Nifty 50 Top 10% listed cos by market cap Nifty 500 All listed All listed ex Nifty 500
60
48.9
50 47.1 47.0
45.2 44.2 44.8 43.6
42.5
40
30
20 14.9 14.4 15.1 15.6 15.5 15.0 15.8 16.4 16.1

11.3 12.1
8.9
10
0
FII DMFs FII DMFs
December 2019 March 2020
Concentration of FII money to top 10% listed companies by market cap surges to 16-
Within the NSE-listed space,
year high: The FII concentration in the Indian equity markets reduced significantly
nearly 93% of the FII money
between 2001 and 2006, with the share of FII investments in the top 10% listed is invested in top 10%
companies (by market cap) as a percentage of their overall investments in the listed companies by market cap
universe declining from 98% in December 2001 to the lows of 85.3% in March 2006. the highest share in the last
However, since the financial crisis, the FII concentration has been gradually rising, with 16 years.
the top 10% companies now accounting for 93.2% of the FII holding in the quarter ending
March 2020 the highest in the last 16 years.
The concentration of investments by Banks, FIs & Insurance to larger companies is even
higher with a 94% investment share in top 10% companies in the March 2020 quarter.
While DMFs have a relatively lower share of 86.7% of their investments made towards top
10% companies, it has risen by a sharp 276bps QoQ and now hovering at near 17-year
high levels.
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Market Pulse
Figure 30: Trend of FII investment share in top 10% Figure 31: Trend of DMF investment share in top 10%
companies by total market cap companies by total market cap
% FII investment share in top 10% companies by market % DMF investment share in top 10% companies by market
cap cap
100 95
90
96
85
92 80
88 75
70
84
65
80 60
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-19
Mar-20
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Ownership concentration in terms of number of companies with holding greater than

FIIs have more than 5%
5%: The number of NSE-listed companies where FII holding is more than 5% fell sharply
holding in nearly 32% of the
in the March quarter reflecting the consequence of a pervasive risk-off sentiment and
listed universe as compared
flight of capital from riskier asset classes including Indian equities. These companies to 25% for DMFs.
(565) accounted for 31.8% of the number of NSE-listed companies in the March quarter
the lowest in ~15 years.
For DMFs, the number of companies with holding greater than 5% has more than doubled
since March 2014, increasing from 209 companies, accounting for 13% of the number of
listed companies, to 445 companies in the March 2020 quarter or one-fourth of the listed
universe. However, while the number of such companies was much lower at 331 in March
2001, its share in the listed universe was much higher at 33%.
Figure 32: Number of listed cos. with FII holding >5% Figure 33: Number of listed cos. with DMF holding >5%
# # of listed cos with FII share>5% % # # of listed cos with DMF share>5% %
% of NSE listed cos (R) % of NSE listed cos (R)
700 50% 500 35%
45% 450
600 30%
40%
500 400
35%
25%
30% 350
400
25% 300 20%
300 20%
250
15% 15%
200
200
10%
100 10%
5% 150
0 0% 100 5%
Mar-08
Mar-12
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-09
Mar-10
Mar-11
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-09
Mar-17
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-18
Mar-19
Mar-20
20/133
Market Pulse
Chart of the month

Coronavirus pandemic: Exponential spread, but fatalities in check
The unprecedented coronavirus pandemic has infected over 5.69m people worldwide
and taken 356 thousand lives as of May 28th, while many countries imposed
partial/complete lockdown on non-essential activities. This may result into a global
recession which is predicted to be worse than the Global Financial Crisis of 2008. India is
not an exception in this matter with over 165 thousand Covid-19 cases and more than
4,531 casualties so far. Overall, India has performed quite well in terms of both number
of cases and fatality rates while comparing with other developed countries including US,
Spain and Italy. However, the biggest concern is that the country could not flatten the
curve of spreading the disease even after imposing a strict 60-day nationwide lockdown.
In the previous edition of our Market Pulse, we have shown how total number of Covid-
19 positive cases has risen in India as compared to other major countries in the world. In
this edition, we dig down further to see how different states in India have performed till
now while controlling overall spread of the disease. Among states, Maharashtra remains
to be the epicentre of the country with 36% share of total Covid-19 positive cases
followed by Tamil Nadu (11.71%) and Delhi (9.84%) as on May 28, 2020. The distribution
remains similar in terms of number of fatalities as well, as 42.07% of total casualties
happened in Maharashtra.
The nonlinear (exponential) behaviour of the outbreak can best be illustrated in three
charts here, in increasing order of severity, using the total affected cases state-wise as a
metric, juxtaposed with doubling times in number of days.
Figure 34: Daily rise in affected cases vs. doubling times, till May 27th, 2020
(Cumulative, <1000) cases till May 27th, 2020
1,000
2x in 5 Days
900
7 Days
800 10 Days
12 Days
700
15 Days
600 17 Days
500 20 Days
25 Days
400
Assam
300 Kerala
200 Uttarakhand
Jharkhand
100
Chattisgarh
- Himachal Pradesh
15-Apr-20 25-Apr-20 5-May-20 15-May-20 25-May-20
Source: www.covid19india.org
21/133
Market Pulse
Figure 35: Daily rise in affected cases vs. doubling times, till May 27 th, 2020
(Cumulative, 1000-5000) till May 27th, 2020
5,000
2x in 5 Days
4,500
7 Days
4,000 10 Days
3,500 12 Days
15 Days
3,000
West Bengal
2,500
Bihar
2,000 Andhra Pradesh
1,500 Karnataka
Telengana
1,000
Jammu & Kashmir
500
Punjab
- Haryana
Figure 36: Daily rise in affected cases vs. doubling times till May 27th, 2020
(Cumulative, 5000+) till May 27th, 2020
60,000
50,000
2x in 5 Days
7 Days
40,000 10 Days
Maharashtra
30,000 Tamil Nadu

Delhi
Gujarat
20,000
Rajasthan
Madhya Pradesh
10,000 Uttar Pradesh
-
22/133
Market Pulse
Figure 37: Share of states in total, recovered and deceased cases (%)
Kerala
Haryana Share in total deceased cases

Odisha Share in total recovered cases
Share in total positive cases
Jammu and Kashmir
Punjab
Telangana
Karnataka
Bihar
Andhra Pradesh
State Unassigned
West Bengal
Uttar Pradesh
Madhya Pradesh
Rajasthan
Gujarat
Delhi
Tamil Nadu
Maharashtra
0 5 10 15 20 25 30 35 40 45
Daily new cases are increasing exponentially, while fatality rate remains under
control: Even after 60-day nationwide lockdown, total number of cases is increasing
exponentially with a new record number in every alternative day. With 165 thousand
cases, India has become 4th highest in terms of new cases globally as on May 26 with
second highest growth rate of novel coronavirus. Maharashtra, Tamil Nadu, Gujrat, Delhi
and Madhya Pradesh continued to record highest number of cases. On the positive side,
their recovery rates are improving over time and fatality rates have improved in recent
weeks in major states except Gujarat. Notably, Punjab showed one of the best recovery
rates in India, over 90% people cured and the North-eastern states and the Union
Territories have not been affected much. For instance, Sikkim and Mizoram reported only
case each while Lakshadweep has not reported a single case till now.
23/133
Market Pulse
Figure 38: State-wise cumulative new cases, recoveries and fatality rate of COVID-1919 cases
Maharashtra Tamil Nadu Delhi

60,000 8% 20,000 6% 20000 16%
7% 14%
50,000 5%
6% 16,000 16000
12%
40,000
5% 4%
12,000 12000 10%
30,000 4%
3% 8%
3%
20,000 8,000 8000
2% 2% 6%
10,000 4%
1% 4,000
1% 4000
0 0% 2%
14-Mar- 1-Apr- 19-Apr- 7-May- 25-May- 0 0% 0 0%
20 20 20 20 20 14-Mar 1-Apr 19-Apr 7-May 25-May 14-Mar 1-Apr 19-Apr 7-May 25-May
Gujarat Rajasthan Madhya Pradesh

16,000 10% 10,000 4% 8000 10%
3%
8% 8,000 8%
12,000 6000
3%
6% 6,000 2% 6%
8,000 4000
4% 4,000 2%
4%
4,000 1%
2% 2000
2,000 2%
1%
0 0% 0 0% 0 0%
14-Mar 1-Apr 19-Apr 7-May 25-May 14-Mar 1-Apr 19-Apr 7-May 25-May 14-Mar 1-Apr 19-Apr 7-May 25-May
West Bengal Uttar Pradesh Karnataka

5,000 16% 8000 3% 3,000 18%
14% 16%
4,000 3% 2,500
12% 6000 14%
2% 2,000 12%
3,000 10%
10%
8% 4000 2% 1,500
8%
2,000 6%
1% 1,000 6%
4% 2000
1,000 4%
1% 500
2% 2%
0 0% 0 0% 0 0%
Telangana Punjab Jharkhand

2,500 10% 2500 60% 500 12%
2,000 8% 2000 50% 10%

400
40% 8%
1,500 6% 1500 300
30% 6%
1,000 4% 1000 200
20% 4%
500 2% 500 100
10% 2%
0 0% 0 0% 0 0%
Odisha Haryana Jammu & Kashmir

2000 3% 1500 2% 2500 8%
2% 7%
1500 2000
2% 6%
1000
2% 5%
1500
1000 1% 4%
1%
1000 3%
500
500 1%
1% 2%
500
1%
0 0% 0 0% 0 0%
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Market Pulse
Kerala Puducherry Himachal Pradesh

1200 1% 60 100%
300 35%
1000 50 80%
1% 250 30%
800 40 25%
1% 60% 200
600 30 20%
150
0% 40% 15%
400 20
100
20% 10%
200 0% 10
50 5%
0 0% 0 0%
0 0%
14-Mar 1-Apr 19-Apr 7-May 25-May 14-Mar 1-Apr 19-Apr 7-May 25-May
14-Mar 1-Apr 19-Apr 7-May 25-May
Bihar Assam Arunachal Pradesh

3500 60% 1000 4% 2.5 100%
3000 50% 800 2 80%

3%
2500
40%
600 1.5 60%
2000
30% 2%
1500 400 1 40%
20%
1000 1%
200 0.5 20%
500 10%
0 0% 0 0% 0 0%
Chandigarh Tripura Chattisgarh

300 2% 300 100% 400 30%
250 250 25%

80%
2% 300
200 200 20%
60%
150 1% 150 200 15%
40%
100 100 10%
1% 100
50 20%
50 5%
0 0% 0 0% 0 0%
Haryana UTTARAKHAND Goa

1600 2% 500 2% 80 100%
400 80%
1200 2% 2% 60
300 60%
800 1% 1% 40
200 40%
400 1% 1%
100 20
20%
0 0% 0 0%
14-Mar 1-Apr 19-Apr 7-May 25-May 14-Mar 1-Apr 19-Apr 7-May 25-May 0 0%
14-Mar 1-Apr 19-Apr 7-May 25-May
25/133
Market Pulse
Higher tests per million population (TPM) may have helped to identify more cases: We
have illustrated the relationship between tests and positive cases per million across
states in the following charts. The first chart shows states with fairly large population
(66m-224m) and the second one illustrated states with smaller population (1.1m 13m).
The relationship is somewhat positive barring few outliers like Karnataka, Rajasthan and
Goa. Notably, Maharashtra, Tamil Nadu and Jammu & Kashmir have a large number of
positive cases per million where tests per million is quite high. On the other side, states
like Uttar Pradesh, West Bengal, Madhya Pradesh and Bihar have identified fewer cases
partly because their tests per million remain significantly low. At the same time,
Rajasthan, Karnataka and Goa seem to be in a good position with high TPM and lower
number of positive cases per million.
Figure 39: Positive cases vs tests per million for high and low population states
Postive cases vs tests per million (states with high population) Positive cases vs tests per million (states with low population)
500
300
450 Maharashtra
400 250
Chandigarh
Positive cases per million
350
Positive cases per million
200
300
Q1 - High Positive cases, Low TPM Q3 - High Positive cases, High TPM Q1 - High Positive cases, Low TPM Q3 - High Positive cases, High TPM
250
150
Q2 - Low Positive cases, Low TPM Q4 - Low Positive cases, High TPM Q2 - Low Positive cases, Low TPM Q4 - Low Positive cases, High TPM
200
Gujarat Tamil Nadu Jammu and
Kashmir
150 100
Madhya Pradesh
100 Rajasthan
50 Uttarakhand Puducherry
Uttar Pradesh Goa
50 Himachal
West Bengal Karnataka
Bihar Nagaland Pradesh
0 Manipur
Arunachal
0
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 6000 Pradesh
0 2000 4000 Tests 6000
per million 8000 10000 12000
Tests per million
26/133
Market Pulse
Tests per million have increased sharply across all states: Over the last month, India
has been able to ramp-up tests per million across all states, as shown in the following
chart. Notably, J&K increased total tests from 1,496 per million as on April 30 th to 10,995
as on May 27th. Similar increment can be seen for Delhi, Goa, Andhra Pradesh, Tamil Nadu,
remains to be the most affected state in the country.
Figure 40: State-wise comparison of no. of tests per million population as on April 30 th, 2020 and May 27th, 2020
As on April 30, 2020 As on May 27, 2020
Delhi 2,383 Jammu and Kashmir 10,995
Andhra Pradesh 1,811 Delhi 9,305
Tamil Nadu 1,582 Goa 9,033
Puducherry 1,564 Andhra Pradesh 6,365
Jammu and Kashmir 1,496 Tamil Nadu 5,852
Rajasthan 1,342 Rajasthan 4,538
Goa 1,319 Puducherry 4,527
Maharashtra 1,111 Arunachal Pradesh 4,279
Haryana 984 Himachal Pradesh 4,226
Chandigarh 973 Chandigarh 3,674
Gujarat 942 Karnataka 3,672
Karnataka 914 Haryana 3,653
Himachal Pradesh 840 Maharashtra 3,316
Kerala 782 Odisha 3,120
Odisha 726 Gujarat 2,854
Punjab 710 Punjab 2,427
Chhattisgarh 611 Manipur 2,203
Uttarakhand 589 Uttarakhand 2,152
Madhya Pradesh 507 Chhattisgarh 2,065
Arunachal Pradesh 461 Kerala 1,935
Uttar Pradesh 347 Madhya Pradesh 1,777
Nagaland 304 West Bengal 1,718
Jharkhand 294 Jharkhand 1,482
Bihar 190 Uttar Pradesh 1,069
West Bengal 171 Nagaland 723
Manipur Bihar 571
148
0 1,000 2,000 3,000 0 4,000 8,000 12,000
Figure 41: State-wise comparison of no. of positive cases per mn population as on April 30th, 2020 and May 27th,
2020
As on April 30,2020) As on May 27,2020
Delhi 177 Delhi 770
Maharashtra 81 Maharashtra 448
Gujarat 65 Tamil Nadu 245
Chandigarh 63 Chandigarh 237
Jammu and Kashmir 47 Gujarat 224
Rajasthan 33 Jammu and Kashmir 145
Madhya Pradesh 32 Rajasthan 101
Tamil Nadu 31 Madhya Pradesh 88
Andhra Pradesh 27 Punjab 72
Punjab 16 Andhra Pradesh 53
Kerala 14 Haryana 48
Haryana 12 Goa 44
Uttar Pradesh 10 West Bengal 43
Karnataka 9 Puducherry 40
West Bengal 8 Uttarakhand 39
Himachal Pradesh 5 Himachal Pradesh 37
Puducherry 5 Karnataka 37
Uttarakhand 5 Odisha 36
Goa 5 Uttar Pradesh 31
Bihar 3 Kerala 29
Odisha 3 Bihar 25
Jharkhand 3 Manipur 14
Chhattisgarh 1 Chhattisgarh 13
Arunachal Pradesh 1 Jharkhand 12
Manipur 1 Nagaland 4
Nagaland Arunachal Pradesh 1
0 50 100 150 200 0 300 600 900
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Market Pulse
Tests per confirmed case (TPCC) is declining in most affected states: TPCC, i.e. the
inverse of test positivity rate is decreasing over time in Maharashtra, Gujarat, Tamil Nadu,
Bihar and Odisha, which may indicate the presence of undetected cases and the need to
increase test per million population. On the other have, Madhya Pradesh, Punjab, West
Bengal, Jammu Kashmir, Andhra Pradesh and Jharkhand have increased their
containment control of the pandemic with increasing TPCC along with high test per 1000
persons.
Figure 42: State-wise comparison of no. of tests per confirmed case

Jharkand
Karnataka
Odisha
Andhra Pradesh
Haryana
Kerala
Rajasthan
UP May 25th
Tamil Nadu May 20th
West Bengal May 15th
Punjab
Madhya Pradesh
Delhi
Chandigarh
Gujarat
Maharashtra
0 20 40 60 80 100 120 140 160

28/133
Market Pulse
: India has started to relax

its lockdown norms in areas other than containment zone even though the number of
cases has shot up significantly over the past few days. This relaxation is growing a scope
of increasing the spread even at a higher rate. Besides, the reverse migration to less
developed states with inferior health infrastructure may turn green zones into red, and
simultaneously there is greater likelihood of rising mortality rate in these newly affected
regions. Moreover, Kerala, which could contain the virus for a while, is again facing new
cases in the precious weeks after evacuating many Indians from abroad.
Figure 43: State-wise one week average growth rate of new COVID-19 cases as on May29th, 2020
Assam
Uttarakhand
Arunachal Pradesh
Chhattisgarh
Puducherry
Manipur
DNHDD
Himachal Pradesh
Ladakh
Meghalaya
Jharkhand
Kerala
Bihar
Tripura
Haryana
Odisha
Karnataka
Chandigarh
Jammu and Kashmir
West Bengal
Delhi
Maharashtra
Goa
Telangana
Uttar Pradesh
Tamil Nadu
Andhra Pradesh
Madhya Pradesh
Rajasthan
Gujarat
Punjab
0% 10% 20% 30% 40% 50%

Source:www.covid19india.org
29/133
Market Pulse
Market Round up
Global equity markets recoup parital losses in April
Global equity markets recovered from their March lows, thanks to drop in infection rate, improvement in recovery rate,
prompt policy interventions and easing of lockdown restrictions to commence business activities. Developed markets
outperformed with MSCI World gaining 10.8% compared to MSCI EM which gained 9%. The S&P 500 Index and Dow
Jones Index increased by 12.5% and 11.1% in April the best monthly rally since 1987. Back home, the Nifty 50 and
Nifty 500 Index rallied by 14.7% and 14.5% respectively in the month of April. The rally, however, was cut short with
markets tumbling in May as infections continued to rise in major urban areas within the country. As of May 27 th, the
number of positive cases in India had crossed 150K with four major states accounting for more 60% of the cases.
Fixed income markets rallied as global central banks stepped up policy measures through rate cuts and asset purchasing
programs to cushion the economic shock from the coronavirus pandemic. The Government and RBI announced a slew
of policy measures amounting to Rs20trn or 10% of GDP to mitigate the coronavirus impact. Excess systemic liquidity
and reverse repo rate cut brought down yield across varios tenors. Indian Rupee recovered from its all-time low of 77
against the dollar on April 21st to end the month at 75.1, as RBI intervened by selling dollars. The Indian rupee has fallen
6.1% since the beginning of the year amid heavy FII selling in equity as well as debt markets.
• Domestic equity markets recovered in April after a sharp correction in March:

The Nifty 50 and Nifty 500
Indian equity markets partially recovered the losses incurred in March by end of
Index surged 14.7% and
April, as the looming growth concerns were partly offset by active policy
14.5% respectively in April.
intervention, commencement of limited economic activities in green and orange The markets, however, fell in
zones and rise in recovery rate for COVID-19 cases. The Nifty 50 and Nifty 500 May following emergence of
Index ended the month 14.7% and 14.5% higher respectively. The markets, tensions between the US and
however, fell in May, as emergence of tensions between United States and China, China and rise in COVID-19
weak economic data and rise in infections weighed on investor sentiments. The infections.
Rs20tn stimulus package announced by the government to support the economy
failed to provide a boost to market sentiments amid imminent growth concerns.
As of May 27th, 2020 Nifty 50 and Nifty 500 Index traded ~23% below December
2019 levels. The Mid- and Small-cap indices also ended higher by 15.4% and
13.4% respectively in April. Market volatility index India VIX fell 47.2% in April
and a further 17.8% in May, after rising sequentially for previous three months.
Volatility, however, continued to remain significantly higher than last year.
In cash markets, average daily turnover increased by 5% MoM to Rs503bn

India VIX fell 47.2% in April
nearly 38% higher than the average daily turnover during FY2019-20 and 17%
and a further 17.8% in May,
higher than the YTD average. Average daily derivative turnover, on the contrary, after rising sequentially for
witnessed a 15% decline MoM, touching an average of Rs940bn in April from previous three months.
Rs1,107bn in the previous month nearly 2% higher than the average daily
turnover during FY2019-20 and 4% lower than the YTD average.
All sectors ended the month with positive returns in April, with gains led by
Pharma (+30%), Real Estate (-37.4%), Auto (+24.7%), Metals (+17.3%) and Bank
(+12.5%). Other heavy-weight sectors such as, IT and FMCG also reported gains
by 10.5% and 4.9% respectively during the month.
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Market Pulse
• Fixed income market rallied on aggressive monetary easing: Fixed income

Fixed income markets rallied
markets rallied in April as global central banks stepped up policy measures in April as global central
through rate cuts and asset purchasing programs to cushion the economic shock banks stepped up policy
from the coronavirus pandemic. The RBI, along with other policy measures aimed measures through rate cuts
at injecting liquidity into the system, cut policy repo rate by 115 bps reverse repo and asset purchasing
rate (the de-facto policy rate in current surplus liquidity environment) by 155bps programs to mitigate
in the fiscal thus far. Surplus systemic liquidity and steep cut in policy rates economic growth concerns.
brought down yield across various tenors. However, the decline was more
pronounced at the shorter-end, while the longer-end remains elevated amid
growth and fiscal pressures, leading to significant steepening of the yield curve.
While the 10-year G-sec yield declined by a meagre 3bps in April and is down
57bps YTD (as of May 27th) to 6.0%, the 1-year and 5-year G-sec yields have fallen
by a much higher 190bps and 106bps YTD respectively.
On the global front, while China and Germany 10-year bond yields fell by 15bps
(-46bps YTD) and 13bps (-23bps YTD) in April to close the month at 2.5% and -
0.6% respectively, Japan and US 10-year yields fell marginally ending the month
6bps and 3bps lower at -0.04% and 0.63% respectively.
• FIIs remained sellers in Indian equities as well as debt in April but turned
After going on a buying spree
buyers in equities May: Foreign institutional investors (FIIs) continued to sell in the first quarter of 2020,
Indian equities and debt in April, with net outflows at US$904mn and US$1.7bn DIIs sold equities worth
respectively (source: Refinitiv) after selling securities worth US$16bn in March Rs8bn in April. FIIs continued
the highest ever monthly outflow. The equity market witnessed FII buying worth to sell equities in April but
US$1.7bn in May thus far (as of May 27th). The selling in debt, however, continued turned buyers in May.
in May with net outflows of US$3.2bn. After going on a buying spree in the first
quarter of 2020, Domestic institutional investors (DIIs) were modest sellers in
Indian equities in April, with net outflows at Rs8bn, but turned buyers again in
May with net inflows at Rs102bn in the month thus far (May 27th).
• Global equity correct sharply in March: After a sharp correction in March, global
benchmark indices recovered in April, thanks to proactive global fiscal and Developed markets
outperformed emerging
monetary policy interventions and flattening of daily rise in COVID-19 cases.
Markets reacted positively as lockdown restriction eased and economic activities
World gained 10.8% in April,
resumed in some economies. While the developed market index (MSCI World MSCI EM gained 9%.
Index) increased by 10.8% in April, the emerging market index (MSCI EM)
increased by 9%.
US: The S&P 500 Index and Dow Jones Index increased by 12.5% and 11.1% in
April the best monthly rally since 1987 due to expansion in stimulus measures
and drop in infection rate. The rally continued in May with S&P and Dow rising
4.2% and 4.9% respectively (as of May 27th) amid optimism over easing of
lockdown and vaccine prospects partially offset by flare up in US-China
geopolitical tensions.
On the macro front, unemployment jumped to 14.7% in April from 4.4% in March,
as lay-offs rose during the standstill in business activities due to the pandemic.
The economy shrank 5% in the first quarter as per second estimate the biggest
quarterly decline since GFC. Industrial production fell a record 11.2% in April as
manufacturing output contracted 13.7%.
Europe: European markets also witnessed a rally in April, as the COVID-19

outbreak showed signs of decline and lockdown restrictions were eased
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Market Pulse
subsequently. While the FTSE 100 rose 4.4% in April, DAX and CAC 40 increased
9.3% and 4% respectively. The Eurozone GDP declined 3.8% if the first quarter,
with France and Spain contracting 5.8% and 5.2% respectively. On the policy
front, ECB is prepared to expand stimulus if needed to counter the impact of the
lockdown on the economy. The Bank of England kept policy rate at an all-time low
of 0.1% after cutting rates twice from the start of the outbreak and rejected the
Asia: Asian markets also ended the month in green. While the Hong Kong market
(Hang Seng Index) and Chinese market (SSE Composite Index) gained 4.4% in
April, the Japanese market (Nikkei 225 Index) and Indian market (Nifty 50 Index)
fell by 6.8% and 14.7% respectively.
In India, while the industrial production in March shrank 16.6% YoY as a result of
the lockdown, merchandise exports and imports declined 35%/60% and
29%/59% YoY in March/April 2020. The manufacturing PMI for April stood at an
all-time low of 27.4 and services PMI at 5.4. Although certain economic activities
were allowed to resume in green and orange zones, major consumption centres
surged 3.9% in April compared to -1.1% in March as economic activities resumed.

The the state of emergency in Japan was extended by another month till end of
May although the economy was not under a formal compulsory lockdown.
• Crude prives fell to negative values in futures market on supply glut far in
Oil prices have recovered
excess of demand: May futures on the US-based WTI crude traded in negative from their March lows due to
territory and June futures fell 50% in April, as traders sold aggressively to avoid coordinated production cuts
taking deliveries. Although oil prices have recovered from their March lows due to by oil producing economies.
coordinated production cuts by oil producing economies, the sharp drop in futures
prices points to a weak demand outlook for crude in view of the global growth
concerns and recent developments in US-China geopolitical tensions. As of May
21st, Brent crude traded 47.6% lower than end of 2019 prices.
Safe haven commodities gold and silver ended the month gaining 5.8% and 7.5%
from March. As of May 27th, the precious metals have returned 32.3% and 18.7%
in the year thus far.
• INR depreciates as FII outflows continue: INR recovered by end of April to 75.1
The key factor attributing to
against the dollar after reaching an all-time low of 77 on April 21st, as RBI the fall in rupee aganst the
intervened by selling dollars to arrest the depreciation in rupee. The key factor dollar is the large outflow of
attributing to this fall is massive foreign capital outflows from equity as well as FII funds from equity and
debt markets. As of May 27th, the INR has fallen 6.1% since the beginning of the debt markets.
year. Rate cuts by global central banks and flight to safety have contributed to
depreciation of major currencies against the dollar.
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Macro economy
Atmanirbhar Package: Empowerment over entitlement and near-term spending
Package announced in five tranches over a five-day period focused on
all crucial sectors and segments of the economy including MSMEs, Power, Agriculture and allied sectors, Coal, Defence,
Civil Aviation, Healthcare, Education, and Public Sector Enterprises (PSEs). Besides actual fiscal outgo on higher
MGNREGS spending, extended EPF contribution and food grain distribution, amongst others, the package focussed a
great deal on bringing in a slew of structural reforms including amendments to the Essential Commodities Act and the
APMC structure, measures to enhance ease of doing business, opening up of the notified strategic sectors to private
companies and privatisation of PSEs in non-strategic sectors and modifications to labour laws. A conditional increase in
state borrowing limits from 3% to 5% of state GDP for FY21, contingent on reform actions, was also announced, thereby
helping states manage their finances better.
Given tight fiscal conditions, much of the government's support has been through its credit line, in the form of
guarantees. Overall, the policy strategy has favoured empowerment of various segments across multiple sectors over
entitlements and near-term spending. Such an approach may be driven by fiscal constraints and its impact may be low
in the short-term but would be significant in the long-term if carried out in a time-bound manner.
The total fiscal support announced by the Government as a part of this package, including the previous measures, adds
up to ~Rs13trn, with direct fiscal impact limited to ~Rs2trn, some of it spread over the next few years. Even as there is
still limited clarity on the extent of fiscal slippage one may expect this year, the shortfall in revenue collections is
expected to overshoot the additional central borrowing of Rs4.2trn planned for this year.
Tranche 1: MSMEs, DISCOMs and EPF
• Liquidity support of Rs3.7trn for MSMEs: To address funding requirements of
MSMEs, the Government has announced a fully guaranteed emergency credit line The Government has
worth Rs3trn from banks/NBFCs for standard borrowers having an outstanding provided liquidity support
worth Rs 3.7trn to MSMEs
credit of up to Rs250mn and turnover of up to Rs1bn. The loans would have a tenor
largely in the form of
of four years with a 12-month moratorium on principal repayment, cap on interest
complete/partial
rates, and no requirement of any fresh collateral. The Scheme can be availed until
guarantees on loans and
October 31st, 2020 and would benefit nearly 4.5mn units. equity infusion through
For stressed MSMEs, the Government would facilitate provision of Rs200bn Fund-of Funds.
subordinate debt by providing partial credit guarantee support to banks through
CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises), entailing a
spend of Rs40bn for the Government. This would benefit nearly 0.2mn MSMEs. The
Government has also announced setting up of a Fund-of-Funds with an initial equity
infusion of Rs100bn, which would be leveraged to provide a total liquidity support
of Rs500bn. This would not only help MSMEs expand their size and capacity but
also encourage them to get listed on the stock exchange. Other measures
announced for MSMEs include a) disallowing global tenders in Government
procurement tenders up to Rs2bn, b) e-marketplace for MSMEs better marketing,
and c) release of Government/CPSE dues to MSMEs within 45 days.
To widen the pool of MSMEs benefiting from these schemes, the Government has
revised the MSME definition by raising the investment limit, introducing turnover
criteria and doing away with the distinction between manufacturing and services.
• Extended Provident Fund support of Rs92.5bn: As part of the Pradhan Mantri
Garib Kalyan Package (PMGKP) worth Rs1.7trn announced on March 26 th, the
Government had decided to bear the entire 24% provident fund contribution of
both employer and employee for the months of March, April and May for people
employed in businesses with an employee base of less than 100 and earning a
monthly income of up to Rs15,000. This support has been extended by another
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Market Pulse
three months, entailing a cost of Rs25bn for the Government. As an additional

liquidity relief worth Rs67.5bn, the Government has also reduced the mandatory
EPF contribution of both employer and employee for employees earning more than
Rs15,000/month from 12% to 10% for all establishments covered by EPFO, except
CPSEs/state PSUs, for the next three months.
• Liquidity support of Rs750bn for NBFCs/HFCs/MFIs: The Government has also
Complete Government
announced a much-awaited liquidity support for the ailing non-banking sector,
guarantee on investment
including non-banking financial companies (NBFCs), housing finance companies grade papers issued by
(HFCs) and micro finance institutions (MFIs). This includes a Special Liquidity NBFCs/HFCs/MFIs would
Scheme worth Rs300bn, under which investment will be made in primary as well provide much-needed
as secondary market transactions in investment grade papers of these companies liquidity support to these
which would be fully guaranteed by the Government. entities and regain
confidence in the market.
For lower-rated companies (AA-rated and below including unrated paper), the existing
Partial Credit Guarantee Scheme announced in the last Union Budget has been
extended to cover primary issuances of bonds/commercial papers of such
companies with an increase in the guarantee limit from 10% to 20% of the first loss.
This would provide an additional liquidity support of Rs450bn to the NBFC sector.
• Liquidity support of Rs900bn for DISCOMs: To address the cash flow issues for
power distribution companies (DISCOMs) arising out of a sharp slump in industrial Liquidity infusion by
PFC/REC to the tune of Rs
-19-induced lockdown, the power financing
900bn into DISCOMs
companies viz. Power Finance Corporation (PFC) and Rural Electrification
would help ease their cash
Corporation (REC) would infuse liquidity worth Rs900bn into DISCOMs against
flow problems.
receivables. Additionally, state governments would provide guarantees on DISCOM
loans availed exclusively to pay dues to power generation companies.
• Liquidity support of Rs500bn through TDS/TCS cut: The rates of Tax Deduction
TDS/TCS cut by 25% of the
at Source (TDS) and Tax Collection at Source (TCS) for payments pertaining to
existing rate for the rest of
contract, professional fees, interest, rent, dividend, commission and brokerage has FY21 to release liquidity
been reduced by 25% of the existing rate for the rest of FY21. This would provide worth Rs 500bn for non-
liquidity support of Rs500bn to non-salaried tax-payers. salaried tax-payers.
• Relief to contractors/real estate developers: As a significant relief to contractors,
the Government has decided to provide an extension of up to six months on Central
Government projects without any cost to the contractor and partially release bank
guarantees in line with project completion. For real estate developers, RERA
timelines on project completion and registration date have been extended by six
months for all registered projects expiring on or after March 25th, 2020, with a
clause of a further three-month extension at the discretion.
• Other direct tax measures: Other measures on the tax front include a) immediate
release of pending refunds to charitable trusts and non-corporate businesses and
professions, b) extension of due dates of income-tax return filing for FY20 from July
31st, 2020 to November 30th, 2020 and tax audit from September 30th, 2020 to
October 31st, 2020, c) extension of date of assessments getting barred on
September 30th, 2020 and March 31st, 2021 by six months, and d) extension of the
period of Vivad se Vishwas Scheme for payment without additional amount to
December 31st, 2020.
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Market Pulse
Tranche 2: Poor, migrant labour and farmers

• Free food grain distribution extended to migrants: Following up on the measures
undertaken over the last couple of months to support migrants by providing food Food security measures
extended to migrants who
and shelter as well as employment via MGNREGS scheme, the Government
are not NFSA/state card
extended the free food grain distribution to migrants who are neither registered
beneficiaries.
under the National Food Security Act (NFSA) or holders of ration cards. Around
800mn migrants would get 5 kgs of grains (wheat/rice) per person and 1 kg Chana
per family per month for the next two months, entailing of cost of Rs35bn for the
exchequer. Additionally, the migrants would be able to access ration from any Fair
Price Shop in India by March 2021 (One Nation One Ration Card).
• Relief of Rs65bn for small businesses/street vendors: In addition to the support

provided by the RBI through loan moratorium, the Government would provide Liquidity support provided
interest subvention of 2% to small businesses on MUDRA-Shishu loans (maximum to businesses/street
vendors through interest
loan amount of Rs50,000; total outstanding credit at Rs1.6trn) for a period of 12
subvention on MUDRA-
months, translating into a total relief of Rs15bn. The Government has also decided
Shishu loans/working
to create a Special Credit Facility within a month to provide an initial working capital
capital assistance.
of up to Rs10,000 to nearly 5mn street vendors. This would provide a liquidity
support of Rs50bn to street vendors who have got severely hit due to COVID-19.
• Employment support for tribal people: Funds worth Rs 60bn under the
Compensatory Afforestation Management & Planning Authority (CAMPA) would be
used by state governments for providing employment opportunities to tribal people
in forestry jobs including afforestation and plantation works, artificial & assisted
natural regeneration, forest management & protection and wild-life related
projects, among others.
• Liquidity support of Rs2.3trn to farmers: To meet the funding requirement of

Liquidity support worth
small and marginal farmers, NABARD would extend an additional working capital Rs2.3trn provided to
funding support of Rs 300bn to Rural Cooperative Banks (RCBs) and Regional Rural farmers through NABARD
Banks (RRBs) over and above the Rs900bn to be extended by NABARD in FY21 and Kisan Credit Card.
through the normal route. This would benefit nearly 30mn small and marginal
farmers with their Rabi harvest and Kharif sowing requirements over the next two
months. Additionally, the Government would also provide concessional credit of
nearly Rs2trn to 25mn farmers through Kisan Credit Cards.
• Affordable rental accommodation for migrants/urban poor: To improve living

standards of migrant workers and urban poor, the Government would launch a
scheme under the Pradhan Mantri Aawas Yojna (PMAY) that would provide
affordable rental accommodation by a) converting the Government-funded houses
into Affordable Rental Housing Complexes (ARHCs) under the public-private
partnership mode, and b) incentivising industries/manufacturing units/other
institutions as well as central/state agencies to develop and operate ARHCs.
• Extension of credit-linked housing subsidy scheme for middle-income group:

The affordable housing
The Government has also extended the deadline for the affordable housing Credit Credit Linked Subsidy
Linked Subsidy Scheme (CLSS) by a year till March 31 st, 2020, thereby benefiting Scheme extended by
nearly 250,000 middle income households during FY21. This would provide an another year until March
investment boost of Rs700bn to the housing sector, besides creating jobs and 31st, 2020.
benefiting related sectors such as steel, transport and construction materials.
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Market Pulse
Tranche 3: Agriculture and allied sectors

• Financing facility of Rs1trn for building agricultural infrastructure: Wastage of
farm produce due to inadequate cold chain infrastructure has been a big concern. Tranche 3 focuses on
Estimates suggest that nearly 16% of perishables and nearly 10% of cereals/ development of agriculture
infrastructure,
pulses/oilseeds get wasted every year. To improve the post-harvest supply chains,
formalization of Micro Food
the Government would set up an Agriculture Infrastructure Fund worth Rs1trn for
Enterprises, support for
funding storage and post-harvest infrastructure at farm-gate/aggregation points.
allied agriculture activities
• Support of Rs100bn for Micro Food Enterprises: For promoting and marketing (animal husbandry/
local brands, the Government would launch a scheme to provide support of fisheries/beekeeping)
Rs100bn to nearly 0.2mn Micro Food Enterprises to assist them in attaining FSSAI among others.
food standards, thereby helping them build and market their brands. This would be
premised on a cluster-based approach to help local value added products to reach
global markets tureal exports.
• Relief package of Rs200bn for fisheries: For sustainable and inclusive
development of marine and inland fisheries, the Government announced the launch
of Pradhan Mantri Matsya Sampada Yojana (PMMSY), first proposed in the 2019-
20 Union Budget, with an outlay of Rs200bn. This would comprise of Rs110bn for
activities in marine and inland fisheries and aquaculture and the remaining Rs90bn
for infrastructure development. This would help check gaps in the fisheries value
chain, increase production and exports as well as generate employment.
• Support of Rs155bn for animal husbandry and beekeeping: The Government
announced setting up of a Rs150bn Animal Husbandry Infrastructure Development
Fund to support private investment in dairy processing and cattle feed infra, with
added incentives for establishing plans for export of niche products. Additionally, a
new scheme with a Rs5bn outlay would be implemented to support beekeeping
with respect to infrastructure, capacity building, and development of quality stock.
• Outlay of Rs40bn for herbal cultivation: The Government plan to cover nearly
1mn hectare area under herbal cultivation over the next two years with an outlay of
Rs40bn, thereby providing an income support of Rs50bn for farmers. The
Government also plan to build regional mandis for medicinal plants.
• Logistics and storage support of Rs5bn for perishable farm produce: The
Long-term governance and
Operation Green scheme launched in the 2018-19 Union Budget for integrated
administrative reforms
development of Tomato, Onion and Potato (TOP) value chain has been extended to announced including
all fruits and vegetables (TOTAL) with an outlay of Rs5bn. The scheme, comprising amendments to the
of 50% subsidy on transportation of produce and 50% subsidy on storage, would Essential Commodities Act,
be launched on a pilot basis for six months. This would help in reducing post- the APMC structure, and
harvest losses at the farm-gate level and enhance value realisation for farmers. the creation of an enabling
legal framework for
• Long-term governance and administrative reforms: Apart from these, the third
farmers.
tranche also provides some long-term guidelines to reform the sector in terms of
governance and administration. These include a) Amendment of Essential
Commodities Act to enhance price realisation for farmers by deregulating select
agriculture food stuffs including cereals, pulses, edible oils, oilseeds, onions and
potato, b) Formulation of a central law to bring about agriculture marketing reforms
to provide marketing flexibility to farmers which is currently restricted to APMCs
(Agriculture Produce Marketing Committees) and c) Facilitate a legal framework
focused on risk mitigation and price and quality assurance for farmers.
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Tranche 4: Structural reforms to push investments

• Liberalisation of the Coal sector: The Government announced some crucial policy
reforms to liberalise the coal sector with an aim to reduce imports and attract
Policy reforms in the coal
private sector participation. These include a) introduction of commercial mining in
sector include commercial
the coal sector on a revenue sharing basis with liberalised entry norms and no end- mining, investment in
use restrictions, facilitated by the passage of the Minerals Law (Amendment) Bill in evacuation and transfer
March 2020. Nearly 50 blocks would be offered immediately, including partially- infrastructure and
explored blocks, with earlier-than-scheduled production to receive rebates in simplification of Mining
revenue-share, b) extension of rebates in revenue-share for gasification or plan.
liquefaction of coal to reduce economic impact, c) investment of Rs500bn for
building evacuation and transfer (conveyor belts) infrastructure, d) auction of
Coal Bed Methane extraction rights from Coal India, e) simplification of guidelines
and format for preparation of mining plan for faster clearances approval process
already made online with approval period slashed from 90 days to 30 days, and f)
concessions in commercial terms worth Rs50bn extended to Coal India customers.
• Reforms in the Mining sector: With an aim to enhance private investments in the
mining sector and improve efficiency and production, the Government announced
a seamless composite exploration-cum-mining-cum-production regime to provide
an end-to-end solution. Open and transparent auction of 500 mining blocks and
joint auction of bauxite and coal mineral blocks would be offered. The distinction
between captive and non-captive mines would be removed to allow lease transfer
and sale of surplus minerals. Additionally, a Mineral Index would be developed and
stamp duty payable at the time of award of mining leases would be rationalised.
• Reforms to increase defence production: Several measures were announced to
increase defence manufacturing and local procurement, thereby reducing defence FDI in defence raised from
import bill. These include a) increase in Foreign Direct Investment (FDI) limit from 49% to 74% to boost
49% to 74%, b) time-bound defence procurement process and faster decision local manufacturing.
making by setting up a dedicated contract management unit, realistic setting of
requirements and overhauling trial and testing procedures and c) corporatisation of
Ordnance Factory Board.
• Aviation sector reforms auctioning of airports and reducing flying cost: The
Aviation sector reforms: a)
Government announced several measures to support the aviation sector one of Six new airports to be
the worst-hit sectors by COVID-19. These include a) optimal utilisation of airspace auctioned, b) optimal
to reduce flying cost to bring benefits worth Rs10bn/year to the sector, b) auction utilisation of airspace and
of six airports for operation and maintenance on public-private partnership (PPP) c) make India an MRO hub.
basis in the 3rd round, and c) rationalisation of tax regime of Maintenance, Repair
and Overhaul (MRO) system to reduce maintenance cost for airlines.
• Power sector reforms privatisation of DISCOMs: To improve performance of
power distribution and supply and bring about operational and financial efficiency,
the Government announced privatisation of power distribution companies in the
Union Territories. A Tariff Policy would also be laid out to protect consumer rights
against DISCOM inefficiencies and inadequate service and improve competition,
transparency and sustainability of the sector.
• Boosting private investments in social infrastructure, space and atomic energy:
VGF of up to 30% for social
infrastructure projects to
infrastructure projects of up to 30% of the project cost with a total outlay of Rs81bn boost private investment.
would enhance private investment in the sector. Measures were also announced to
boost private participation in space activities by providing level-playing field and
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Market Pulse
clear policy and regulatory environment as well as opening exploration/space travel

to the private sector. Reforms were also announced to open up nuclear energy
space to the private sector for cancer research and food preservation.
Tranche 5: NREGA, state finances and ease of doing business
• Increased allocation to MGNERGS: Following up on the measures announced over
the last couple of months, including wage hikes, the Government increased the MGNERGS allocation
allocation to MGNERGS increased to Rs1.01trn
scheme by Rs400bn, taking the total allocation to Rs1.01trn for the fiscal the the highest ever.
highest ever. This would particularly provide job opportunities to migrant labourers
in the current weak business environment.
• Enhanced borrowing for states but with conditions: Considering a sharp drop in
State borrowing limits
revenues for states, the Centre has increased the borrowing limit of states from 3%
raised from 3% to 5% of
to 5% of state GDP for FY21, translating into extra resources of Rs4.3trn GDP, contingent on reform
equivalent to the additional borrowing announced by the Centre. This is in addition actions to provide extra
to the liquidity relief provided by the RBI (60% increase in Ways & Means Advance resources of Rs4.3trn.
limits, extension of overdraft facility) and timely payment of dues by the Centre.
However, the enhanced limit would be partly (1.5% of the 2%) linked to reforms
undertaken by the states in the area of PDS portability, ease of doing business,
power distribution and urban local body revenues.
• Relaxation of IBC norms: To enhance ease of doing business, the Government
IBC norms relaxed
announced relaxation of IBC norms including a) an increase in the minimum increase in minimum
threshold to initiate insolvency proceedings from Rs0.1mn to Rs100mn, thereby threshold, suspension of
supporting MSMEs, b) suspension of fresh initiation of insolvency proceedings fresh proceedings by one
extended by another six months and c) exclusion of COVID-19 related debt from year and provision of
COVID-related exemptions.
• Relief on technical/procedural defaults: With an aim to provide relief to

corporates in meeting technical/procedural requirements, the Govt. decriminalised
the Companies Act violations involving minor technical and procedural defaults
pertaining to CSR reporting, board report, filing defaults and delay in holding AGMs.
This would particularly alleviate stress faced by smaller companies due to fear of
litigation and criminal proceedings in events of such defaults.
• Easier listing norms and other measures to support business environment: A
slew of measures were announced to ease listing norms including a) direct listing
of Indian securities in overseas jurisdictions, b) NCDs of private companies listed
on stock exchange would not be regarded as listed companies, c) creation of
additional/specialised benches for NCLAT (National Company Law Appellate Limiting the number of
Tribunal) and d) lower default penalties for small companies, one-person PSEs in notified strategic
companies, producer companies and start-ups. sectors to four, coupled
with privatisation of PSEs
• Opening all sectors to private companies through Public Sector Enterprise
in non-strategic sectors,
Policy: The Government expressed the intention of opening the private sector to
would go a long way in
all sectors of the economy facilitated by creation of a coherent Public Sector improving governance,
Enterprise (PSE) Policy. Through this policy, the Government would open the efficiency and
notified strategic sectors of the economy to the private sector, with presence of at administration of PSEs.
least one and up to four PSEs in these sectors. Other PSEs in these notified sectors
would be privatised or merged or brought under holding companies. Additionally,
PSEs in all non-strategic sectors will be privatised at an opportune time.
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Market Pulse
• Increased spending on healthcare and education:

step up spending on public healthcare infrastructure, particularly at the grass-root
levels, including health and wellness centres, infectious disease hospital blocks in
all districts and public health labs in all districts and blocks, is a step in the right
direction and would prepare India for dealing with any future pandemics. Moreover,
the Govt. has proposed an extensive use of technology to deliver education in the
post-COVID environment by leveraging digital platforms, TV channels and radio.
Figure 44: Details of measures announced in the fifth tranche of the Rs20trn economic package
Total stimulus Fiscal cost
S. no. Measures
(Rs bn) (Rs bn)
1 Increase in MGNERGS allocation 400.0 400.0
2 Increased investments in public healthcare 0.0 0.0
3 Leveraging technology to deliver education in the post-COVID environment 0.0 0.0
4 Relaxation of IBC norms 0.0 0.0
5 Decriminalisation of Companies Act defaults 0.0 0.0
6 Easier listing norms and other measures to support businesses 0.0 0.0
7 Public Sector Enterprise Policy 0.0 0.0
8 Enhanced borrowing for states 0.0 0.0
Total 400.0 400.0
% of GDP 0.2% 0.2%
Source: Government, NSE.
Figure 45: Details of measures announced in the fourth tranche of the Rs20trn economic package
S. no. Measures
(Rs bn) (Rs bn)
1 Reforms in the coal sector Commercial mining, diversified opportunities, liberalised regime 0.0 0.0
2 Enhancing private investments in the mining sector 0.0 0.0
3 Augmenting domestic defence production and procurement 0.0 0.0
4 Aviation reforms--airport auctions, efficient airspace management, MRO 0.0 0.0
5 Power sector reforms--Tariff Policy, DISCOM privatisation in UTs 0.0 0.0
6 Promoting private investment in social infrastructure 81.0 81.0
7 Boosting private participation in space activities 0.0 0.0
8 Opening nuclear energy to private sector for cancer research and food preservation 0.0 0.0
Total 81.0 81.0
% of GDP 0.04% 0.04%
Figure 46: Details of measures announced in the third tranche of the Rs20trn economic package
S. no. Measures
(Rs bn) (Rs bn)
1 Agriculture Infrastructure Fund for farm-gate infrastructure 1,000.0 0.0
2 Formalisation of Micro Food Enterprises (MFEs) 100.0 100.0
3 Pradhan Mantri Matsya Sampada Yojana (PMSSY) for fisheries 200.0 200.0
4 National Animal Disease Control Programme 0.0 0.0
5 Animal Husbandry Infrastructure Development Fund 150.0 0.0
6 Promotion of Herbal Cultivation 40.0 40.0
7 Beekeeping initiatives 5.0 5.0
8 Extension of Operation Greens to all fruits and vegetables 5.0 5.0
9 Amendments to Essential Commodities Act 0.0 0.0
10 Agriculture marketing reforms 0.0 0.0
11 Agriculture produce price and quality assurance 0.0 0.0
Total 1,500.0 350.0
% of GDP 0.8% 0.2%
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Market Pulse
Figure 47: Details of measures announced in the second tranche of the Rs20trn economic package
S. no. Measures
(Rs bn) (Rs bn)
1 Free food-grain distribution to migrants for two months 35.0 35.0
2 100% national portability of Public Distribution System by March 2021 0.0 0.0
3 Interest subvention of 2% for MUDRA-Shishu loans for 12 months 15.0 15.0
4 Special credit facility for street vendors 50.0 50.0
5 Affordable rental housing complexes for migrant workers/urban poor 0.0 0.0
6 Employment push using CAMPA funds 60.0 0.0
7 Additional emergency working capital funding for farmers through NABARD 300.0 0.0
8 Concessional credit through Kisan Credit Cards 2,000.0 0.0
9 Extension of Credit Linked Subsidy Scheme 700.0 0.0
Total 3,160.0 100.0
% of GDP 1.6% 0.05%
Figure 48: Details of measures announced in the first tranche of the Rs20trn economic package
S. no. Measures
(Rs bn) (Rs bn)
1 Emergency Credit Line to standard MSMEs 3,000.0 0.0
2 Subordinate debt for stressed MSMEs 200.0 40.0
3 Fund of Funds for equity infusion into MSMEs 500.0 100.0
4 Disallowing global tenders in Government procurement 0.0 0.0
5 Extended PF contribution 28.0 25.0
6 Reduction in statutory PF contribution 67.5 0.0
7 Special Liquidity Scheme for NBFCs/HFCs/MFIs 300.0 0.0
8 Partial Credit Guarantee Scheme 2.0 for NBFCs 450.0 0.0
9 Liquidity infusion by PFC/REC into DISCOMs 900.0 0.0
10 Relief to contractors 0.0 0.0
11 Extension of RERA timelines for real estate projects 0.0 0.0
12 TDS/TCS reduction 500.0 0.0
13 Immediate release of pending refunds to charitable trusts/non-corporate businesses & professions 0.0 0.0
14 Extension of due date of income-tax return and tax audit 0.0 0.0
15 Extension of date of assessments getting barred 0.0 0.0
16 Extension in payment date for Vivad se Vishwas Scheme 0.0 0.0
Total 5,945.5 165.0
% of GDP 3.0% 0.08%
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Figure 49: Details of overall stimulus package announced under Atmanirbhar Bharat Scheme
Measures Announcement date Amount (Rs trn)
Fiscal measures
Tranche 1 on MSME, DISCOMs and ETFs 13-Apr-20 5.95
Tranche 2 on poor, migrant labour and farmers 14-Apr-20 3.10
Tranche 3 on agriculture and allied sectors 15-Apr-20 1.50
Tranche 4 on structural reforms to push investments 16-Apr-20 0.08
Tranche 5 on NREGA, state finances and ease of doing business 17-Apr-20 0.40
Revenue loss due to tax concessions since March 22nd, 2020 0.08
Pradhan Mantri Garib Kalyan Package 26-Mar-20 1.70
Spending on healthcare 0.15
Total fiscal measures 12.95
% of GDP 6.5%
Total monetary measures (actual) 8.02

% of GDP 4.0%
Total stimulus provided by Atmanirbhar Bharat package 20.97

% of GDP 10.5%
Source: RBI, Government, Media, NSE.
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RBI cuts policy rates by a further 40bps; eases liquidity and financial stress
In another off-cycle policy meet concluded on May 22nd, the Monetary Policy Committee (MPC) reduced rates by another
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 and inflation
to remain elevated in H1FY21 amid persisting supply dislocations.
A host of other measures were also announced, extensions to some already announced in the past, to improve
availability of liquidity further, support foreign trade and ease financial stress of corporates as well as state governments.
The moratorium on term loans and working capital facilities was extended by three months on expected lines.
Additionally, the exclusion of moratorium/deferment period from asset reclassification and resolution timeline would
serve to alleviate stress on the banking sector.
The Central Bank has remained proactive in taking swift policy actions to mitigate the liquidity shock caused by COVID-
19, with
short-end have accordingly dropped meaningfully (3M/1Y G-sec yield down 235/175bps YTD), spreads at the long-end
remain elevated, probably reflecting the supply overhang. In this context, we expect more open market purchases at
the long-end (or Operation Twist), including potential partial monetisation of the fiscal deficit in a weak demand
environment and a benign inflation trajectory ahead. On policy rates, space remains available for another 25-50bps cut
in this fiscal, ceteris paribus, but effectiveness is contingent on transmission..
• Policy rates slashed by 40bps: In an off-cycle policy meet today, the MPC decided RBI cuts policy rates by
to cut policy rates by 40bps with a 5:1 vote, citing the need to address growth 40bps, translating into
concerns sooner than later in the wake of a much adverse macroeconomic impact cumulative cuts in
of COVID-19 than envisaged earlier. This takes the repo and the reverse repo (the repo/reverse repo rate this
de facto policy rate in the current surplus liquidity environment) rates to 4% and year by 110bps/135bps
3.35%, translating into a total cut this year of 115bps and 155bps respectively. The
Marginal Standing Facility (MSF) and Bank rate stand reduced to 4.25%. The MPC
expects GDP to contract in FY21, even as it refrained from giving forecasts given
heightened uncertainty, and inflation trajectory to remain benign barring near-term
pressure owing to persisting supply dislocations. Further, the MPC has voted to
maintain an accommodative stance for as long as necessary to revive growth,
thereby keeping the room open for further rate cuts.
• RBI announces measures to ease financial stress: The RBI also announced
several measures to make debt servicing easier and improve access to working Our reports on earlier
measures announced by
capital. These include a) Extension of moratorium on instalments on term loans
the RBI:
outstanding as on March 1, 2020 by another three months until August 31 st, 2020,
without resulting in asset classification downgrade, b) Easier working capital 1. COVID-19 policy
financing and servicing: Deferment period on interest payment on working capital response: Rs1.7trn fiscal
facilities has been extended by another three months until August 31 st, 2020, push, Rs3.74trn liquidity
without resulting in asset classification downgrade or an adverse impact on the boost (March 27th, 2020)
2. RBI stems up policy

permitted to be converted into a funded interest term loan to be repaid by the end response, over to the
of the current financial year. Lending institutions may also recalculate drawing Government now ( April
power of borrowers by reducing margins and/or reassessing working capital cycle 17th, 2020)
till the extended period, c) Extension of resolution timeline: Lending institutions are
permitted to exclude the moratorium/deferment period from the calculation of
review and resolution periods, and d) Group exposure limit under the Large
Exposures Framework increased
base, applicable until June 30, 2021.
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• Measures to improve functioning of markets and support foreign trade: To

facilitate SIDBI to meet long-term funding requirements of small industries, the
RBI decided to rollover the special refinancing facility of Rs150bn announced on
April 17th by another three months. The RBI has extended the deadline for FPIs to
utilise at least 75% of the allotted limit under the Voluntary Retention Route (VRR)
from three months to six months. A slew of measures were announced to support
foreign trade in the wake of a sharp drop in domestic/external demand and global
supply chain disruptions including a) an extension in the permissible period of
export credit from 12 months to 15 months for disbursements made up to July 31 st,
2020, b) a credit facility of Rs150bn to the EXIM Bank for 90 days with rollover up
to one year to meet its foreign exchange requirements, and c) extension of time of
payment for imports from six months to 12 months from the shipment date for
imports made on or before July 31st, 2020.
• Liquidity support of Rs133bn for states: To ease the stress on State Government
finances, the RBI has relaxed the withdrawal rules from the Consolidated Sinking
Fund a fund maintained by State Governments with the RBI as a buffer for
repayment of their liabilities, thereby enabling States to deal with the redemption
pressures. This would provide an additional funding of Rs133bn to States.
• Expect more OMOs/deficit monetisation; transmission critical: The RBI, on
contain the
economic and liquidity shock caused by COVID-19 pandemic. This is reflected in
the proactive policy response by the RBI thus far. The liquidity easing measures
s up to Rs9.4trn or 4.6% of GDP. Consequently, while
rates at the short-end have come off meaningfully (3M/1Y G-sec yield down
235/175bps YTD), spreads at the long-end remain elevated, probably reflecting the
supply overhang. In this context, we expect the RBI to do more open market
purchases at the long-end (or Operation Twist), and/or partly monetise fiscal deficit
particularly given a collapsed demand environment and a benign inflation trajectory
ahead (The RBI expects inflation to fall to sub-4% by Q3FY21). On policy rates,
25-50bps cut in this fiscal, ceteris paribus, but
its effectiveness is contingent on speedy transmission.
Figure 50: Changes in key policy rates
Key rates Previous value Current value
Repo Rate 4.4% 4.0%
Reverse Repo Rate 3.75% 3.35%
Marginal Standing Facility (MSF) Rate 4.65% 4.25%
Bank Rate 4.65% 4.25%
Cash Reserve Ratio (CRR) 3% 3%
Statutory Liquidity Ratio (SLR) 18.0% 18.0%
Source: RBI
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Figure 51: Policy rates slashed by 40bps: repo/reverse repo rates now at 4%/3.35%
Cumulative cuts in repo and reverse repo rates in 2020 thus far stand at 110bps/155bps.
%
Movement in key policy rates
Repo rate Reverse repo rate Bank rate Cash Reserve Ratio
10
5
4.25
4 4.0
3.35
3 3.0
Source: RBI, CMIE Economic Outlook, NSE.
Figure 52 dity Adjustment Facility

Systemic liquidity has remained in surplus since June and has increased sharply over the last couple of months, thanks
to continued liquidity injection by the RBI through various conventional as well as unconventional measures. Net liquidity
dity Adjustment Facility has averaged at Rs4.9trn during the period March 27-May 20th.
The amount of outstanding money parked by banks with the RBI surged to as high as Rs 8.5trn on May 5 th, averaging at
Rs 7.3trn during the same period.
Rs bn
Net lending under RBI's Liquidity adjustment facility
Outstanding amount under repo operations
3000 Outstanding amount under reverse repo operations Figure greater than zero
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

-7000 system has increased sharply,
averaging at Rs 4.9trn during Mar
27-May 28
-9000
Jul-18
May-18
Sep-18
May-19
Sep-19
Nov-19
Oct-18
Mar-19
Jan-19
Jan-18
Feb-18
Jan-20
Jun-19
Feb-20
Apr-18
Dec-18
Aug-19
Apr-20
Source: CMIE Economic Outlook, NSE
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Figure 53: India sovereign yield curve

The India sovereign yield curve has steepened over the last couple of 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, massive FPI
outflows and a huge demand-supply mismatch amid heavy supply of G-secs. With the combined fiscal deficit expected
to significantly overshoot budget estimates in FY21, supply of central as well as state papers is expected to be huge this
year, thereby putting continued pressure on the long-end of the curve.
% India sovereign yield curve
31-Dec-19 28-Feb-20 27-May-20
8.0
7.2 7.1
6.7
6.4
5.6
5.1
4.8
4.0
3.2
3.1
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.
Figure 54: Spreads between 10-year G-sec and repo rate

10-year G-sec yield vs. Repo rate
8.5 10-year G-sec yield Repo rate Spread (R) 250
8.0
7.5 200
7.0
150
6.5
6.0
100
5.5
5.0 50
4.5
4.0 0
Source: RBI, Refinitiv Datastream, NSE.
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Figure 55: Bank lending rates vs. policy rate

The weighted average lending rate for fresh loans fell by a steep 43bps in March alone (-46bps in 1Q 2020) even as
lending rate on outstanding loans fell by a meagre 11bps (-14bps in 1Q 2020). A pick-up in monetary transmission in
the credit markets is crucial for the cut in policy rates to be effective in reducing the cost of borrowing for the real
economy.
% Bank lending rates, G-sec rates and policy rate
MCLR on outstanding loans MCLR on fresh loans Repo rate 10-year G-sec yield
11.0
10.0 10.0
9.0
8.8
8.0
7.0
6.0 6.1
5.0
4.4
4.0
Source: RBI, Refinitiv Datastream, NSE.
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Market Pulse
Food inflation rises in April amid supply bottlenecks

The decline in food inflation witnessed over the last couple of months has been expectedly halted, albeit temporarily,
owing to lockdown-induced supply-side bottlenecks. Food inflation (36.7% of the CPI basket) picked up by ~80bps MoM
to 8.6% led by a jump across the board (except fruits). Within core inflation, while health inflation moderated to series-
low levels, housing inflation inched up modestly. Price collection of other categories has not happened owing to
unavailability of transaction data.
A meaningful deterioration in consumption demand, coupled with a sharp drop in commodity prices including crude oil,
is expected to keep core inflation benign. With inflation unlikely to emerge as a concern (RBI expects inflation to ease
to sub-4% in the second half of the current fiscal) and growth expected to fall to unprecedented low levels, we expect
the RBI to cut rates further this fiscal, by at least another 25-50bps, ceteris paribus, and continue injecting liquidity in
the system.
• Lockdown impacts data collection: 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 19 th. Data collection for the month of April has taken place
from 674 urban and 524 villages for commodities that were transacted and were
available during the lockdown. Due to limited transactions in April, price movement
for several sub-groups were not compiled.
• Food inflation picks up amid supply bottlenecks: The lockdown-induced supply-
side bottlenecks have temporarily halted the decline in food inflation witnessed Food inflation picked up in
over the previous few months. Food inflation (36.7% of the CPI basket) picked up April amid supply-side
by ~80bps MoM to 8.6% led by a jump across the board (except fruits). Among bottlenecks.
major food items, inflation in cereals/pulses (~12% of the CPI basket) jumped to
71/45-month high of 7.8%/22.8%, spices inflation surged to the series-high (since
-month high of 10.8%.
While fruit inflation moderated for third month in a row, vegetable inflation
d supply constraints. Within core
inflation, while health inflation moderated to series-low levels, housing inflation
inched up by a modest 25bps MoM to 3.9%. Price collection in other categories has
not happened due to limited transaction data.
• RBI to ease further: Even as data collection is expected to be a challenge in
April/May, other high frequency indicators viz. auto sales, merchandise trade and
PMI, amongst others, confirm the extent of economic shock caused by COVID-19
and attendant measures undertaken to contain the spread. Food inflation is
expected to temporarily remain elevated amid supply constraints, but a significant
deterioration in domestic demand, coupled with a sharp drop in commodity prices
included crude oil, is likely to keep core inflation benign. The RBI expects headline
inflation to fall to the sub-4% in the second half of the fiscal, partly supported by a
favourable base. With inflation unlikely to be an impediment to rate cuts, we expect
the RBI to slash policy rates by another 25-50bps, ceteris paribus, with particular
focus on ensuring adequate systemic liquidity through conventional as well as
unconventional tools.
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Figure 56: Consumer price inflation in April 2020 (%YoY)

Weight (%) Apr-20 Mar-20 Apr-19 FY20 FY19
CPI NA 5.8 3.0 4.8 3.4
Core CPI inflation* 44.9 NA 3.9 4.6 4.0 5.8
Food & Beverages 45.9 8.6 7.8 1.4 6.0 0.7

Cereals and products 9.7 7.8 5.3 1.2 2.1 2.8
Egg 0.4 9.0 5.6 1.9 2.3 4.5
Milk and products 6.6 9.4 6.5 0.4 1.8 2.9
Oils and fats 3.6 10.8 7.5 0.7 2.1 2.9
Fruits 2.9 2.7 3.6 (4.9) 2.3 0.7
Vegetables 6.0 23.6 18.6 2.9 (5.2) 21.3
Pulses and products 2.4 22.8 15.8 (0.8) (8.3) 9.9
Sugar and confectionary 1.4 10.3 3.9 (4.0) (7.0) 0.8
Spices 2.5 12.8 9.8 0.8 2.2 4.4
Non-alcoholic beverages 1.3 2.2 2.2 3.2 2.6 2.6
Pan, Tobacco & Intoxicants 2.4 NA 4.7 4.3 4.2 6.2
Clothing & Footwear 6.5 NA 2.1 2.0 1.6 4.1
Housing 10.1 3.9 3.7 4.8 4.5 6.7
Fuel & Light 6.8 NA 6.6 2.6 1.3 5.7
Miscellaneous 28.3 NA 4.4 5.1 4.4 5.8
Health 5.9 2.8 4.2 8.4 6.3 7.1
Source: CSO, NSE. * Headline inflation excluding food & beverages, pan, tobacco & intoxicants and fuel & light. NA = Not Available.
Figure 57: India inflation vs. interest rates
Source: Refinitiv Datastream, NSE
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Figure 58: India consumer price inflation (CPI)
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Figure 59: Category-wise contribution to India consumer price inflation (CPI)
Figure 60: Category-wise contribution to India Food and Beverages inflation (CPI)
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Market Pulse
• WPI inflation moderates in-line with retail inflation: Wholesale price inflation
(WPI) also declined further in March a four-month low of 1.0%. This was mainly due WPI inflation moderated to
to a significant decline in primary (+3.7% YoY 14-month low) and fuel & power (- a four-month low of 1% in
1.8% YoY) inflation. Within primary articles, food inflation fell to a 13-month low of March 2020.
4.9%, -290bps MoM, non-food primary articles inflation declined by a huge 490bps
MoM to 1.9%, and crude, petroleum & natural gas remained in deflation for the
second month in a row at -7.8% YoY owing to a sharp drop in crude oil prices. Fuel
& power category was pulled into deflation by mineral oils, registering a price
decline of -8.2% YoY, partly offset by higher electricity inflation (+9.9% the
highest in the series). Manufactured products inflation remained steady at a modest
0.3% YoY.
The gap between retail and wholesale inflation widened to a four-month high of of
(45.9%) as compared to the wholesale basket (15.3%), where price drop has been
quite sharp over the last couple of months and b) a higher weightage of
manufactured goods in the wholesale basket (64.2%) as compared to the retail
basket, where prices have remained broadly steady but are expected to fall owing
a significant deterioration in domestic demand due to COVID-19 contagion.
Figure 61: Wholesale price inflation for March 2020 (%YoY)
Weight (%) Mar-20 Feb-20 Mar-19 FY20TD FY19TD
WPI 1.0 2.3 3.1 1.7 4.3
Primary articles 22.6 3.7 6.7 4.9 6.9 2.7
Fuel & power 13.2 (1.8) 3.4 4.6 (1.7) 11.5
Manufactured products 64.2 0.3 0.4 2.2 0.3 3.7
Food group 24.4 5.5 7.3 3.6 6.9 0.6
Source: CSO, NSE
Figure 62: India wholesale price inflation (WPI)
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Market Pulse
Industrial production contracts sharply in March

The modest recovery in industrial activity seen over the last few months is expected to get significantly derailed, thanks
to the nation-wide lockdown due to COVID-19 outbreak as well as global supply disruptions impacting production of
industries like pharmaceuticals, automobiles, electronics and other industrials which rely heavily on global markets for
inputs. the steepest decline ever, and much lower than the
Consensus Estimate of -8.7% (source: Refinitiv Datastream), translating into a drop of 0.7% in FY20. This was led by a
sharp dip in manufacturing activity as well as decline in electricity production owing to low industrial/commercial
demand, even as mining production remained largely steady. However, with the response rate being lower than usual,
revisions to March figures are inevitable. Industrial production is expected to witness a much sharper contraction in April
given the extended and stringent lockdown for the entire month. Moreover, a significant deterioration of domestic
demand is also likely to weigh on industrial production over the coming months.
• 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 was 73%, much lower than than 88% in the first revision for
February and 94% in the final revision for December.
• Industrial production declines sharply owing to lockdown: After improving to a
Industrial production
seven-month high of 4.6% in February, industrial production growth fell sharply to
declined by 16.6% in
-16.6% in March 2020 the steepest decline in the new series and much lower than March 2020 the steepest
the Consensus estimates (-8.7% as per Refinitiv Datastream poll). This translates decline in the new series.
into a decline of 0.7% in FY20 vs. +3.8% in FY19. The sharp drop in March was
largely led by a 20.6% YoY contraction in manufacturing output and a 6.8% YoY Contraction in April is
decline in electricity production amid low demand from industrial and commercial expected to be much
sharper amid an extended
establishments, even as mining production remained largely steady as compared
and stringent lockdown
to the same period last year. All sub-sectors within the manufacturing space
during the entire month.
witnessing a contraction, with biggest laggards being motor vehicles, trailers &
semi-trailers (-50% YoY), computer, electronic & optical products (-42% YoY),
fabricated metal products (-33% YoY) and machinery & equipment (-32%).
On the use-based side, capital goods and consumer durables got impacted the
most, contracting by 36% and 33% YoY in March, translating into a drop of 11.5%
and 6.2% in FY20 respectively.
• Investment as well as consumption activity have deteriorated sharply: The
Both investment as well as
deterioration in investment activity seen over last many months has got
consumption demand has
accentuated by COVID-19 outbreak as visible in a sharp 35.6% YoY decline in significantly worsened due
capital goods production, despite a low base (-9.1% YoY in Apr ), marking the to COVID-19 and is
15th consecutive month of contraction, translating into a fall of 11.5% YoY in FY20. unlikely to revive in a hurry.
Infrastructure/construction sector production also registered a strong 23.8% YoY.
Weak consumption demand in the economy has also worsened, with consumer
goods production registering a decline of 23.2% YoY, led by a huge drop in
consumer durables production (-33.1% YoY).
• Industrial recovery derailed: The modest recovery in industrial activity seen over
the last few months has got singinifcantly, thanks to a nation-wide 54-day
lockdown due to COVID-19 outbreak -end in some
states 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 domestic
demand is also likely to weigh on industrial production over the coming months. On
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Market Pulse
the positive side, a coordinated monetary and fiscal response should help mitigate
the economic shock to some extent.
Figure 63: India industrial production for March 2020 (%YoY)
Weight (%) Mar-20 Feb-20 Mar-19 FY20TD FY19TD
IIP (16.6) 4.6 2.7 (0.7) 3.8
Sector- Mining 14.4 - 9.7 0.8 1.7 2.8

based Manufacturing 77.6 (20.6) 3.1 3.1 (1.3) 3.8
indices Electricity 8.0 (6.8) 11.5 2.2 1.1 5.2
Primary Goods 34.0 (3.1) 8.3 2.6 1.2 3.5
Capital Goods 8.2 (35.6) (9.5) (9.1) (11.5) 5.7
Intermediate Goods 17.2 (18.5) 19.4 12.4 11.9 (0.2)
Use-based
Infra/Construction Goods 12.3 (23.8) (0.1) 5.1 (2.0) 8.2
Goods
Consumer Goods 28.2 (23.2) (1.5) (0.5) (1.4) 5.6
Consumer Durables 12.8 (33.1) (5.8) (3.2) (6.2) 6.5
Consumer Non-durables 15.3 (16.2) 1.5 1.4 2.2 4.9
Source: CSO, NSE:
Figure 64: India industrial production (3MMA)
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Figure 65: Long-term industrial production trend (12MMA)
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Figure 66: India industrial production use-based goods (3MMA)
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Figure 67: India eight-core sector growth (3MMA)
Figure 68: India manufacturing and Services PMI fell deep into the contraction zone in April 2020
Manufacturing and Services PMI
70.0 Manufacturing PMI Services PMI
60.0
50.0
40.0
30.0
20.0
10.0
-
May-13
May-14
May-15
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
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Market Pulse
Trade deficit contracts to near four-year lows, reflecting the severity of lockdown impact
The severity of economic shock caused by the lockdown is now clearly visible in the underlying merchandise trade
figures for April 2020, even as the significant contraction in trade deficit to four-year lows of US$6.8bn would help
. Following a 35% YoY drop in March when domestic lockdown was effective for
the steepest fall witnessed in the last two decades. While the
decline was broad-based, labour-intensive sectors such as gems & jewellery and textiles saw a 90% drop. Imports also
fell by 58.6% YoY led by an equivalent contraction in oil as well as non-oil imports, with hardly any gold imports during
the month. Imports excluding oil and gold fell by 52% YoY. The contraction in exports has been severe than imports as
large-scale disruptions in global supply chains as well as demand destruction caused by COVID-19 led to either delays
in shipments or cancellation of orders.
Trade data is likely to remain weak in May, albeit better than April, amid loosening of lockdown restrictions in some
states during the month. That said, trade deficit is expected to come off meaningfully in FY21 as weak domestic demand
vulnerability to massive foreign capital outflows, if any.
▪ Exports declined by a huge 60% YoY in April : After registering a 35% YoY drop
in March when lockdown was effective for only Exports as well as imports
by a sharp 60.3% YoY in April the worse in the last two decades. The decline has fell by nearly 60% YoY in
been broad-based and particularly pronounced in labour-intensive sectors such as April reflecting the
severity of the impact of
gems & jewellery (-98.7% YoY) and readymade textiles (91% YoY) as
lockdown on Indian
manufacturing completely stopped in the lockdown period. Other major items such
economy.
as engineering goods and electronics also recorded a 75% and 65% drop
respectively, while agriculture exports fared somewhat better, thanks to
Government efforts in identifying farm products for exports amid trade restrictions
against Chinese goods as well as providing necessary policy support. In absolute
terms, the export bill in April was the lowest in more than 13 years.
▪ 59 In-line with exports, imports also fell by a

huge 58.6% YoY in April the steepest decline in decades now. In absolute terms,
the import bill in April was the lowest in over 11 years. Oil imports declined by 59%
YoY, partly reflecting a sharp drop in crude oil prices, leading to oil trade deficit
contracting to four-year lows. Non-oil imports also fell by an equivalent 58.5% YoY
led by almost 100% decline in gold imports during the month. Excluding gold and
oil, imports fell by 52.2% YoY in April.
▪ contracting to four-year lows: Sharp contraction in

Trade deficit contracted to
exports as well as imports resulted in trade deficit declining to US$6.8bn in April near four-year low in April.
the lowest in the last 47 months, and much lower than the average monthly rate of
US$13.2bn in FY20. While oil deficit has contracted to four-year lows of US$3.4bn, FY20 CAD expected at 1%;
non-oil trade deficit has actually widened to three-month high of US$3.3bn. FY21 is likely to see
surplus.
▪ Current account balance to move into surplus in FY21: While we expect a current
Record-high forex reserves
account deficit of 1% of GDP in FY20 vs. 2.1% in FY19, we are mostly likely to see
a current account surplus in FY21 amid a signficant deterioration in domestic
positioning in current weak
demand and plunge in crude oil price, notwitstanding a weak global demand
global environent
environment that is likely to put pressure on exports. Lower remittances from
Middle East countries, however, is a concern. While forex reserves fell by US$6bn
on a MoM basis in March the highest monthly fall in the last 17 months, the
accretion improved significantly in April and May, rising by US$11.5bn in FY21 thus
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far (as of May 15th), leading to import cover improving meaningfully. thereby
Figure 69: India monthly trade balance for April 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$bn)
Apr-20 10.4 -60.3 17.1 -58.6 4.7 -59.0 12.5 -58.5 0.0 -99.9 -6.8
Mar-20 21.4 -34.6 31.2 -28.7 10.0 -15.0 21.1 -33.8 1.2 -62.6 -9.8
Apr-19 26.1 0.5 41.4 3.6 11.4 8.7 30.0 1.8 4.0 54.0 -15.3
FY20 314.0 -4.9 473.0 -8.0 130.2 -7.6 342.8 -8.1 28.2 -14.2 -159.0
Source: Ministry of Commerce, CMIE Economic Outlook, NSE
Figure 70: India monthly trade balance
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Market Pulse
Figure 71: Non-oil non-gold imports trend Figure 72: Oil Imports Trend
Significant disruptions in global supply chains and Oil imports have also fallen at a steep 59% YoY in April
deterioration in domestic demand has led to a sharp fall resulting in oil trade deficit falling to four-year low levels.
in non-oil non-gold imports by 52% in April 2020 the US$bn Oil imports trend %
steepest pace of declines in several decades. Oil Imports % YoY (R)
US$bn Non-oil non-gold imports have nosedived 18
%
35 15 80
Non-oil non-gold imports % YoY (R)
30 40 12
25 30
20 9
20
0 6
(20)
15
(20) 3
10
(40) 0 (70)
5 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
0 (60)
Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20
Source: Ministry of Commerce, CMIE Economic Outlook, NSE
Figure 73: Oil imports are expected to remain weak amid low crude oil prices
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Market Pulse
Figure 74: Global trade projected to fall sharply in 2020

According to World Trade Organisation, global merchandise trade is expected to fall by 13% YoY in 2020 in the optimistic
scenario and by 32% or more if the pandemic is not brought under control and policy response is not effective enough.
Source: Refinitiv Datasream, NSE.
Figure 75: Forex reserves are back to all-time high levels in May, leading to a significant improvement in import
cover
On the positive side, a sustained built up of forex reserves over the years, has resulted in a significant improvement in
import cover, further supported by moderation in domestic demand. After falling to eight mont
import cover has improved sharply to ~13
US$ bn) Forex reserves and import cover (months) # of months
500 FX reserves (US$bn) Import cover ratio (months, RHS) 14
13
450
12
400
11
350 10
9
300
8
250
7
200 6
Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-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.
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FY20 fisc overshoots RE by 80bps to 4.6%; revenue receipts in April fall sharply
to 4.6% the highest in last seven years. This was led by a huge shortfall in revenue receipts (Rs1.8trn or 0.9% of GDP).
Direct tax collections fell by 7.8% in FY20, marking the first contraction in the last four decades, indirect tax collections
grew by a modest 1.8% YoY. GST collections fell below Rs1trn mark in March for the first time in five months, reflecting
the impact of lockdown. Disinvestment receipts fell short of the revised estimate by 23% in FY20 or Rs150bn as weak
market conditions in Feb-March made it difficult for the Government to offload shares. Government, however, largely
stuck to the expenditure target, barring a small cut in capital spending.
collections fell by 45% YoY in April, largely led by a huge drop in income tax, GST and custom collections during the
month, partly offset by higher corporate tax receipts. Net tax collections, however, fell by 71% YoY in April as 69% of
the gross taxes collected during the month was transferred to states. Revenue expenditure grew at a robust 24% YoY,
reflecting higher spending by the Centre on rural development, healthcare, agriculture and MGNREGS. Capital
expenditure, however, fell by 7.5% YoY. Overall, fiscal deficit in April already touched 35% of the FY21 budget estimates
s well as non-tax collections expected to get severely hit in the wake of an ensuing recession
this fiscal and weak market sentiments, the Government is likely to significantly overshoot the budgeted target of 3.5%.
orrowing plan for the year by Rs4.2trn to Rs12trn may at best meet the revenue
shortfall, thereby providing a limited space for a meaningful fiscal stimulus. A detailed analysis on this would follow in
the next edition of Market Pulse.
• FY20 fisc overshot RE by 80bps to 4.6%...:

FY20 came in 22% higher than the revised estimate at Rs9.4trn, overshooting the Gross fiscal deficit overshot
the revised target of 3.5%
target by 80bps to 4.6% the highest in last seven years. This was largely led by a
by 80bps.
huge shortfall in revenue collections, amounting to Rs1.8trn of 0.8% of GDP. Nearly
60% of this was financed by market borrowings and 26% by securities against
small savings. External financial also went by 136% as compared to revised
estimates.
• Gross tax revenues in FY20 fell by

3.4% YoY vs. the targeted growth of 4% in the revised estimates, translating into a Short-fall in revenue
shortfall of Rs1.5trn. Net tax revenues, however, registered a modest growth of receipts in FY20 amounted
2.9% led by a 14.5% YoY decline in transfer to states. Direct tax collections to Rs1.8trn of 0.8% of GDP.
declined by 7.8%, marking the first contraction in the last four decades, thanks to
lacklustre corporate tax receipts (-16.1% YoY). Income tax collections grew at a
modest 4%, much lower than the revised growth estimate of 18.5%. Growth in
indirect tax collections, however, was a tad better at +1.8%, thanks to a pick-up in
GST collections over last few months, barring March.
• Non-tax revenue and capital receipts fell 11.5% short of RE: While non-tax
revenues registered a strong 38% growth in FY20, thanks to one-time surplus
transfer by the RBI in August 2019, it was Rs138bn or 6.9% short of the revised
estimate. Disinvestment receipts declined by 47% to Rs503bn in FY20 the lowest
in last three years vs. the RE estimate of Rs650bn.
•
GST collections fell below
fell by 72% YoY in April: After remaining north of Rs1trn over the previous four the Rs1trn mark for the
months, GST collections fell by 8.4% YoY/7.4% MoM in March to Rs 976bn. This first time in four months;
translates into gross GST collections of Rs 12.2trn in FY20, up by a modest 3.8%
YoY. The drop reflects the impact of a slowdown in economic activity and shutdown declined by 70% YoY.
of non-essential segments towards March-end. The decline in GST collections
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Market Pulse
worsened in April amid a nation-wide lockdown, deterioration in domestic demand

and waiver of interest, late fees or penalties for SMEs for delays in GST filings. While
share of GST collections came in at a muted Rs167bn in April 2020, down 70% YoY.
• Revenue expenditure growth maintained in FY20; capex cut marginally: Despite

pressures on the revenue front in the wake of COVID-19 outbeak, the Government
did not resort to a
intention to focus more on containing the social and economic damage caused by
COVID-10 than fiscal consolidation. While revenue expenditure grew by 17%, in-
line with the revised growth target, capital expenditure was cut marginally,
registering a 9.7% growth in FY20 vs. the revised estimate of +13.4%.
• April data gives a glimpse of build up of fiscal pressures in FY21: The impact of
an exten Gross tax collections in
April declined by 45% YoY.
month of April. Gross tax collections fell by 45% YoY in April, largely led by a huge
drop in income tax, GST and custom collections during the month, partly offset by Spending on rural
higher corporate tax receipts. Net tax collections, however, fell by 71% YoY in April development, healthcare,
as 69% of the gross taxes collected during the month was transferred to states. agri and MGNREGS picked
Revenue expenditure grew at a robust 24% YoY, reflecting higher spending by the up.
Centre on rural development, healthcare, agriculture and MGNREGS. Capital
expenditure, however, fell by 7.5% YoY. Overall, fiscal deficit in April already
• A massive fiscal slippage in FY21 in the making: A 7-day lockdown in the month
of March led to a miss of 80bps on the fisc in FY20. With the lockdown getting
Combined fiscal deficit
extended to almost two months in the current fiscal, albeit with some relaxations
(Centre + States) may well
in the latter part of this period in the Green and Orange districts, strain on the
shoot up to double-digits in
-tax FY21.
collections are expected to get severely hit in the wake of an ensuing recession this
fiscal and weak market sentiments, barring some relief from the hike in excise
duties on petrol and diesel. Clearly, the Government is likely to overshoot the
borrowing plan for the year by Rs4.2trn to Rs12trn may at best meet the revenue
shortfall, thereby providing a limited space for a meaningful fiscal stimulus.
With states playing a major role in containing the virus but with a sharp drop in
resources, state finances are also likely to come under a severe strain. The Centre
has already allowed the states to borrow up to 5% of GDP in the current fiscal, albeit
with some conditions. Prima facie, the combined fiscal deficit (centre + states) may
well rise to double-digits in FY21, with total gross market borrowings jumping to
Rs20bn+.
• With a huge supply of Government

paper, centre and states combined, expected to hit the market in the coming
months, we do not rule out direct deficit monetisation of fiscal deficit by the RBI.
As widely feared, this is unlikely to be inflationary in nature in the wake of a massive
demand destruction caused by the virus outbreak.
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Market Pulse
Figure 76
Figure 77
Fiscal deficit trend (% of GDP)
7.0 6.6
5.9
6.0
4.9 4.9
5.0 4.5 4.6
4.1
3.9 3.8
4.0 3.5 3.5 3.4 3.3 3.5
3.0
2.0
1.0
-
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20BE FY20RE FY20A FY21BE
Source: CMIE Economic Outlook, CGA, NSE
Figure 78: A quick glance at FY20 and FY21BE fiscal balances

FY20 FY21
% YoY over % YoY over
Rs bn RE (Rs bn) %YoY Actual (Rs bn) %YoY BE (Rs bn)
FY20RE FY20A
Net tax revenues 15,046 14.2 13,559 2.9 16,359 8.7 20.7
Non-tax revenues 3,455 46.6 3,262 38.3 3,850 11.4 18.0
Non-debt cap rec. 816 -27.6 686 -39.1 2,250 175.7 227.8
Total receipts 19,317 16.0 17,507 5.1 22,459 16.3 28.3
Revenue Exp 23,496 17.0 23,496 17.0 26,301 11.9 11.9
Capital Exp 3,489 13.4 3,367 9.7 4,121 18.1 22.4
Total expenditure 26,986 16.6 26,864 16.0 30,422 12.7 13.2
Fiscal deficit 7,668 18.1 9,356 44.1 7,963 3.8 -14.9
% GDP 3.8 4.6 3.5
Source: CMIE Economic Outlook, CGA, Budget documents, NSE
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Market Pulse
Figure 79: Direct Tax Collection Trends Figure 80: Indirect Tax Collection Trends
Rsbn Direct tax collections trend % Rsbn Indirect tax collections trend %
Indirect tax collections % YoY (R)

12000 Direct tax collections % YoY (R) 25 12000 40
10000 20 35
10000
15 30
8000 8000
10 25
6000 6000 20
5
4000 15
0 4000
10
2000 -5 2000
5
0 -10 0 0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: CMIE Economic Outlook, CGA, NSE
Figure 81: Gross tax collection trends Figure 82: Monthly trend of GST Collections
Rsbn Gross tax collections trend % Rs bn Monthly trend of GST collections
Gross tax collections % YoY (R) FY20 Required monthly target % YoY
25000 30
1200 15.0
Required monthly run-rate: Rs 1.03trn
25 10.1
20000 1000 8.9 8.1 8.3
6.7 10.0
20 5.8 6.0
800 4.5 4.5
15000 5.0
15
600
10 0.0
10000 400
-5.3
-3.0
5 -5.0
200 -8.4
5000
0 0 -10.0
0 -5
FY11FY12FY13 FY14FY15FY16FY17FY18FY19FY20
Source: CMIE Economic Outlook, CGA, PIB, NSE
Figure 83: Revenue and capital expenditure trend Figure 84: Expenditure Mix
Rs trn Share of revenue and capital expenditure in total % Share of revenue and capital expenditure in total
expenditure expenditure trend
Capital exp Revenue expenditure Capital expenditure
30 Rev exp 60.0 100
Millions
13.1 12.2 11.8 12.1 11.8 14.1 14.5 12.3 13.3 12.5
% YoY growth in rev exp
% YoY growth in capital exp 3.4 80
40.0
3.1
20 2.6
2.9 60
2.5
2.0 20.0
1.9
1.7 86.9 87.8 88.2 88.0 88.2 85.9 85.5 87.7 86.7 87.5
1.6 23.5 40
1.6
10 18.8 20.1
16.9
14.7 15.4 0.0
11.5 12.4 13.7 20
10.4
0 -20.0 0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: CMIE Economic Outlook, CGA, PIB, NSE
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Market Pulse
Figure 85
Items (Rs bn) FY20RE FY20A FY21BE
Rs bn % YoY Rs bn % of RE % YoY Rs bn % YoY* Rs bm % YoY
Net tax revenues 15,046 14.2 13,559 90.1 2.9 16,359 8.7 214 (70.1)
Gross tax revenues 21,828 4.1 20,099 92.9 (3.4) 24,230 12.0 676 (44.3)
Of which:
Direct Tax 11,575 2.9 10,372 89.6 (7.8) 13,060 12.8 465 (10.8)
Corporation tax 6,105 -8.0 5,569 91.2 (16.1) 6,810 11.5 195 57.7
Income tax 5,470 18.5 4,803 87.8 4.0 6,250 14.3 270 (32.1)
Indirect Tax 10,059 5.3 9,727 96.7 1.8 11,170 11.0 211 (69.5)
Goods and service tax 6,123 5.3 6,014 98.2 2.9 6,905 12.8 167 (69.8)
Custom Duties 1,250 6.1 1,092 87.3 (7.3) 1,380 10.4 39 (70.0)
Excise Duties 2,480 6.9 2,396 96.6 3.7 2,670 7.7 1 NM
Others 194 13.0 164 84.7 8.0 205 5.8 5 (19.5)
States Share (6,560) -13.8 (6,507) 99.2 (15) (7,842) 19.5 (460) (7.1)
Transferred to NCCD (28) 55.0 (33) 119.0 84.4 (29) 5.0 (1) NM
Non-Tax Revenue 3,455 46.6 3,262 94.4 38.3 3,850 11.4 58 (75.2)
Dividends and profits 1,999 76.2 1,861 93.1 64.1 1,554 (22.3) 0 (94.9)
Other non-tax revenues 1,456 19.1 1,401 96.2 14.5 2,296 57.7 58 (75.2)
Central govt. revenue receipts 18,501 19.1 16,821 90.9 8.3 20,209 9.2 272 (71.4)
Non-Debt Capital Receipts 816 (27.6) 686 84.1 (39.1) 2,250 175.7 4 (86.5)
Recovery of Loans 166 (6.9) 183 110.3 2.0 150 (9.9) 4 4.3
Misc. Receipts (inc. divestment) 650 (23.6) 503 77.4 (46.9) 2,100 223.1 0 (100.0)
Total Receipts 19,317 16.0 17,507 90.6 5.1 22,459 16.3 275 (71.8)
Revenue Expenditure 23,496 17.0 23,496 100.0 17.0 26,301 11.9 2,788 24.4
Interest Payments 6,251 7.3 6,110 97.7 4.9 7,082 13.3 267 36.5
Major subsidies 2,273 15.5 2,232 98.2 13.3 2,278 0.2 441 (36.1)
Food 1,087 7.3 1,087 100.0 6.7 1,156 6.3 192 (59.0)
Fertilizer 800 13.3 811 101.4 14.9 713 (10.9) 206 21.5
Petroleum 386 55.3 334 86.6 36.0 409 6.1 42 (17.9)
Other revenue expenditure 14,973 21.9 15,154 101.2 23.4 16,941 13.1 2,080 53.4
Capital Expenditure 3,489 13.4 3,367 96.5 9.7 4,121 18.1 283 (7.5)
Total Expenditure 26,986 16.6 26,864 99.5 16.0 30,422 12.7 3,071 20.6
Fiscal Deficit 7,668 18.1 9,356 122.0 44.1 7,963 3.8 2,795 78.0
Fiscal Deficit/GDP 3.8 4.6 3.5 1.4
Source: CMIE Economic Outlook, CGA, Budget Documents, NSE. * The YoY growth figures are on FY20RE.
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Market Pulse
Q4FY20 GDP growth at a 11-year low of 3.1%; FY20 at 4.2%, revising FY21E to -6.0%
-year low of 3.1%, illustrating the nature of the national
lockdown, even as it was ahead of market expectations (NSEe: +1%). Growth was dragged down by lower consumption
as well as investment demand. Government spending remained the only saviour for yet another quarter despite strained
fiscal balances. Moreover, the share of discrepencies in Q4FY20 was a tad higher than the average March quarter share
over the last nine years, but contributed 82% to the GDP growth. Adjusting for Government consumption and
discrepancies, GDP in Q4FY20 contracted by 0.8%. While the nationwide lockdown owing to COVID-19 outbreak is
partly to be blamed for the sharp drop in growth last quarter, signficant downward revisi
(9MFY20 GDP growth downgraded by 60bps) points to a pervasive slowdown in the economy even before the
Coronavirus outbreak forced the nation into a lock-down. GDP growth in FY20 at 4.2% is now the lowest in last 11 years.
By economic activity, GVA growth in Q4FY20/FY20 came in at 3.0%/3.9%, supported by Agriculture, while growth in
Industry and Services sectors fell to the lowest in the series.
Amidst an extended lock-down for more than two months now and counting and expectations of a gradual easing of
restrictions at best given rising number of COVID-19 cases, the impact on Indian economy is expected to be much more
severe than envisaged earlier, particularly in the wake of limited fiscal spend. An anticipated recovery period has now
extended substantially as consumption behaviour is expected to change drastically even post the lockdown amid job
uncertainty, leading to higher savings. The severity of macroeconomic shock caused by the lockdown is reflected in a
sharper-than-expected drop in several high frequency indicators such as merchandise trade performance,
manufacturing PMI, auto sales, fuel consumption, amongst others. We therefore downgrade our FY21 GDP growth
estimate to -6.0% vs. +0.8% earlier, led by a meaningful contraction in consumption as well as investment activity.
Nominal GDP would see a contraction in FY21 for the first time in the last six decades, thereby having severe implications
for the fiscal math. Risks to our growth estimates, however, continue to remain on the downside.
• Q4FY20/FY20 GDP growth fall to 11-year lows: Fourth quarter GDP growth fell
GDP growth in Q4/FY20 fell
to a 11-year low of 3.1%, even as it was higher than market expectations (NSEe:
to a 11-year low of
1%). While investments continued to remain a drag, with COVID-10-imposed 3.1%/4.2%.
restrictions further adding to the woes, consumption growth also moderated
significantly to over five-year lows. This, along with downward revisions to previous
-year low of 4.2%. The Gross
Value Added (GVA) growth in Q4FY20/FY20 also declined to a decadal low of
3.0%/3.9%, largely led by contraction in industrial sector growth for yet another
quarter and signficant moderation in Services sector growth, even as Agri sector
growth surprised positively. Nominal GDP growth fell to 48-year low of 7.2% in
FY20, thereby having significant implications for the fiscal math.
• Government spending the only saviour: The Q4FY20 GDP growth was severely
dragged down by lacklustre investment, with GFCF (Gross Fixed Capital Formation) Government spending has
been the only saviour;
contracting by 6.5% in Q4FY20 the steepest decline in last 11 years, marking the
excluding Government
third consecutive quarter of an YoY contraction. The impact of muted demand
spending and
environment, weak business confidence, low capacity utilisation and tight financial
discrepancies, GDP
conditions prevalent before got accentuated with the COVID-19 outbreak and
contracted by 0.8% YoY in
attendant containment measures. Private consumption, however, grew at a modest Q4FY20.
2.7% YoY in Q4FY20 the lowest in five years. Government spending remained the
only saviour for yet another quarter despite strained fiscal balances, contributing
~40% to GDP growth in Q4FY20 but with a much lower share of 10%. Notably, the
share of discrepencies in Q4FY20 was a tad higher than the average March quarter
share over the last nine years, but contributed 82% to the GDP growth during the
quarter. Excluding Government consumption and discrepancies, GDP growth in
Q4FY20 worked out to be -0.8% YoY.
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Market Pulse
• Sector-wise, Agri/Government services come to the rescue: Among the sectors,

Excluding Government
Agriculture and Government services emerged as the only silver linings. Agriculture
services/Agri, GVA growth
sector grew at a two-year high of 5.9%, and is expected to fare relatively much
in Q4/FY20 came in at a
better in FY21, supported by a normal monsoon and elevated reservoir levels. much lower 1.1%/2.8%.
Industrial sector contracted by 0.6% YoY in Q4FY20 the second and the steepest
fall in the last eight years (new series), led by manufacturing and construction,
reflecting the weakened consumption and investment demand post the lockdown
announcement. Services growth also moderated significantly to 4.4% led by trade,
hotels & transport and financial & business services, even as Government services
growth remained robust at 10.1% for third quarter in a row. Excluding Agri/
Government Services, GVA growth would work out to be much lower 1.1%/2.8% in
Q4FY20/FY20.
• Direction/magnitude of quarterly revisions disturbing: While revisions to earlier
data have been routine with National Accounts data, particularly in the new series
(Base year 2011-12), what surprises and bothers this time is the direction and
magnitude of the revisions. While growth numbers were revised higher in February,
the revisions for the same quarters has been on the lower side this time.
Nevertheless, the revised data points to a significant, pervasive slowdown in the
economy even before the Coronavirus outbreak forced the nation into a lock-down
of 60 days and counting. A lower growth trajectory than anticipated earlier has
implications on the impact of the lockdown (worse than expected), and on the
extent of recovery (should take longer than expected, but with a sharper base
effect-led initial recovery in FY22).
• FY21 GDP growth estimate revised lower to -6.0%: Amidst an extended lock-
We have revised our GDP
down for more than two months now and counting and expectations of a gradual
growth forecast from 0.8%
easing of restrictions at best given rising number of COVID-19 cases, the impact on (estimated in April; read
Indian economy is expected to be much more severe than envisaged earlier, details here) to -6.0%,
particularly in the wake of limited fiscal spend. An anticipated recovery period has thanks to an extended
now extended substantially as consumption behaviour is expected to change lockdown and sharper-
drastically even post the lockdown amid job uncertainty, leading to higher savings. than-expected drop in high
The severity of macroeconomic shock caused by the lockdown is reflected in a frequency indicators.
sharper-than-expected drop in several high frequency indicators such as
merchandise trade performance, manufacturing PMI, auto sales, fuel consumption,
amongst others. We therefore downgrade our FY21 GDP growth estimate to -6.0%
vs. +0.8% earlier, led by a meaningful contraction in consumption as well as
investment activity. Nominal GDP would see a contraction in FY21 for the first time
in the last six decades, thereby having severe implications for the fiscal math. Risks
to our growth estimates, however, continue to remain on the downside.
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Market Pulse
Figure 86: India quarterly GDP growth falls to a 11-year low (%)
GDP growth at 3.1% in Q4FY20 is the weakest in last 11 years. Adjusted for seasonal effects, the 4QMA growth is
firmly trending lower to 4.2% now.
Figure 87: Quarterly growth trend (2011-12=100) (%YoY)

Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Gross Domestic Product (GDP) 7.1 6.2 5.6 5.7 5.2 4.4 4.1 3.1
Private Consumption (PFCE) 6.7 8.8 7.0 6.2 5.5 6.4 6.6 2.7
Government Consumption (GFCE) 8.5 10.8 7.0 14.4 6.2 14.2 13.4 13.6
Gross Capital Formation (GCF) 10.8 11.4 11.5 5.0 5.3 -2.9 -4.3 -5.8
Gross Fixed Capital Formation (GFCF) 12.9 11.5 11.4 4.4 4.6 -3.9 -5.2 -6.5
Net trade -10.8 65.6 -18.7 -58.5 -4.1 -46.0 -57.5 14.9
Exports 9.5 12.5 15.8 11.6 3.2 -2.2 -6.1 -8.5
Imports 5.9 18.7 10.0 0.8 2.1 -9.4 -12.4 -7.0
Gross Value Added (GVA) 6.9 6.1 5.6 5.6 4.8 4.3 3.5 3.0
Agriculture 3.8 2.5 2.0 1.6 3.0 3.5 3.6 5.9
Industry 7.5 4.8 5.0 2.6 4.2 0.5 -0.3 -0.6
Mining and Quarrying -7.3 -7.0 -4.4 -4.8 4.7 -1.1 2.2 5.2
Manufacturing 10.7 5.6 5.2 2.1 3.0 -0.6 -0.8 -1.4
Electricity 7.9 9.9 9.5 5.5 8.8 3.9 -0.7 4.5
Construction 6.4 5.2 6.6 6.0 5.2 2.6 0.0 -2.2
Services 7.4 7.4 7.4 8.7 5.5 6.5 5.7 4.4
Trade, Hotels, Transport, Storage, Comm. 8.5 7.8 7.8 6.9 3.5 4.1 4.3 2.6
Fin. Svcs, Real Estate & Business Svcs. 6.0 6.5 6.5 8.7 6.0 6.0 3.3 2.4
Community, Social & Personal Svcs. 8.8 8.9 8.1 11.6 7.7 10.9 10.9 10.1
Source: CSO, NSE
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Market Pulse
Figure 88: Annual real GDP growth trend (% YoY)

FY16 FY17 FY18 FY19 FY20 FY21E
Gross Domestic Product (GDP) 8.0 8.3 7.0 6.1 4.2 -6.0
Private Consumption (PFCE) 7.9 8.1 7.0 7.2 5.3 -6.0
Government Consumption (GFCE) 7.5 6.1 11.8 10.1 11.8 13.1
Gross Capital Formation (GCF) 4.7 3.7 10.0 9.5 -2.0 -12.1
Gross Fixed Capital Formation (GFCF) 6.5 8.5 7.2 9.8 -2.8 -13.7
Net trade of goods & services -9.1 -5.7 257.7 -11.8 -29.2 -11.6
Exports of goods & services -5.6 5.0 4.6 12.3 -3.6 -14.9
Imports of goods & services -5.9 4.4 17.4 8.6 -6.8 -14.5
Gross Value Added (GVA) 8.0 8.0 6.6 6.0 3.9 -6.0
Agriculture 0.6 6.8 5.9 2.4 4.0 2.8
Industry 9.6 7.7 6.3 4.9 0.9 -13.5
Mining and Quarrying 10.1 9.8 4.9 -5.8 3.1 0.1
Manufacturing 13.1 7.9 6.6 5.7 0.0 -15.2
Electricity 4.7 10.0 11.2 8.2 4.1 -4.9
Construction 3.6 5.9 5.0 6.1 1.3 -17.2
Services 9.4 8.5 6.9 7.7 5.5 -4.2
Trade, Hotels, Transport, Storage, Comm. 10.2 7.7 7.6 7.7 3.6 -16.3
Fin. Svcs, Real Estate & Business Svcs. 10.7 8.6 4.7 6.8 4.6 -4.4
Community, Social & Personal Svcs. 6.1 9.3 9.9 9.4 10.0 12.9
Source: CSO, NSE
Figure 89: Share in GDP (%)

FY16 FY17 FY18 FY19 FY20
Gross Domestic Product (GDP) 100.0 100.0 100.0 100.0 100.0
Private Consumption (PFCE) 56.1 56.1 56.0 56.6 57.2
Government Consumption (GFCE) 10.0 9.8 10.2 10.6 11.3
Gross Capital Formation (GCF) 34.5 33.0 33.9 35.0 32.9
Gross Fixed Capital Formation (GFCF) 30.7 30.8 30.8 31.9 29.8
Net trade of goods & services -1.2 -1.1 -3.6 -3.0 -2.0
Exports of goods & services 20.8 20.2 19.7 20.9 19.3
Imports of goods & services 22.1 21.3 23.4 23.9 21.4
Discrepancies 0.7 2.3 3.5 0.9 0.6
Gross Value Added (GVA) 100.0 100.0 100.0 100.0 100.0

Agriculture 15.4 15.2 15.1 14.6 14.6
Industry 31.6 31.5 31.4 31.1 30.2
Mining and Quarrying 3.0 3.1 3.0 2.7 2.7
Manufacturing 18.1 18.1 18.1 18.1 17.4
Electricity 2.1 2.2 2.3 2.3 2.3
Construction 8.2 8.1 8.0 8.0 7.8
Services 53.0 53.3 53.4 54.3 55.2
Trade, Hotels, Transport, Storage, Comm. 19.0 18.9 19.1 19.4 19.4
Fin. Svcs, Real Estate & Business Svcs. 21.9 22.0 21.6 21.8 21.9
Community, Social & Personal Svcs. 12.2 12.3 12.7 13.1 13.9
Source: CSO, NSE
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Market Pulse
Data revisions and implications: Revisions to national income data have been routine
with national accounts data, particularly in the new series (Base year 2011-12). In fact,
the last significant revision dated January 7 th, 2020 had revisions going back every year
to FY17 as better data became available. These ranged from updated production and
prices of crops, ASI (Annual Survey of Industries) results, to updated information on local
bodies and autonomous institutions. Most such revisions are not substantial in nature.
Quarterly revisions: The interesting difference this time around is with the direction
and magnitude of the revisions. Consider the tables below on quarterly figures of GDP and
GVA at both 2011-12 and current prices. Growth in Q1 and Q2FY20 reflected the severe
slowdown in the economy, with Q1 growth dropping to 5.0%, followed by 4.5% in Q2. One
may recall the slowdown also being reflected across various other indicators, like bank
credit, capital raising, corporate earnings and flow of funds to the commercial sector.
The revisions on February 28th showed a slightly different picture, with growth being
revised upwards for Q1 and Q2 of FY20 (by 60bps), but maintaining the trend of a gradual
slowdown, with 3QFY20 growth estimated at 4.7%. What we see now with the Q4FY20
data release is a further revision to FY20 quarters, downwards this time, to
levels even lower in general than the first estimates available in Nov . While Q1
is revised upwards marginally, there are meaningful downgrades for both Q2 and Q3 (-
70bps and 60bps), followed by a 3.1% growth estimate for 4Q. Growth for FY20 is thus
expected to be 4.2%, down 80bps from the earlier estimate of 5.0%, and 190 bps down
6.1% (Which was also reduced from 6.3% earlier).
The revisions are relatively marginally smaller for the more easily estimated nominal data,
but the change in direction between the November, February and May data is evident, as
shown below. In nominal terms, FY20 growth has been revised lower from 7.7% to 7.2%.
Implications: The revised data points to a significant, pervasive slowdown in the
economy even before the COVID-19 outbreak forced the nation into a lock-down of 60
days and counting. A lower growth trajectory than anticipated earlier has implications
on the impact of the lockdown (worse than expected), and the recovery ahead (should
take longer than expected, but with a sharper base effect-led initial recovery in FY22).
Figure 90: Revision in Quarterly Gross Domestic Product Estimates for FY20 (%YoY, 2011-12=100)
Quarter of FY20 Q1 Q2 Q3 Q4
November 30th, 2019 5.0 4.5
Feb 28th, 2019 5.6 5.1 4.7
May 29th, 2019 5.2 4.4 4.1 3.1
Source: CSO, NSE
Figure 91: Revision in Quarterly Gross Value Added Estimates for FY20 (%YoY, 2011-12=100)
November 30th, 2019 4.9 4.3
Feb 28th, 2019 5.4 4.8 4.5
May 29th, 2019 4.8 4.3 3.5 3.0
Source: CSO, NSE
Figure 92: Revision in Quarterly Growth Domestic Product Estimates for FY20 (%YoY, Current Prices)
November 30th, 2019 8.0 6.1
Feb 28th, 2019 8.3 6.4 7.7
May 29th, 2019 8.1 5.9 7.4 7.5
Source: CSO, NSE
Figure 93: Revision in Quarterly Gross Value Added Estimates for FY20 (%YoY, Current Prices)
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November 30th, 2019 7.9 6.3
Feb 28th, 2019 8.6 6.6 7.8
May 29th, 2019 8.0 6.2 7.0 6.8
Source: CSO, NSE
Figure 94: Gross value added (GVA) across sectors:

Across sectors, Agriculture and Government services emerged as the only silver linings. Agriculture sector grew at a
two-year high of 5.9% in Q4FY20. Industrial sector contracted by 0.6% YoY in Q4FY20 the second and the steepest
fall in the last eight years (new series), led by manufacturing and construction, reflecting the weakened consumption
and investment demand post the lockdown announcement. Services growth also moderated significantly to 4.4% led
by trade, hotels & transport and financial & business services, even as Government services growth remained robust at
10.1% for third quarter in a row.
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Figure 95: India GVA sector share of growth (%)
Figure 96: GDP sector quarterly growth (%YoY)

Consumption the mainstay of Indian economy witnessed a significant moderation in the March quarter. has seen
some improvement in the December quarter. While growth in private consumption fell to five-year low of 2.7% in
Q4FY20, Government consumption growth remained robust for yet another quarter at 13.6%. Investments (Gross Fixed
Capital Formation) grew at a 11-year low of -6.5% in Q4FY20, marking the 3rd consecutive quarter of an YoY contraction.
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Figure 97: GDP sector quarterly contribution (%GDP)
Figure 98: India GDP sector share of growth (%)
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Figure 99: Nominal vs. real GDP and GVA growth

Gap between real and nominal GDP growth widened further in Q4FY20, thanks to a spike in inflation over the last few
months.
FY21 GDP growth estimate revised lower to -6.0%: Amidst an extended lock-down for
more than two months now and counting and expectations of a gradual easing of
restrictions at best given rising number of COVID-19 cases, the impact on Indian economy
is expected to be much more severe than envisaged earlier, particularly in the wake of
limited fiscal spend. An anticipated recovery period has now extended substantially as
consumption behaviour is expected to change drastically even post the lockdown amid
job uncertainty, leading to higher savings. The severity of macroeconomic shock caused
by the lockdown is reflected in a sharper-than-expected drop in several high frequency
indicators such as merchandise trade performance, manufacturing PMI, auto sales, fuel
consumption, amongst others. We therefore downgrade our FY21 GDP growth estimate
to -6.0% vs. +0.8% earlier, led by a meaningful contraction in consumption as well as
investment activity. Nominal GDP would see a contraction in FY21 for the first time in the
last six decades, thereby having severe implications for the fiscal math. Risks to our
growth estimates, however, continue to remain on the downside.
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Figure 100: Annual GDP growth trend: FY21 GDP growth estimate revised downwards from 0.8% to -6%
% Annual GDP growth trend
10.0 8.5
7.9 8.1 7.9 8.0 8.3
7.7 7.4
8.0 7.0
6.4 6.1
5.2 5.5
6.0
4.2
4.0 3.1
2.0
-
(2.0)
(4.0)
(6.0)
-6.0
(8.0)
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21E
Source: CSO, CMIE Economic Outlook, NSE
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Insights
Invited article: Earning trust through long-term integrated thinking
Trust is very fragile. It takes special attention to detail to build and even more to protect
In August 2019, we have witnessed a tectonic shift in the understanding of key business
6
companies as part of The Business Roundtable declared that the purpose of a
stakeholders.
Obviously, such a change did not happen overnight and examples of such a shift range
the company for the long term over a decade ago; Former Chairman of Royal Dutch/Shell,
Sir Mark Moody-Stuart who was instrumental in bringing anti-corruption among the ten
Emeritus of the Global Reporting Initiative (GRI) and International Integrated Reporting
Council (IIRC), Mervyn E. King who promotes integrated thinking to ensure that
companies report not only their financials but material impacts on positive and negative
purpose and contributions to society to bring long term value appreciation.
There is a strong link between a focus on long-term value creation and building trust.
Unfortunately, when it comes to financial services sector trust has been fleeting. Financial
service professionals have often struggled to earn the trust of their stakeholders.
According to a survey in the CFAI 2020 Trust Report, doctors, for example, are trusted
three times as much when compared to financial advisers - who rate on a par with
mechanics, but worse than lawyers.
Figure 101: CFAI 2020 Trust Report Survey
Source: CFA Institute
6
First formulated in 1970 by Milton Friedman at his New York Times article.
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TRUST IS THE ESSENCE OF GOOD GOVERNANCE
earn the trust of its stakeholders. Transparency in relationships is the key to earning that
trust. Success requires effective utilization of resources entrusted to an institution. Being
fair and accountable to all the stakeholders whose resources are entrusted to the
institution is the key to sustainability of access to those resources. The communication
and behavior of each institution influences not only how its own resources are utilized,
but also those of its stakeholders. Therefore, consistency of the policies of an institution
is key to ensure that right expectations are formed throughout the value chain, thereby
making the whole value chain stronger. Risk is the kin of profit. Value creation requires
measured risk taking. Therefore, taking initiative and responsibility, which naturally
involves risk taking is a key element of value creation. Sustainability of success requires
continuous improvement and innovation. This in turn requires learning and the
participation and involvement of all in the organization. Hence, creation of a climate,
which emphasizes good governance principles and deployment of a good corporate
governance culture is the key for sustainability 7.
Good governance is key for the financial industry not only for its own institutions, but also
for where the industry deploys the funds it manages. Generally, governance regulations
are tightened after major financial failures, when trust plummets.
WHY IS TRUST SHORT-LIVED IN SPITE OF BEING CORE TO FINANCE?

We all know that funds are aplenty. In that case why do investments rarely end up in
places where they could really make a difference and instead often gravitate towards old
tested solutions? Did asset management industry forget to focus on what is really
days is being defined by comparing itself to benchmarks, why do we then pay a lot of fees
to asset managers when all what they do is to crunch data?
Individuals often fail to invest and dis-intermediate money because they believe the
financial system is not delivering on promises or changing fast enough to meet new
expectations. Challenge in the intermediation mechanism is that there is plenty of money
in the world, but it is being managed sub-optimally. For example, funds gravitate towards
old tried and tested solutions, even when they are not satisfying new expectations or
generating returns commensurate to requirements. In spite of growing pools of capital,
the status quo remains the same.
Additionally, throughout history, economic crises have been associated with market
failures. From a public point of view, the people who benefitted from an economic crisis
were the financials professionals who initiated them, they were also the ones, who took
advantage of the crisis and became the recipients of public funds in terms of government
bailouts. Consequently, people link crises to the failure of financial professionals in taking
appropriate actions, the most recent being the 2008/2009 global financial meltdown,
after which trust in banks eroded significantly.
Finance is often based around asymmetric relationships where one party possesses
significantly more information than the other for example an investment advisor and his
7
CRAFTED principles for governance, as explained in Y. Argüden, “Boardroom Secrets: Corporate Governance for Quality of Life”, Palgrave
MacMillan (2009)
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interests before your own as you have a duty of care towards your clients. In such
circumstances, trust is always essential, as in doctor-patient or attorney-client
relationships. The problem is that sometimes financial advisors or intermediaries may
. Trust is absolutely core to finance.
SUSTAINABILITY IS BECOMING A HIGH PRIORTY FOR INVESTORS

As financial professionals struggle with trust issues, there are new emerging
developments happening. These days, various stakeholders in the society are also raising
their concerns about the fact that the world we live in is running out of resources,
externalities are becoming unmanageable and thus, causing detrimental climate change.
Countries, governments, global exchanges, regulators, corporations are responding to
those pressures by balancing local needs with global pulls.
Accordingly, there is also increasing responsibility of investors for stewardship of

sustainable action. Asset managers these days are expected to exercise higher oversight
on ESG matters as more of them sign up to investment practices laid down by the UN to
reach Sustainable Development Goals (SDGs) in the future. Adequate oversight on ESG
could help managers improve on the trust deficit brought about by information
asymmetry implicit in financial market intermediation.
For some asset managers, ESG is not a new burden in first place. Responsible asset
managers have been integrating ESG concepts into their core process for years. The
process of trying to figure out if the governance of the corporation is working properly or
how a corporation is treating its customers and suppliers has been a common part of
investment due diligence. The E, S, G acronyms are now giving visibility to parts of the
processes that have been part of similar concepts being used for a long time.
CHALLENGED BY AN INABILITY TO DEFINE A CLEAR SOCIAL PURPOSE

For trust to exist it needs to be encouraged and cultivated with a clear social purpose.
However, unlike for asset owners, it is very difficult for asset managers to commit to a
single statement of purpose. Asset managers have a fiduciary duty to their investors and
a mandate to abide by. For example, in the United States it is written in law that asset
law to ensure ESG integration into investment decisions. Then, there are different legal
approaches to fiduciary duty in other regions. For example, in France there is Article 173,
which makes ESG integration a requirement by law. Similar laws also apply in the UK, as
well as in the rest of the European Union. Therefore, an ability to define a social purpose
to start with may depend on where you sit. And many a times there may be difficulties in
how to incorporate externalities into the investment decisions.
The good news is that this is improving. Even in the United States, one of the most litigious
places from the fiduciary duty perspective, impetus to consider ESG in investment
decisions is increasing. According to the Conference Board 8, recently the notion of
fiduciary duty is expanding to include sustainability issues. Increasingly the pursuit of
sustainable business initiatives is viewed as consistent with corporate governance
8 The Conference Board, “Sustainability in the Boardroom,” DN-008, June 2010
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standards. In particular, judicial action 9, recent stakeholder constituency statutes10, and

statutory exculpatory provisions under corporate law11 have laid the groundwork for
boards to consider non-shareholder interests and concerns in making investment
decisions12. According to Mr. David Atkin, CEO of CBUS, a large pension fund in
Australia fiduciary duty in Australia is also shifting. Mr. Atkin says that these days it is less
requiring investors to demonstrate how they take account of climate considerations and
social issues. Additionally, he explains tha
account of these issues or sufficiently demonstrate the assessment of ESG, are exposing
process for assessing risk and for recognizing the outcomes our investments can have on
EARNING TRUST WHILE DEPENDING ON INCONSISTENT DATA

Consistency in behavior, in actions, or in delivering continuous results is a sign of good
leadership and fostering trust. However, one of the major difficulties asset managers are
admitting is the unreliability and inconsistency of data, which they rely on for delivering
results.
There are non-profit and independent standards organizations, such as GRI, SASB, TCFD,
which are aiding this process and offering guidance both to asset managers as well
corporations with the goal to improve the quality of data; as well as voluntary initiatives
such as UN Global Compact and International Integrated Reporting Council that provide
principles rather than standards.
Sustainability Governance Scorecard, an impact research conducted by Argüden

Governance Academy, aims to improve transparency of meaningful disclosure. It
encourages peer learning by promoting best practice examples selected from
sustainability reports by Global Sustainability Leaders from seven countries across 10
sectors. 13 The study also shows that corporations who voluntarily adopt UN Global
Compact principles and Integrated Reporting tend to have better ESG reporting
performance.
9 See, for examples of cases where the legal courts underscored the importance of assessing the impact on key stakeholder relations of a
Business decision made in the context of hostile takeovers a shareholder instituted derivative actions: Unocal Corp. Mesa Petroleum Co., 493 A.
2d 946, 955 (Del. 1985), discussing how boards should consider the impact on constituencies other than shareholder when analyzing the
reasonableness of defensive measures; and Paramount Communications, Inc. v. Time Inc., 571 A. 2d 1140, 1153 (Del. 1989)
10 For example, 15 Pa. Cons. Stat. §1715. In general, see Kathleen Hale, “Corporate Law and Stakeholders: Moving beyond Stakeholder Statutes,”
Arizona Law Review, Vol. 45, 2003, p. 829

11 Delaware Code Annotated, Title 8, Section 102(b) (7), permitting the use of clauses in the certificate of incorporation (therefore approved by
shareholders) to insulate corporate directors from monetary liability for any action arising from a breach of their duty of care. Exculpatory
clauses provide more freedom and leniency to directors in their decision-making capacity and encourage them to take strategic risk.
12 Pursuit of Social Investments,” The Conference Board, Director Notes No. DN-002, January 2010.
13 https://sgscorecard.argudenacademy.org/
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Figure 102: Percentage of sustainability leaders by initiative
The main problem here is that despite emerging standards, the corporations across the
globe are still largely reporting ESG data on a discretionary basis. This causes many data
discrepancies. For example, one corporation may report sustainability data only for the
home country, while another corporation may cover all regions it is operating in. Or one
corporation may have its non-financial data partially/fully audited, while the other
corporation may not have any assurance at all 14.
Even though it is correct that data is crucial for asset managers, its absence should not
become an excuse for inactivity. If we have data, then in theory machines could be doing
the job of asset managers. Surely, the role of asset managers is to boldly go where the
data is poor and to exercise judgment on the likely future direction of finance. Maybe the
financial services industry is being too conservative and unwilling to innovate. This could
be another reason why trust in active asset management skills has been so low. Then the
question comes up: why should clients pay asset managers a lot of fees if all what asset
managers primarily do is to crunch data?
In order to resolve the issues related to data inconsistency, asset managers could
propose that data should be more focused on outcome rather than on just comparability.
Maybe asset managers could use UN SDGs as the common goalpost and try to quantify
the impact on SDGs. Maybe asset managers need to go beyond past mistakes. Over the
last generation asset management became an industry defining performance based on a
comparing itself to benchmarks, rather than focusing on outcomes for the society.
Ironically, the incompleteness of ESG data could now provide a great reason to focus on
what is really important which is the ultimate outcome, rather than comparability to
predefined bogeys.
TRUSTWORTHINESS MAY DEPEND ON WHERE YOU SIT

An in
operations are physically located. ESG looks very different depending upon where you
Brazil may depend on rainforests whereas South Africa may depend on coal mining and
may be more incentivized compared to others when it comes to ESG integration. Their
14 https://sgscorecard.argudenacademy.org/
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governments, exchanges or regulatory agencies may be responding more decisively to

threats from climate change or externalities.
1. Switzerland, Hong Kong and Singapore that have historically functioned as

financial hubs may have an inherent incentive to take leadership and push for ESG
integration as they may wish to be first movers in an increasingly ESG driven
environment. EU members such as Germany and France operating under the
influence of the European Finance Commission as well as places like Mainland
China in Asia are locations where climate action is something that is being pushed
by governments and regulators to ensure delivery on international commitments.
In the process, they may be creating a foundation for ESG integration.
2. Areas where ESG integration is taken seriously, such as in the UK, Northern
Europe, and South Africa, there is a sophisticated audience for sustainability. The
bottom up demand from society is simply higher in these regions, which
incentivize regulatory agencies to take action faster. Mandatory regulation also
seems to experience fewer backlashes from corporations in jurisdictions where
the cultural sensitivities are higher.
3. Then there are countries like Japan, Brazil, Turkey, Thailand and India that either
have large government pension funds or influential exchanges that have pushed
for ESG integration through issuing indices and increasing flow of funds into the
GPIF (Government Pension Investment Fund), the evolution of ISE Corporate

Sustainability Index by B3 (Bolsa do Brasil), the creation of BIST Sustainability
Index created by Borsa Istanbul15 and the formation of Nifty100 ESG Index by
National Stock Exchange of India (NSE). The Thai Government Pension Fund
(GPF) has also been spearheading sustainable investing among Thai asset
managers. GPF contributed by initiating a collaborative engagement among Thai
asset management firms to promote good governance and ESG practices among
corporates. It is naïve to think that ESG can be promoted by private action alone.
It needs support from asset owners, global exchanges and regulatory agencies
acting in tandem to give it momentum. Therefore, global exchanges are creating
enablers for asset managers through indices and other initiatives to evaluate ESG
fund returns and create awareness about the sustainability performance of most
liquid companies on their exchanges. Additionally, global exchanges actively
promote sustainable investing among investment practitioners and various
events designed by exchanges to encourage engagement and collaboration
is a difference between asset managers and asset owners. Intermediaries do not

have full agency power. However, asset owners and regulatory agencies have the
power to move the asset managers towards better ESG integration.
4. Lastly, there are global regions where inaction by regulatory agencies has not
investors in countries such as United States, Canada, and Australia became global
15
One of the five founders of the Sustainable Stock Exchanges Initiative at Rio +20
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leaders forcing corporations to make more disclosures. Stakeholder relations

seem to be in front and center for ESG integration in these countries. As data is
not easily accessible in standard formats, engagement with corporations is key.
Therefore, many initiatives are being taken by asset managers themselves to
establish proper communication with corporations and improve the quality of
data.
LOOKING INTO THE FUTURE
There are several ways asset managers can act which can ensure that going forward they
earn trust from clients who are increasingly concerned about sustainability issues. ESG
may provide an opportunity for differentiation and also help build stronger relationships
with the clients and stakeholders. The line of trust asset managers failed to build for years
could reverse course now in a new world that is changing rapidly in many ways, given the
devastation caused by the impact of Covid 19. Maybe now it is a perfect time for asset
managers to make a difference by ensuring that funds are flowing to places where they
will help find a solution to dire challenges faced by humanity, whether that be climate
change or one produced by the pandemic. Trust in financial services could develop faster
if the industry changed fast enough and funds went to areas which many conscious
investors would consider as responsible, meeting the needs of a sustainable future.
Long-term holistic thinking will assist asset managers in identifying sustainable value and
in avoiding value traps. Paying attention to ESG is not only good for risk management, but
also a lead indicator for future value creation.
In the future, we need to see more evidence that ESG considerations are becoming part
of the values and beliefs by ALL asset managers. While some asset managers immediately
became torchbearers as the new ESG principles were introduced, it has been somewhat
disappointing to find out that others still do not fundamentally believe in ESG. Some asset
managers to this date do not have deep seated views about sustainability enshrined in
their own mission and vision statements. ESG faces a challenge of getting stuck in a tug
of war between believers and non-believers as it is pushed as a concept one that needs
to be embraced instead of a concept whose outcome is directly measurable in terms of
its impact. This needs to change.
In conclusion, trust cannot exist without creation of value, and value creation without
trust is unsustainable.16 Asset managers need to adapt to a rapidly changing world with
long-term integrated thinking or need to face a long-term decline in their prospects going
forward.
16 https://trust.cfainstitute.org/wp-content/uploads/2020/05/CFAI_TrustReport2020_FINAL.pdf
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The impact of COVID-19 on the agricultural economy of India and the way ahead 17
The unprecedented Coronavirus pandemic may lead to a global recession in FY21, with the Indian economy seeing its
worst year since 1979-80 on the back of a 60-day lockdown. In this gloom and doom9, there is a ray of hope from
Agriculture of hope. As per the RBI, the summer sowing of rice, pulses and oilseeds in the country is on track, with record
procurement from the winter crop.
In this context the NSE had organised a webinar on "The impact of COVID-19 on the agricultural economy of India and
the way ahead" on May 27th, with an eminent panel consisting of Prof. Ashok Gulati, the Infosys Chair Professor for
Agriculture at ICRIER, Dharmakirti Joshi, the Chief Economist at CRISIL and Simon Wiebusch, the Chief Operating
Officer for the Crop Science Division of Bayer in India, Bangladesh and Sri Lanka. We summarize key takeaways from the
discussion here. We also provide the YouTube link to the webinar.
to the combined effects of a 60-day lock-down, supply chain disruptions and the ripple impact on several sectors.
Further, at least some portion of the loss in national income is anticipated to be of a relatively permanent nature, i.e.,
unlikely to revive over the next several years, especially given the weak state of the economy prior to the crisis. Mr. Joshi
believes Agriculture is the exception here across sectors, with growth estimated at 2.5% for FY21.
Structural reforms like amendment of the Essential

Commodities Act, formulating a central law for agriculture marketing and legal framework on contract farming along
with improved agri-infrastructure will facilitate farmers to realise better price from the market in the long-term. The key,
however, is effective implementation of these proposals, according to Prof. Gulati. Mr. Wiebusch believes apart from all
the disruption, most notably from the significant migration of labour across the country, the current crisis also presents
an opportunity to revive not just the agriculture sector, but overall employment in the country. A case in point here is
enabling enterpreneurship in the skilled labour travelling across the country to their homeland to engage in agriculture.
Technology evolution and derivatives market of agri-commodities may help to bring even higher efficiency in the sector.
Prof. Gulati believes the current crisis offers an opportunity for a policy measure (cf. Affordable Housing for all)
signific
▪ Indian economy may shrink by 5% in FY21 amid the coronavirus

Exclusive link to the webinar held on May
pandemic:
27th The Impact of COVID-19 on
pandemic, 60-day long nationwide lockdown, unavailability of medical the agricultural economy of India and the
care of the disease and its prolonged and ripple impact on several way ahead
sectors in the domestic market as well as globally. The economy will
suffer the most during the first quarter with 21% decline mainly due to Welcome Address: Ravi Varanasi, Chief
Business Development Officer, NSE
the lockdown imposed by the government, and actual recovery may
start over the second half of the FY. Moderator: Dr. Tirthankar Patnaik, Chief
▪ Permanent loss of GDP is inevitable: GDP may not revive to its pre- Economist, NSE
Covid trend in the next three fiscal years despite of several fiscal and Key speakers:
monetary policy measures. Under the current circumstances, India 1. Mr. DK Joshi, Chief Economist, CRISIL
may record a 10% permanent loss in its real GDP from the decadal- 2. Prof. Ashok Gulati, Infosys Chair
trend level. Professor of Agriculture, ICRIER
3. Mr. Simon Wiebusch, Chief Operating
▪ Low immunity to fight the virus: Indian economy was slowing down
Officer, Bayer Crop Science
the recent slowdown amid Covid-19 is quite low as compared to its

situation during the GFC in 2008 when the country was growing at
around 8%.
17
Please click here to watch the full webinar.
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▪ High impact on construction: Construction sector is the most vulnerable mainly

due to the reverse migration and lack of demand during the recession. This may
raise total number of unemployment in the country by an alarming rate as the sector
employs as many number of people as the manufacturing sector even with a much
lower GDP share.
▪ Limited impact from the government relief package: Panellists expressed
reservation on the government fiscal relief package given the tight fiscal condition.
Most of the incremental borrowing this year would barely be sufficient to meet the
shortfall in projected revenue. Other than provisioning free ration and food, cash
transfer to a subset of deprived population, moratorium on existing loans and
provisioning additional loans to MSMEs, the relief package emphasised mostly on
structural reforms which will have limited impact in the short-term. Besides, the
government did not provide direct relief to the vulnerable sectors including hotel,
restaurants, aviation, construction, automobile, etc. This would delay their recovery
process and may have ripple impact on unemployment and accumulate NPAs in the
financial system.
▪ Liquidity infusion may not be sufficient while credit market remains tight:
Similar to other countries, liquidity support remains to be the major policy action in
India taken by the government as well as the RBI. However, it would not be
effective in India as the credit market remains tight and a significant part of the
economy remains to be outside the scope of organised financial system.
▪ Agriculture is the lone exception in the economy which is projected to grow by
2.5% in FY21 given the summer sowing of rice, pulses and oilseeds in the country
is on track, with record procurement from the winter crop particularly in Madhya
Pradesh, Haryana and Punjab. Punjab government has taken several proactive
measures like creating new procurement centres other than mandis to ensure
social distancing and timely procurement of rabi crops.
▪ Though agri-
products were under essential commodities, the supply chains of all commodities
were disrupted heavily due to the nationwide lockdown. Besides, cold storage
facilities were unavailable, mandis were not functioning properly, lack of transport
services and shortage of labour amid reverse migration and fear of getting
infections during the period added additional problem in the system that had
adversely affected perishable goods. This may perhaps lead to change in cropping
patterns in the coming year as farmers are de-risking and moving to government
procured crops, while production of perishables may reduce that may lead to higher
vegetable prices.
▪
Panellists have assured that there is no need to be concerned about the food
inflation over the next few months. The recent rise in food prices are temporary in
nature, mainly contributed by supply chain disruptions. Given the current buffer
stock maintained by the government, food prices will ease down post the lockdown
period.
▪ Stimulus package may have long-term positives on agriculture: The Finance
Minister announced three structural reforms in agriculture under the relief package.
First, the Essential Commodities Act will be amended to liberalise select agri-
products including cereals, pulses, edible oils, oilseeds, onions and potato, while
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restrictions will be imposed only in extreme situations like, war, pandemic, etc.
Second, Government will formulate a central law to bring agriculture marketing
reforms to provide marketing flexibility to farmers which is currently restricted to
APMCs. Third, Centre will also formulate a legal framework on contract farming
focusing risk mitigation, and price and quality assurance for farmers. These
measures will facilitate farmers to realise better price from market.
▪ Success of legal contract farming depends on the implementation process:
Implementation of legal contract farming may be difficult in India given the
fragmentation of the market. Allowing Farmers Producers Organisations (FPOs)
and consolidation of supply providers may help to accelerate the process of
contract farming. Besides, FPOs should get proper training in using derivatives and
require adequate capital at reasonable interest rates to make it successful.
▪ Complementary agri-infrastructure is essential: Several agri-infrastructures like
adequate cold storage, better communication, and uniform systems across states
are essential to get fruitful impact of these measures on agriculture.
▪ Technology evolution and derivatives market may help to bring higher
efficiency in agriculture: The agri-market needs to be technologically upgraded
through better infrastructure in the supply chain process, integrating agri-market
across states and developing derivatives market for agri-commodities. Even if
the futures market to de-risk the farming activities throughout the year.
▪ Locust attacks may not have much impact on agriculture: Given the rabi crop is
already harvested and Kharif sowing has not yet started, locust attacks may not
have much impact on agriculture, barring horticulture. However, early control
measures taken by the farmers may help to minimise its impact on the horticulture
crops as well.
▪ Need for an export policy: While it is important to emphasise on revival of
consumption demand internally, experts agreed to have a trade policy for agri-
commodities where agri-market should be open for trade in excess of the minimum
requirement of buffer stock decided by the government.
▪ India may take longer
time to recover and its vulnerability can be much higher than other countries given
its high density of population, weak health infrastructure, and limited fiscal space.
The reverse migration of unskilled labor force in less developed states may raise
additional problems to the current system. This may increase wage rate in relatively
developed states due to shortage of labour, while eastern part of the country may
face additional burden of surplus labour that may result a sharp decline in wage
rates, particularly in the agri-sector which already has a surplus labour force.
▪ Provisioning productive employment to migrants: Though MGNREGA is crucial to
generate additional employment, panellists emphasised to provide productive
employment to migrant labourers in the eastern belt of the country through front-
loading of PM Aaawas yojana, investing on roads, agri-infrastructure, water
management, food processing industries. Water and power consumption needs to
be rationalised. Solar power should be made a third crop for the farmers and buy-
back should be in place. These policy actions along with better infrastructure,
technological evolution and agri-reform would help in doubling farm incomes in a
year.
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Market Pulse
Did restrictions on short-selling decline risks in the equity market?
short- -Perez (April 2020)18 to revisit the debate on whether short-selling bans
actually help to improve market confidence by reducing downward price movement and market volatility. The paper
compares arguments in favour of short-selling bans with arguments against them. The literature almost unanimously
argues against the measure as it leads to lower liquidity, increase price inefficiency and distort price discovery. Besides,
restriction on short-selling has negative spillover impact on other markets, including options market.
Many regulators across countries have however imposed restrictions on short-selling activities to reduce market
volatility and downward price movement particularly during (after) certain extreme economic situations, like the Global
Financial Crisis in 2008. In recent times, SEBI has imposed short-selling restrictions on index derivatives market from
March 23rd to minimize the COVID-19-related adverse impact on the securities market. Following the restriction, overall
volatility in the Indian securities market declined significantly. Nevertheless, it would be difficult to argue that the
decline in volatility was solely due to the restriction as volatility indices had declined in other major countries as well.
Besides, overall liquidity declined quite significantly in index derivatives over the last week of March, while trading
activities increased steadily in the Cash market. Despite of all these measures, FPIs remain net sellers over the period
amid continuous rise in Covid-19 cases globally as well as in India and impending global recession in 2020 due to
lockdown measures taken across countries.
Short-selling generally refers to selling a security that is not owned by the trader
at the time of trading. In other words, the trader borrows a security to sell upfront
before owning it with an expectation that price of the security will fall
subsequently when the trader will buy it to deliver to the lender. Hence, the short-
selling mechanism consists of (i) borrowing a security (ii) to sell it to another
trader, and (iii) purchasing the security in some time later at a lower price, (iv) to
deliver the lender and (v) earning the difference between sale price and buy price
with the interest cost to borrow the security initially.
Regulators often impose bans on short-selling activities with an aim to reduce

volatility in the market and to restrain the downward price movement. However,
there are two contradictory theories that explain how short-selling bans affect
the security price. On one side, restriction on short-selling along with investors
having different opinions about stock price movement, stocks are generally
overvalued as bearish investors are not allowed to sell and their valuation does
not have much impact on stock price. Hence, removal of short-selling bans may
help to correct the market valuation and the stock price may fall subsequently.
On the other side, short-selling bans would not lead to underpricing or overpricing
as rational agents have already incorporated short-selling constraints in their
decisions. In other words, allowing short-selling would not have much impact on
the stock price movements.
Though the actual impact of short-selling on stock price movements is debatable,

several studies have shown findings in favour of allowing short-selling to improve
market quality as short-sellers contribute positively to price discovery and
enhance price efficiency. Besides, stock prices converge towards their
fundamental values at a faster pace when short-selling is allowed in the market.
Post the COVID-19 outbreak when market uncertainty rose to a new high, it
would be valuable to understand how short-selling effects market during a time
18
https://www.world-exchanges.org/our-work/articles/wfe-research-what-does-academic-research-say-about-short-selling-bans
86/133
Market Pulse
of increased uncertainty. There are few studies that show short-selling may rise
the downward price movement during a time of sharp price decline, while others
found no evidence that short-selling causes a faster price decline. At the same
time, bans on short-selling reduce trade volumes and lead to higher bid-ask
spread due to low liquidity. Another study on the Mainland Chinese market has
shown how lifting bans on short-selling enhanced price efficiency and reduced
market volatility.
Restriction on short-selling may also have spillover impact on other markets like
options. In US stock market, it was found that short-selling bans during the GFC
had spiked up buying put options to reduce the downside risks. This had negative
impact on options market itself with higher spread of option contracts of banned
stocks. In UK, short-selling bans increased trading volume in OTC market where
short-selling bans were not present. In summary, short-selling bans had several
distortive effects on the existing market mechanism.
Despite sufficient evidence in favor of allowing short-selling in the stock market,

periods of high volatility have often seen it restricted across markets, an
illustrative example being the recent COVID-19 outbreak.19 Among other policy
measures, the regulator restricted short-selling of index derivatives from March
23rd, 2020. Under this measure, short positions in index derivatives (short,
futures,
(MFs/FPIs/TMs/Clients) holding of stocks.
Data reveals that overall volatility in the Indian securities market has declined
significantly post March 23rd, but it would be difficult to argue that the decline in
volatility was solely due to the restriction as volatility indices declined in other
major countries as well. Besides, overall liquidity declined quite significantly in
index derivatives segment over the last week of March as the restriction was
imposed only in the index derivatives market, while turnover increased steadily
in the Cash market at NSE. Nevertheless, FIIs remain net sellers over the period
amid the continuous rise in Covid-19 case globally as well as in India.
19
https://www.sebi.gov.in/media/press-releases/mar-2020/regulatory-measures-taken-by-sebi-in-view-of-ongoing-market-
volatility_46389.html
87/133
Market Pulse
Figure 103: Movement in volatility indices across markets

Though market volatility declined gradually in the Indian securities market post SEBI restriction on short-selling, other
countries followed similar trend during this period. Hence, it became difficult to argue the declining trend was solely due
to the short-selling restrictions in India.
Figure 104: Turnover vs. number of trades in 2020 thus far

Short-selling restriction did not have much impact on liquidity in the Cash market at NSE, barring few days over the last
week of March.
Turnover (Rsbn) No of Trades (mn) - RHS
700 30
600
25
500
20
400
15
300
10
200
5
100
0 0
01/Jan 16/Jan 31/Jan 15/Feb 01/Mar 16/Mar 31/Mar 15/Apr 30/Apr
Source: NSE.
88/133
Market Pulse
Figure 105: Short-selling restriction may have reduced liquidity in the Index derivatives segment particularly
over the last week of March 2020
Index Futures - Turnover (Rsbn) Index Options Premium turnover (Rsbn)
BANKNIFTY NIFTY NIFTY BANKNIFTY
600 120 60
500 100 50
400 80 40
300 60 30
200 40 20
100 20 10
0 0 0
Source: NSE.
Figure 106: Movement in MSCI India vs. key developed markets in 2020 thus far
Amid significant rise in Covid-19 case globally and rise in uncertainty over the global economy, it became difficult to
distinguish the impact of short-selling restriction in India.
89/133
Market Pulse
Figure 107: FPIs remain net sellers in most of the days post March 23rd in both equity and debt segments
Figure 108: Post the short-selling restriction, DIIs net investment flattened in the equity segment
90/133
Market Pulse
Market performance across asset classes

Figure 109: Performance across equity indices, fixed income, currency and commodities
Indicator Name Apr-20 1M ago 3M ago 12M ago 1M (%) 3M (%) 6M (%) 12M (%) YTD (%)
Equity Indices
NIFTY 50 9,860 8,598 11,962 11,748 14.7 -17.6 -17.0 -16.1 -19.0
NIFTY 500 8,013 6,997 9,861 9,664 14.5 -18.8 -17.3 -17.1 -18.8
MSCI INDIA 1,147 995 1,358 1,352 15.3 -15.6 -15.0 -15.2 -16.3
India Volatility Index (%) 34 64 17 22 -47.2 95.7 108.8 55.7 191.3
MSCI WORLD 2,053 1,853 2,342 2,179 10.8 -12.4 -8.1 -5.8 -13.0
S&P 500 COMPOSITE 2,912 2,585 3,226 2,946 12.7 -9.7 -4.1 -1.1 -9.9
DOW JONES INDUSTRIALS 24,346 21,917 28,256 26,593 11.1 -13.8 -10.0 -8.5 -14.7
HANG SENG 24,644 23,603 26,313 29,699 4.4 -6.3 -8.4 -17.0 -12.6
FTSE 100 5,901 5,672 7,286 7,418 4.0 -19.0 -18.6 -20.5 -21.8
NIKKEI 225 20,194 18,917 23,205 22,259 6.8 -13.0 -11.9 -9.3 -14.6
Fixed Income
India 10YR Govt Yield (%) 6.11 6.14 6.6 7.4 -3bps -49bps -53bps -130bps -44bps
India 3M T-Bill Yield (%) 3.69 4.32 5.23 6.56 -63bps -154bps -146bps -287bps -146bps
US 10YR Govt Yield (%) 0.63 0.70 1.52 2.51 -7bps -89bps -107bps -188bps -129bps
Germany 10YR Govt Yield (%) -0.59 -0.46 -0.44 0.01 -13bps -14bps -19bps -60bps -40bps
China 10YR Govt Yield (%) 2.51 2.66 3.05 3.42 -15bps -54bps -77bps -91bps -66bps
Japan 10YR Govt Yield (%) -0.04 0.02 -0.06 -0.04 -6bps 3bps 10bps 1bps -2bps
Currency
USD/INR 75.1 75.7 71.4 69.6 -0.7 5.2 5.9 8.0 5.2
EUR/USD 1.1 1.1 1.1 1.1 -0.2 -1.2 -1.8 -2.3 -2.4
GBP/USD 1.3 1.2 1.3 1.3 1.7 -4.3 -2.5 -3.2 -4.8
USD/YEN 106.9 108.0 108.4 111.4 -0.9 -1.3 -1.1 -4.0 -1.6
USD/CHF 1.0 1.0 1.0 1.0 0.2 -0.1 2.2 5.6 0.3
USD/CNY 7.1 7.1 6.9 6.7 -0.6 1.8 0.2 4.7 1.2
Commodities
Brent Crude Oil (US$/bbl) 25.5 22.6 58.2 72.9 12.9 -56.2 -57.6 -65.0 -61.5
LME Aluminium (US$/MT) 1,459 1,493 1,706 1,783 -2.2 -14.5 -16.8 -18.2 -18.1
LME Copper (US$/MT) 5,160 4,939 5,551 6,427 4.5 -7.0 -10.6 -19.7 -16.1
LME Lead (US$/MT) 1,610 1,734 1,898 1,905 -7.1 -15.2 -25.8 -15.5 -15.9
LME Nickel (US$/MT) 12,124 11,435 12,772 12,132 6.0 -5.1 -27.3 -0.1 -13.1
LME Tin (US$/MT) 15,274 14,667 16,425 19,741 4.1 -7.0 -7.4 -22.6 -11.1
LME Zinc (US$/MT) 1,934 1,895 2,212 2,960 2.1 -12.6 -23.4 -34.7 -15.1
SHC Iron Ore Spot (US$/MT) 84 84 97 97 -0.6 -13.5 0.6 -13.5 -9.2
Gold Spot Price (US$/troy ounce) 1,705 1,612 1,587 1,283 5.8 7.4 12.9 32.9 12.1
Silver Spot Price (US$/troy ounce) 15 14 18 15 7.5 -16.7 -17.0 0.7 -15.7
Platinum Spot Price (US$/ounce) 767 727 959 889 5.5 -20.0 -18.1 -13.7 -21.0
Palladium Spot Price (US$/ounce) 1,986 2,307 2,295 1,366 -13.9 -13.5 10.7 45.4 3.4
Source: RefinitivDatastream, Bloomberg, NSE
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Market Pulse
Figure 110: Performance across NSE sector indices

Indicator Name Apr-20 1M ago 3M ago 12M ago 1M (%) 3M (%) 6M (%) 12M (%) YTD (%)
Auto 5,901 4,731 8,087 8,351 24.7 -27.0 -30.2 -29.3 -28.5
Bank 21,535 19,144 30,834 29,765 12.5 -30.2 -28.4 -27.7 -33.0
FMCG 28,669 27,319 30,775 30,337 4.9 -6.8 -11.3 -5.5 -4.8
IT 14,108 12,764 16,144 16,705 10.5 -12.6 -9.3 -15.6 -9.9
Media 1,160 1,040 1,835 2,409 11.5 -36.8 -35.1 -51.9 -35.7
Metals 1,860 1,586 2,569 3,089 17.3 -27.6 -25.6 -39.8 -33.6
Pharma 9,327 7,177 8,139 9,403 30.0 14.6 18.4 -0.8 16.0
Real Estate 187 176 331 258 6.7 -43.4 -30.4 -27.5 -37.3
Source: RefinitivDatastream, NSE
Figure 111: NIFTY sector performance over the last month (rebased to 0)
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Market Pulse
Figure 112: India 10Y G-sec yield long-term trend Figure 113: 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
7.4 last 12 months
11
7.2
10
7.0
9
6.8
8
6.6
7
6.4
6 6.2
5 6.0
4 5.8
May-19
Jul-19
May-20
Sep-19
Mar-20
Nov-19
Oct-19
Jan-20
Feb-20
Jun-19
Aug-19
Dec-19
Apr-20
May-20
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
Figure 114: India sovereign yield curve

The India sovereign yield curve has steepened over the last couple of 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, massive FPI
outflows and a huge demand-supply mismatch amid heavy supply of G-secs. With the combined fiscal deficit expected
to significantly overshoot budget estimates in FY21, supply of central as well as state papers is expected to be huge this
year, thereby putting continued pressure on the long-end of the curve.
% India sovereign yield curve
31-Dec-19 28-Feb-20 27-May-20
8.0
7.2 7.1
6.7
6.4
5.6
5.1
4.8
4.0
3.2
3.1
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 115: Sovereign yield curve across G20 countries as of April 30th, 2020
Dec 2019 3m 6m 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 30y
US 0.11 0.11 0.17 0.19 0.24 0.35 0.52 0.63 1.27
Japan (0.15) (0.17) (0.19) (0.18) (0.18) (0.17) (0.16) (0.17) (0.16) (0.13) (0.07) (0.04) 0.43
Germany (0.55) (0.55) (0.55) (0.76) (0.79) (0.71) (0.76) (0.76) (0.73) (0.66) (0.64) (0.59) (0.17)
France (0.51) (0.47) (0.48) (0.61) (0.59) (0.54) (0.44) (0.36) (0.29) (0.23) (0.15) (0.11) 0.63
UK 0.08 0.17 0.08 0.01 0.05 0.07 0.09 0.07 0.11 0.12 0.19 0.23 0.57
Italy 0.02 0.11 0.26 0.53 0.60 0.87 1.09 1.31 1.42 1.54 1.68 1.78 2.62
Canada 0.26 0.30 0.34 0.31 0.29 0.36 0.39 0.39 0.55 1.13
EU (0.55) (0.55) (0.55) (0.76) (0.79) (0.71) (0.76) (0.76) (0.73) (0.66) (0.64) (0.59) (0.17)
Argentina 25.84 52.25 38.22 34.32
Australia 0.22 0.23 0.27 0.33 0.43 0.53 0.63 0.76 0.84 0.91 1.65
Brazil 3.10 2.89 3.12 4.11 5.43 6.32 7.13 7.54
China 1.14 1.33 1.42 1.74 2.29 2.51 3.33
India 3.64 3.67 3.93 4.47 4.73 5.10 5.15 5.76 6.15 6.30 6.35 6.11 6.65
Indonesia 3.38 3.53 5.70 6.88 7.29 7.89 8.12
South Korea 1.49
Mexico 5.76 5.49 5.28 5.46 5.55 6.28 6.67 7.80
Russia 5.32 5.25 5.12 5.33 5.41 5.75 5.90 6.11
South Africa 3.10 5.54 8.42 10.27 11.81
Turkey 7.34 7.22 8.48 8.87 8.57 11.10 12.19
Figure 116: Sovereign yield curve across G20 countries as of April 30th, 2018
Dec 2017 3m 6m 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 30y
US 1.81 2.01 2.24 2.48 2.62 2.80 2.92 2.96 3.13
Japan (0.12) (0.13) (0.14) (0.13) (0.12) (0.10) (0.10) (0.06) (0.03) (0.00) 0.03 0.06 0.75
Germany (0.68) (0.66) (0.65) (0.57) (0.42) (0.25) (0.05) 0.07 0.20 0.32 0.44 0.57 1.23
France (0.57) (0.56) (0.55) (0.47) (0.32) (0.11) 0.02 0.21 0.37 0.52 0.66 0.79 1.63
UK 0.51 0.63 0.71 0.80 0.85 1.01 1.14 1.20 1.26 1.37 1.48 1.45 1.85
Italy (0.48) (0.41) (0.39) (0.18) (0.02) 0.29 0.61 0.89 1.23 1.35 1.62 1.74 2.83
Canada 1.20 1.33 1.63 1.90 2.00 2.09 2.13 2.26 2.32 2.41
EU (0.68) (0.66) (0.65) (0.57) (0.42) (0.25) (0.05) 0.07 0.20 0.32 0.44 0.57 1.23
Argentina 28.06 19.01
Australia 1.98 2.10 2.24 2.31 2.49 2.60 2.69 2.75 2.81 2.83 3.40
Brazil 6.20 6.15 6.29 7.16 8.26 8.90 9.36 9.61
China 3.04 3.27 2.97 3.19 3.61 3.66 4.12
India 6.20 6.39 6.79 7.33 7.57 7.74 7.78 7.89 7.83 7.88 7.87 7.77 8.02
Indonesia 4.90 5.05 6.07 6.30 6.64 7.03 7.62
South Korea 1.90 2.14 2.20 2.38 2.47 2.70 2.70
Mexico 7.64 7.63 7.66 7.25 7.38 7.36 7.46 7.66
Russia 7.06 7.05 6.41 6.63 6.84 6.86 7.10 7.27
South Africa 6.35 7.10 7.64 8.19 9.05
Turkey 12.95 13.11 13.90 13.70 13.00 12.24
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Market Pulse
Figure 117: Corporate spreads remain elevated at the shorter-end

Corporate bond spreads shot up in March and April amid tight liquidity conditions in the wake of surge in FPI outflows
and redemption pressures in domestic mutual funds, as well as a sharp drop in trading activity. However, a slew or
measures taken by the RBI over the last one month has helped ease liquidity in the system. The TLTROs have led to an
increase in demand for higher-tenor and better-rated corporate bonds by banks thereby reducing the term and liquidity
premia, even as spreads at the shorter-end have remained elevated as demand remains weak due to reinvestment risk.
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
Aug-15
Jun-16
Aug-16
Jun-17
Aug-17
Jun-18
Aug-18
Jun-19
Aug-19
Dec-15
Apr-16
Dec-16
Apr-17
Dec-17
Apr-18
Dec-18
Apr-19
Dec-19
Apr-20
Figure 118
Rs bn
Net lending under RBI's Liquidity adjustment facility
Outstanding amount under repo operations
3000 Outstanding amount under reverse repo operations
Figure greater than zero
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

-7000 system has increased sharply,
averaging at Rs 4.9trn during Mar
27-May 28
-9000
Jul-18
May-18
Sep-18
May-19
Sep-19
Oct-18
Mar-19
Nov-19
Jan-18
Feb-18
Jan-19
Jan-20
Jun-19
Feb-20
Apr-18
Dec-18
Aug-19
Apr-20
Source: Bloomberg, NSE
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Market Pulse
Market Statistics: Primary market

Funds mobilisation in the primary market
Funds mobilisation declined sharply amid nationwide lockdown: Amid continuous
decline in total fund mobilisation through the NSE platform. Over the month of April, total
fund raised through the securities market recorded 35% to reach Rs534bn from
In the primary market, debt remains to be the preferred instrument as compared to

equities. Out of total resource mobilisation, firms raised Rs524bn through debt, which
accounts for almost 98% of total fund raised over the month, and remaining Rs9.9bn were
mobilised through equities. Over the month, 30 firms raised Rs394bn through private
placement which is 22% lower than Rs503bn in the previous month. Still, private
placement remains to be the most preferred channel in the primary market with almost
74% share in the primary market. Besides, government raised Rs130bn through issuance
of G-Sec.
allotment compared to Rs203bn over the previous month. Besides, one firm issued IPOs
to raise Rs83m over the month which is significantly lower than the previous month. This
month no one has raised fund through rights issue, QIP and NCDs.
Figure 119: Fund mobilised through NSE platform

Particulars Apr-20 Mar-20
Amount Amount
No. of Amount Raised No. of Amount Raised
Raised Raised
Issues (Rsm) Issues (Rsm)
(USDm) (USDm)
Equity
IPOs 1 83 1 1 103,408 1,388.02
Rights Issue - - - 3 3,734 50.12
Preferential Allotment 7 9,870 130 15 203,420 2,730.47
Debt
Public issue of NCDs - - - 1 3,226 43.31
Public issue of Gsec 3 130,000 1,706
Private Placement 30 394,391 5,176 52 503,276 6,755.38
Total 534,343 7,013 817,064 10,967
Note: In case of debt issuances, the above table reports no. of ISINs instead of issues.
Source: NSE.
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Market Pulse
New listings in the month

Risk of lower valuation may have discouraged firms to get listed: 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 of April, only one firm Laxmi Goldorna House Limited was listed in the
SME platform with a market size of Rs313m while Mittal Life Style Limited got migrated
from the SME platform towards the mainboard with a mere 0.6% listing gain on the listing
day.
Figure 120: Companies listed on NSE in April 20

Listing Security Name Listing Gain Market Cap Gross Turnover Listing
Date % (Rsm) (Rsm)
16- Apr-20 Laxmi Goldorna House Limited 0.0 313 26 SME IPO
29-Apr-20 Mittal Life Style Limited 0.6 1227 2 Migrated from SME to NSE Main Board
Source: NSE.
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Market Pulse
Market Statistics: Secondary market

Institutional flows across market segments
The overall trend of net FII inflows differs significantly over the last five (fiscal) years
across different segments. FIIs net inflows were positive in the Equity segment
throughout FY17, except a sharp fall during the third quarter particularly after the
demonetisation. This sudden policy announcement had affected the debt market as well
the fiscal year.
In contrast, there was a significant jump in net inflows in FY18 with US$19bn net
investment in the debt segment, while net inflows remained muted in equities amid the
slowdown in the Indian economy and rise in uncertainty in the global market. This has
also contributed negatively to the FII net inflows throughout FY19 in both equity and debt.
FIIs were net seller till February, before improving partially over the month of March.
The positive trend continued over the first quarter of FY20 with a positive outlook of
Indian economic growth, which trembled a bit during May over the uncertainty in the
General Election in India, but recovered sharply after getting a clear mandate in favour of
the Modi Government. However, the situation reversed completely after the
announcement of additional income tax on FPIs net income in the Union Budget FY20.
The slowdown continued till September, even through government withdrew the budget-
related tax proposals on FPIs registered as trusts. Afterwards, FIIs net inflows recovered
slowly in the equity segment and increased exponentially since October due to the
competitive edge of Indian market over its peers, whereas it remained quite low in the
debt segment.
The trend, however, has changed completely since February as the Covid-19 outbreak
has became pandemic. This has added concerns over the impending global slowdown and
increasing the probability of default by many large companies, particularly related to
Aviation industry, Tourism and many other non-essential commodities. Besides, the
revival of financial system in India seems unlikely after the s
of the largest private bank Yes Bank. FIIs net inflows started declining sharply since
current fiscal year with a sharp rise in capital outflows from both equity and debt
segments.
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Market Pulse
Figure 121: Overall net inflows of FIIs in India

*FII/FPI trading activity on NSE, BSE and MSEI.
For domestic institutional investors (DIIs), the overall trends of net investments remain
largely positive over the last five (fiscal) years, including FY21. Though trends were quite
similar during the first half of all these (fiscal) years, they differ substantially during the
latter halves. Specifically, DII inflows increased significantly in FY16 and FY19 to reach
Rs633bn and Rs834bn respectively, reversing a decline towards Rs54bn in FY17.
DIIs started FY20 as net sellers given the ongoing uncertainty about the General Elections
return to power. Unlike FIIs, net inflows remained elevated

and increased further during July-
and continue to fall till January partly due to a significant drop in economic growth in the
last few quarters. Unlike FIIs, domestic institutional investors increased their net
month of March as well.
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.
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Market Pulse
Figure 122: Overall net inflows of DIIs in India

**DII flows are for India as a whole in equity only.
FIIs remain net seller in the Cash market: invested through NSE
slowdown in the economy and the fear over the sudden outbreak of Novel-coronavirus
which first detected near Wuhan in the Hubei province of China earlier this year and
spread in more than 180 countries so far. FIIs net outflow increased sharply to Rs656bn
in March as market uncertainty rose to a new high with rising number of Covid-19 positive
cases and number of fatalities over the month. This has partially declined over the month
of April even as Covid-19 cases continuous to rise exponentially in India, perhaps due to
multiple policy actions taken by the government bodies, RBI and the SEBI. Over the
contrary, DIIs turned net sellers in April with Rs13bn net sales, significantly down from
Rs531bn over the previous month.
FIIs net investment fell sharply in the derivatives segments as well: In case of the
ictions imposed by the regulator on margin trading

and short-selling. Over the month, DIIs turned net sellers from Rs107bn net investment
in March to Rs17bn net outflows over this month.
Similar trend was observed in the Currency segment as well, where FIIs net investment
turned negative from Rs5bn in March to net outflows of Rs5bn over the month. In case of
Interest rate derivatives, DIIs net investment has somewhat muted, while FIIs turned net
sellers in April with Rs2bn net outflows over the month.
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Figure 123: Foreign and domestic institutional flows (Rsbn)

Month Apr-20 Mar-20 Apr-19 Previous FY CYTD
Buy Sell Net Buy Sell Net Buy Sell Net Buy Sell Net Buy Sell Net
Cash Market
DII 724 738 (13) 1526 995 531 595 683 (88) 9,777 8,653 1124 3,942 3,256 686
FII 1,194 1,243 (48) 1458 2,114 (656) 992 865 128 13,166 14,155 (989) 4,727 5,654 (926)
Futures & Options
DII 590 608 (17) 840 733 107 750 812 (62) 10,242 10,445 (204) 3,332 3,253 79
FII 35,638 35,520 118 48,760 48,415 345 43,593 43,376 217 664,429 661,886 2543 216,296 215,526 770
Currency Derivatives
DII 78 82 (5) 184 179 5 143 135 9 1,016 1,000 16 348 358 (10)
FII 757 737 20 1,519 1,374 145 716 633 83 9,144 8,247 897 3,801 3,387 414
Interest Rate Derivatives
DII 4 4 (0) 13 13 (0) 15 15 1 174 178 (4) 40 39 1
FII 0 2 (2) 3 2 1 2 3 (0) 47 40 6 10 9 1
Source: NSE*DII Domestic Institutional Investors, FII Foreign Institutional Investors
Segment-wise total turnover

over the month of April
amid fewer trading days and rise in uncertainty in the market. In Cash market, total
turnover contracted by 10% rise over the month to reach Rs9trn in April vs. Rs10trn over
the previous month due to having less trading days over the month and sharp fall in
institutional investment in the market.
Similar trends were observed in derivatives segments as well. Total turnover nearly
halved for the Currency futures to reach Rs3.
previous month. Equity options recorded a sharp fall in total premium turnover (-37%),
followed by equity futures turnover that dropped by 26% among all major segments.
Other segments have also registered sharp fall over the month.
Figure 124: Total turnover in different segments (Rsbn) during

Segment Jan-20 Feb-20 Mar-20 Apr-20
Cash Market 8,054 7,969 10,065 9,059
Equity futures 19,471 18,487 20,974 15,497
Index futures 5,433 5,393 9,214 5,947
Stock futures 14,038 13,094 11,760 9,550
Equity options 1,200 1,156 2,268 1,419
Index options 991 941 1,985 1,209
Stock options 209 214 283 210
Currency derivatives 3,882 3,982 7,243 3,733
Currency futures 3,871 3,973 7,220 3,722
Currency options 11 9 23 11
Interest rate derivatives 254 279 298 94
Interest rate futures 254 279 298 94
Interest rate options 0.03 0.10 0.17 0.02
Commodity futures 1.1 1.6 0.9 0.6
Source: NSE ions contracts
Average daily turnover

Cash market is further concentrated to large firms and investors are moving towards
less risky assets: On average, daily turnover rose only in the Cash market while all other
segments recorded a sharp fall over the month. Daily average turnover in Cash market
increased by 5% to reach Rs503bn in April (vs. Rs479bn over the previous month) partly
due to increase in uncertainty in the market after the sudden outbreak of COVID-19
globally, and exponential rise in total number of infected cases in India.
Further, we can see investors are moving to more stable assets like gold bonds, and as a
result there was a rise in total turnover of Sovereign Gold Bonds over the month while
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Market Pulse
average daily turnover fell by 2.3% for Exchange Traded Funds (ETFs), 55% for InvITs
and 55% for Mutual funds over the month as investors are turning towards less risky
investment options. Further total turnover has concentrated towards large stocks. This,
in turn, has reduced average turnover in the SME segment by 52%.
In the Cash market, SUNPHARMA, HINDUNILVR and RELIANCE recorded a sharp increase
in total turnover over the month that has partly increased average daily turnover in the
segment.
Figure 125: Average daily turnover in Cash market (Rsmn)

Current Previous
Product Apr-20 Mar-20 % Change FYTD FYTD % Change Previous FY CYTD
Cash Market 503,279 479,264 5.0 503,279 336,981 49.3 364,399 428,621
Exchange Traded Funds 3,024 3,095 (2.3) 3,024 2,480 21.9 2,069 2,403
SME Emerge 17 36 (52.1) 17 89 (80.5) 53 39
Sovereign Gold Bonds 28 21 37.6 28 4 630.6 10 18
InvITs 38 86 (55.4) 38 32 18.8 51 62
Mutual Funds (Close Ended) 1 1 (54.0) 1 1 (52.5) 1 1
Source: NSE.
In case of Stock derivatives, daily stock futures turnover declined by 5.3% over the month,
whereas stock options premium turnover fell by 13.2% amid net outflows of institutional
investors and additional restrictions imposed on margin trading and short-selling
activities. Banking sector was adversely affected over the month largely due to rise in the
probability of defaults over the month amid exponential rise in Covid-19 cases and
nationwide lockdown in the country. In this banking sector, turnover fell sharply for SBI
bank, ICICI Bank, HDFC Bank in both Equity futures and options segment.
The index derivatives segment also registered a sharp drop in average daily turnover over
the month, where daily turnover of Nifty fell by 33% and Bank Nifty by 9.3% in the futures
segment. In case of Options premium turnover, Nifty options premium dropped by 40%
over the month followed by Bank Nifty by 9.5%.
Figure 126: Average daily turnover in Equity derivatives (Rsmn)

Current Previous
Product Apr-20 Mar-20 % Change FYTD FYTD % Change Previous FY CYTD
Single stock derivatives
Stock futures 530,538 559,977 (5.3) 530,538 610,067 (13.0) 602,216 590,746
Stock options premium 11,681 13,458 (13.2) 11,681 8,134 43.6 9,245 11,175
Index futures
BankNifty 134,636 148,422 (9.3) 134,636 90,708 48.4 113,155 126,079
Nifty 195,728 290,301 (32.6) 195,728 122,784 59.4 157,060 190,788
NiftyIT 34 59 (43.0) 34 308 (89.1) 121 56
Index options
BankNifty 31,559 34,879 (9.5) 31,559 16,980 85.9 22,493 29,252
Nifty 35,601 59,666 (40.3) 35,601 12,638 181.7 21,090 33,265
NiftyIT 0 0 NA 0 0 (100.0) 0 0
Source: NSE.*premium turnover for options.
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Market Pulse
USDINR remains the major currency pair traded in India, followed by GBPINR and
EURINR. Amongst them, average daily futures turnover of USDINR rose sharply by 75%
and EURINR i
In Currency options, USDINR contributed about 100% of total turnover over the month.
Its daily premium turnover has more than doubled to Rs1.1bn over the month amid
increase in uncertainty in the currency market and a sharp depreciation of Rupee over the
months.
In the Interest rate derivatives segment, 645GS2029 is the most traded instrument in
both futures and options segments with Rs14.4bn and Rs8.7mn average daily turnover
respectively over the month.
Figure 127: Average daily turnover in Currency derivatives (Rsmn)

Current Previous
Product Apr-20 Mar-20 % Change % Change Previous FY CYTD
FYTD FYTD
Currency futures
EURINR 7,029 12,104 (41.9) 7,029 5,599 25.6 7,000 8,433
EURUSD 76 508 (85.0) 76 499 (84.7) 472 298
GBPINR 13,916 21,709 (35.9) 13,916 12,203 14.0 15,368 19,771
GBPUSD 130 881 (85.2) 130 485 (73.1) 514 491
JPYINR 3,099 5,848 (47.0) 3,099 1,955 58.5 3,109 3,835
USDINR 194,693 319,956 (39.2) 194,693 179,967 8.2 171,331 208,016
USDJPY 1 6 (76.5) 1 6 (76.3) 9 6
Currency options
EURINR 0.00 0.49 (100.0) 0.00 0.04 (99.5) 0.06 0.15
EURUSD 0.00 0.00 NA 0.00 0.00 NA 0.00 0.00
GBPINR 0.00 0.77 (100.0) 0.00 0.13 (100.0) 0.25 0.50
GBPUSD 0.00 0.03 (100.0) 0.00 0.00 NA 0.01 0.03
JPYINR 0.00 0.00 (100.0) 0.00 0.00 (100.0) 0.02 0.01
USDINR 624.56 1,137.38 (45.1) 624.56 589.31 6.0 548.49 682.36
USDJPY 0.00 0.00 NA 0.00 0.00 NA 0.00 0.00
Source: NSE. *premium turnover for options
Figure 128: Average daily turnover in Interest rate futures (Rsmn)

Current Previous
Product Apr-20 Mar-20 % Change % Change Previous FY CYTD
FYTD FYTD
645GS2029 5,428 14,404 (62.3) 5,428 0 NA 8,617 10,612
726GS2029 57 366 (84.4) 57 764 (92.6) 7,903 1,163
757GS2033 57 127 (54.9) 57 0 NA 44 51
Source: NSE. *Data for only those contracts which were traded in the month of March have been reported in the above table.
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Market Pulse
Turnover of top traded symbols during the month

Figure 129: Top 10 symbols based on total turnover of Cash market (Rsmn)
Symbol Mar-20 Feb-20 %Change
RELIANCE 618,897 492,418 25.7
BAJFINANCE 371,451 311,882 19.1
HDFCBANK 363,126 449,531 (19.2)
AXISBANK 316,659 285,806 10.8
ICICIBANK 297,946 383,231 (22.3)
HINDUNILVR 248,325 139,144 78.5
HDFC 238,551 315,287 (24.3)
INDUSINDBK 238,171 271,911 (12.4)
SBIN 211,299 428,770 (50.7)
SUNPHARMA 174,456 87,844 98.6
Source: NSE
Figure 130: Top 10 symbols based on total turnover of Stock futures (Rsmn)
Symbol Apr-20 Mar-20 %Change
RELIANCE 798,870 609,034 31.2
ICICIBANK 412,154 588,474 (30.0)
BAJFINANCE 377,247 428,904 (12.0)
HDFCBANK 372,734 528,917 (29.5)
SBIN 342,850 810,274 (57.7)
AXISBANK 335,889 373,328 (10.0)
HINDUNILVR 311,185 215,478 44.4
HDFC 273,608 346,863 (21.1)
KOTAKBANK 227,485 267,626 (15.0)
BHARTIARTL 227,385 272,859 (16.7)
Source: NSE
Figure 131: Top 10 symbols based on total turnover of Stock options (Rsmn)
Symbol Apr-20 Mar-20 %Change
RELIANCE 33,811 24,273 39.3
SBIN 12,556 40,166 (68.7)
ICICIBANK 11,804 15,763 (25.1)
BAJFINANCE 11,518 8,971 28.4
AXISBANK 9,845 9,339 5.4
SUNPHARMA 7,961 4,200 89.5
HDFCBANK 6,865 9,018 (23.9)
INDUSINDBK 6,855 11,518 (40.5)
AUROPHARMA 5,649 2,137 164.3
HINDUNILVR 5,282 2,488 112.2
Source: NSE
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Market Pulse
and Equity derivatives market, as shown in the following chart. Monthly turnover in equity
fore coming
down sharply in the following month to reach at Rs16.9trn amid the rise in uncertainty in
the market, impending global recession in FY21 due to lockdown in several countries and
significantly fall in FII inflows. In case of the Cash market, monthly turnover has increased
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. However, this segment has also
recorded a sharp fall in monthly turnover over the month of April.
Figure 132
Source: NSE.
Note: Total turnover for derivatives includes gross traded value of futures and total premium turnover of options.
105/133
Market Pulse
Average daily turnover grew significantly: Despite of the unprecedented coronavirus
decent growth in all major segments on YoY basis. In the Cash market, daily turnover
increased by 41.5% in April, slightly lower than the previous month, but significantly
other segments both equity and currency derivatives recorded 3% growth in their average
daily turnover partly due to the additional restrictions imposed by SEBI on marginal
trading and short-selling activities particularly in the equity derivatives segment.
The overall decline in daily turnover across segments in April has somewhat coincided
with the decline in global economy in 2020 amid the Covid-19 outbreak.
Figure 133: Impact of global slowdown on overall turnover growth across segments
Source: RefinitivDatastream, NSE.
o.
Despite of continuous decline in economic growth projections over the last several
months amid 60-
significantly across all segments over the previous three months. The trend has reversed
in April across all segments as number of Covid-19 cases continues to increase
exponentially, and many leading rating companies have revised their GDP growth forecast
to -5% while IIP growth declined to as low as -16.7%.
106/133
Market Pulse
Figure 134: Growth rates of Cash turnover and economic slowdown in India (IIP and GVA growth)
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 over
March-April 2020 in both wholesale and retail markets in India. Inflation trajectory is
expected to ease further with the RBI expecting it to fall to sub-4% in the second half
of the fiscal.
margin, which may have negative impact on total trading volume as well.
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Market Pulse
Figure 135:
Exchange rate and crude oil price are on opposite trajectory: Decline in crude oil price
did not have significant impact on India given a limited impact on domestic fuel price and
low domestic demand due to 60-day lockdown. In contrast, INR continues to depreciate
given a sudden rise in FPI net outflows, which may have led to a significant rise in daily
turnover of currency derivatives. But its growth rate declined to 3.3% in April amid decline
in growth projections globally as well as in India.
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Market Pulse
Figure 136: oil price and exchange rate
Net investments turned negative for both FIIs and DIIs:

significantly in April as both the FIIs and DIIs become net sellers over the month in contrast
to the previous month. DIIs net investment was quite high in March that led to a significant
109/133
Market Pulse
Figure 137:
Source: RefinitivDatastream, NSE.
110/133
Market Pulse
Client category-wise participation in total turnover
different client categories over the last six (fiscal) years. In FY21, proprietary traders
continues to contribute 23% to total turnover in the cash market, followed by FIIs (14%),
including individual investors, HUFs,
trusts, NRIs, etc. traded around 51% over the period, marginally higher than the
previous fiscal. In contrast, share of FIIs, DIIs and Corporates declined 1-2 percentage
points over the previous fiscal.
Figure 138: Share of client participation across market segments of NSE in the last five (fiscal) years (%)**
Cash Market Equity Derivatives
120% 120%
Corporates DII FII PRO Others Corporates DII FII PRO Others
100% 100%
28
80% 37 41 80% 36 37 37 38
45 46 47 42
51
60% 60%
21 17
18 49 33
22 23 42 42 38 32
40% 40%
23
23 21
16
15 15
20% 14 20% 14 19
10 10 12 14 12 17
9 10 0 0
10 8 0 0 0 0
10 12 11 6 11 8 8 11 9 9
0% 5 4 0%
FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21
Index Futures Index Options

120% 120%
Corporates DII FII Others PRO Corporates DII FII Others PRO
100% 100%
29 30 26 27 25
31 33 33
80% 80% 39
46 45
55
60% 60%
40 41 41 45
39 41
38 42
40% 40% 38
35 37
25
14 16 14 17 18
20% 20 20%
1 1 1 2 13 19 17
2 10 12 10
14 14 14 13 1 0 0 0 0
13 9 0 0 11
0% 10 7 7 9 9
0%
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Market Pulse
Stock Futures Stock Options

120% 120%
Corporates DII FII Others PRO Corporates DII FII Others PRO
100% 100%
26 25 25 23 21
30
80% 80% 39 37 36 40 42 42
60% 32 31 60%
37 38 33
34
37 37
40% 40% 38 35
39
45
18 24 28 33
17 21
20% 20% 17
3 3 4 5 15 17 15
6 6 10
16 15 0 0 0 0 0 6
13 13 10 9 9 9 10 10 8 0
0% 7
0%
Currency Futures Currency Options

120% 120%
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
20 20 24
27 31
80% 80%
60% 49 49 52 47 43 60%
37
78 75 74 64 52
40% 40% 60
14 12 10 8
16
17
20% 1 4 16 18 20% 6
15
3 2
2 9
19 18 2 2
2 2
3 2
12 10 10 9 1 12 2
0% 7 8 7 9 5
0%
Currency Derivatives Interest Rate Futures

120% 120%
Corporates FII Banks Corporates FII Banks
DII ex-banks PRO ex-banks Others DII ex-banks PRO ex-banks Others
100% 100% 3
8 9 4 5
14 14 15 11
18 24 29
80% 80%
40 51 48 35
52
51
60% 60%
60 62 63 55
52 4
47 3 3
40% 2 4
40% 1 18 23
19 20
16 2 20
8 1
20% 10 6 5 0 3 2
8 10 20% 1
1 3 9 9 11 27 27
3 23 20 24
14 13 10 11 9 18
7
0% 0%
Source: NSE
**DII: Domestic Institutional Investors, FII: Foreign Institutional Investors, PRO: Proprietary Traders, Others: includes individual investors, HUFs, trusts, NRIs, etc.
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Market Pulse
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, followed by corporate whose
share declined from 14% to 9% over the same period. This overall fall in their shares has
45% of total turnover in FY21 (vs.39% in FY16) whereas FIIs share rose from 14% to 20%
over the same period. However, the share of DIIs remains marginal during this period,
which can be attributed to the regulatory restrictions on derivative activity.
In case of Stock futures, Proprietary traders, Corporates and Others lost their share in the
market, which was mainly compensated by FIIs. In FY21, Others traded 31% of total
contracts in stock futures while proprietary traders and FIIs contributed 22% and 33% of
total turnover. Remaining 9% traded by corporate and merely 6% transactions were done
by DIIs in the segment.
DIIs share in the Options segment remains negligible throughout the period due to
regulatory restrictions on derivative activity. Over the period, share of proprietary traders
declined in Index options from 55% in FY16 to merely 33% in FY21 which was partially
offset by Others whose share rose from 25% to 42% over the period. Among other share
17% over the period.
k options from 15% in FY16 to 6% in FY21 which

was taken over by proprietary traders and Others. Out of total contracts traded in Index
options, more than 42% were traded by proprietary traders and 45% by Others.
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 35% of total turnover. Here,
banks capture 23% of total turnover followed by corporates with 27% market share in
FY21.
Figure 139: Share of client participation in Cash market of NSE (%)**

Client Current Previous
Apr-20 Mar-20 Change Change Previous FY CYTD
category FYTD FYTD
Cash market
Corporates 4.1 7.3 (3.2) 4.1 4.8 (0.7) 5.3 5.4

DII 8.1 12.5 (4.4) 8.1 10.0 (1.8) 10.2 10.3
FII 13.6 17.7 (4.2) 13.6 14.5 (0.9) 15.2 14.8
PRO 22.9 23.8 (1.0) 22.9 22.7 0.2 22.7 22.7
Others 51.3 38.6 12.7 51.3 48.0 3.3 46.5 46.9
Source: NSE. **DII Domestic Institutional Investors, FII Foreign Institutional Investors, PRO Proprietary Traders, Others includes individual investors, HUFs, trusts,
NRIs, etc.
113/133
Market Pulse
Figure 140: Share of client participation in Equity derivatives of NSE (%)**

category FYTD FYTD
Index Futures
Corporates 9.0 12.3 (3.3) 9.0 14.2 (5.1) 12.5 11.3
DII 0.7 0.9 (0.2) 0.7 2.7 (2.0) 1.8 1.2
FII 19.7 20.3 (0.6) 19.7 19.1 0.6 18.2 19.3
PRO 25.1 27.5 (2.5) 25.1 25.1 (0.1) 26.6 26.1
Others 45.5 38.9 6.6 45.5 38.9 6.6 40.9 42.1
Stock Futures
Corporates 9.0 9.2 (0.2) 9.0 11.5 (2.5) 10.5 9.2

DII 5.7 5.6 0.1 5.7 5.6 0.1 5.9 5.9
FII 32.5 34.5 (2.0) 32.5 26.0 6.5 28.0 30.3
PRO 21.5 21.6 (0.2) 21.5 25.3 (3.8) 23.2 22.0
Others 31.2 29.1 2.1 31.2 31.6 (0.4) 32.3 32.6
Index Options
Corporates 8.6 6.8 1.7 8.6 10.2 (1.7) 9.1 8.7
DII 0.0 0.0 (0.0) 0.0 0.0 (0.0) 0.0 0.0
FII 16.7 19.2 (2.4) 16.7 19.2 (2.5) 19.2 18.0
PRO 32.8 32.8 0.0 32.8 33.1 (0.3) 33.4 33.4
Others 41.9 41.2 0.7 41.9 37.4 4.5 38.3 39.9
Stock Options
Corporates 6.9 8.0 (1.1) 6.9 10.3 (3.3) 8.3 6.9
DII 0.0 0.0 (0.0) 0.0 0.0 0.0 0.0 0.0
FII 5.8 8.4 (2.6) 5.8 13.0 (7.1) 10.5 8.2
PRO 42.4 43.6 (1.2) 42.4 39.2 3.2 42.2 43.6
Others 44.8 40.0 4.8 44.8 37.6 7.2 39.0 41.3
Equity Derivatives
Corporates 8.5 7.2 1.4 8.5 10.4 (1.8) 9.2 8.7

DII 0.3 0.3 (0.0) 0.3 0.3 (0.1) 0.3 0.3
FII 17.2 19.6 (2.4) 17.2 19.3 (2.1) 19.2 18.2
PRO 32.4 32.4 (0.0) 32.4 32.9 (0.5) 33.2 33.1
Others 41.6 40.5 1.1 41.6 37.1 4.5 38.1 39.7
NRIs, etc.
114/133
Market Pulse
Figure 141: Share of client participation in Currency derivatives of NSE (%)**

Client Current Previous Previous
Apr-20 Mar-20 Change Change CYTD
category FYTD FYTD FY
Currency Futures
Corporates 9.4 10.5 (1.0) 9.4 9.3 0.1 10.1 10.6
FII 18.1 16.9 1.1 18.1 16.7 1.4 15.6 16.1
Banks 8.1 10.7 (2.5) 8.1 11.0 (2.9) 10.4 9.1
DII ex-banks 0.1 0.1 0.0 0.1 0.2 (0.1) 0.2 0.1
PRO ex-banks 36.8 42.1 (5.3) 36.8 44.3 (7.5) 43.3 41.3
Others 27.5 19.8 7.7 27.5 18.5 8.9 20.4 22.7
Currency Options
Corporates 5.0 5.1 (0.1) 5.0 10.8 (5.8) 8.1 5.2
FII 2.3 4.4 (2.1) 2.3 2.1 0.3 2.5 3.3
Banks 1.9 1.6 0.3 1.9 1.6 0.3 1.9 1.9
DII ex-banks 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PRO ex-banks 59.6 61.5 (1.9) 59.6 61.6 (2.0) 60.4 61.2
Others 31.1 27.4 3.8 31.1 24.0 7.1 27.1 28.3
Currency Derivates
Corporates 7.4 8.2 (0.9) 7.4 10.0 (2.7) 9.1 8.0
FII 10.7 11.8 (1.0) 10.7 9.5 1.3 9.0 10.1
Banks 5.2 6.9 (1.7) 5.2 6.4 (1.1) 6.2 5.7
DII ex-banks 0.1 0.1 0.0 0.1 0.1 (0.0) 0.1 0.1
PRO ex-banks 47.4 50.1 (2.7) 47.4 52.8 (5.4) 51.9 50.7
Others 29.2 22.9 6.3 29.2 21.2 7.9 23.8 25.4
Source: NSE. **DII Domestic Institutional Investors, FII Foreign Institutional Investors, PRO Proprietary Taders, Others includes individual investors, HUFs, trusts,
NRIs, etc.
Figure 142: Share of client participation in Interest rate futures of NSE (%)**
category FYTD FYTD
Interest rate futures
Corporates 27.4 20.1 7.2 27.4 21.2 6.1 18.1 19.8
FII 0.9 0.9 (0.0) 0.9 1.0 (0.1) 1.2 1.0
Banks 22.6 17.6 5.0 22.6 21.4 1.2 19.7 19.3
DII ex-banks 3.5 2.8 0.7 3.5 5.8 (2.3) 4.3 2.7
PRO ex-banks 34.7 48.6 (13.9) 34.7 46.2 (11.5) 51.6 50.6
Others 10.9 9.9 0.9 10.9 4.4 6.5 5.1 6.6
Interest rate options
Corporates 44.2 23.7 20.4 44.2 NA NA 25.3 26.3
FII 0.0 0.0 0.0 0.0 NA NA 0.0 0.0
Banks 26.2 0.1 26.1 26.2 NA NA 4.1 4.0
DII ex-banks 0.0 0.0 0.0 0.0 NA NA 0.0 0.0
PRO ex-banks 22.5 62.0 (39.5) 22.5 NA NA 57.7 56.6
Others 7.1 14.1 (7.0) 7.1 NA NA 12.9 13.0
Interest rate derivatives
Corporates 27.9 20.6 7.3 27.9 21.2 6.7 18.3 20.3
FII 0.9 0.8 0.1 0.9 1.0 (0.1) 1.2 0.9
Banks 22.7 15.5 7.2 22.7 21.4 1.3 19.3 18.0
DII ex-banks 3.4 2.5 1.0 3.4 5.8 (2.4) 4.2 2.5
PRO ex-banks 34.3 50.2 (15.9) 34.3 46.2 (11.9) 51.8 51.1
Others 10.8 10.4 0.3 10.8 4.4 6.4 5.3 7.2
NRIs, etc.
115/133
Market Pulse
Region-wise distribution of new investors registered

Total registration in
previous month. On average, however, it maintained a slight rise over the last five months
Overall trend is quite different across regions. Northern part of the country recorded a
highest CAGR of 4% over the period, followed by Eastern region with merely 1% CAGR. In
contrast, there is decline in total registration in both Western and Southern parts of the
country with a CAGR of -1% over the period.
As a result, share of total registration changed across regions over the month. Out of 406
followed by western region with 32% registration, while 24% of total investors registered
from south, and remaining 9% from east India. Over the month, registration declined
across all regions, West by 35%, North by 24%, followed by South (14%) and East (13%).
This, in turn has resulted a 25% decline in total registration over the month.
Figure 143: Region-wise distribution of new investors registered

600
Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20

500
406
400
325
'000
300
200
145
128
103 96 107
100 83
32 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, Chattisgarh; 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 April,
around 7.6% of all investors are from Delhi region, which is marginally higher than Mumbai
(~6.8%). Among others, 3.2% of all registration over the month happened in Pune,
followed by Bangalore and Surat with 2.7% and 1.3% of total registration respectively.
Besides, a significant number of investors are registered in Hyderabad, Jaipur and Nashik
over the last month.
116/133
Market Pulse
Figure 144: Number of new investors registered in top 10 districts

50
45
Dec-19 Jan-20 Feb-20 Mar-20 Apr-20
40
35 31
30 27 28 28
'000
25
20
15 13
11 11
10 10 8
10 5 6 6
5 5 5 5 5 4
3
5
0
Source: NSE
Note: Top 10 districts are chosen based on data.
117/133
Market Pulse
Region-wise distribution of individual investor turnover in the cash market

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. Western
region contributed largest share over the period in terms of turnover and trade volumes
in the Cash market with around 36% of total turnover by retail investors and 39% of total
g other regions, North India contributed around 30% of
retail turnover and 29% of retail volume, followed by the Southern and Eastern India.
Figure 145: Region-wise distribution of individual Figure 146: Region-wise distribution of individual
100% 100%
38 39 39 40 39 36
90%
80% 80% 41 43 42 42 39
44
70%
60% 26 60%
24 24 24 24 24
50% 23
23 21 22 22 20
40% 40%
29 29 29 28 28 30
30%
27 27 27 27 28 29
20% 20%
10%
9 8 9 9 8 8 10 9 9 9 8 9
0% 0%
Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20
East India North India South India West India East India North India South India West India
Source: NSE.
Further, we have shown the distributional pattern of total turnover and trade volume
across major districts over the last five months. Data reveals that, top 10 cities
contributed ~42% of total retail turnover and ~40% of retail trade volume over the month.
Amongst them, Mumbai and Delhi have contributed around 21.8% of total turnover in
evious month, while Bangalore and
Ahmedabad contributed 4.5% and 3.5% respectively, followed by Pune (3.1%) over the
month.
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Market Pulse
Figure 147: Top 10 districts based on Cash turnover of individual investors

16
14 12.9
% of Cash turnover of individual investors
11.6
12 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20
10.2
10 9.3
6
4.4 4.5 4.4
4 3.5
3.0 3.1
2.4 2.5
1.6 1.6 1.9 1.6 1.6 1.5 1.5 1.5
2
Source: NSE.
Note: Individual investors include Individual / Proprietorship firms and HUF. Top ten districts are chosen based on Apr data.
Figure 148: Top 10 districts based on individual investors traded
14
12.5
11.8 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20
12
% of traded volume of individual investors in cash
10
8.8
8.0
8
5.7
6
market
3.5 3.8 3.8 3.7

4 3.3
2.1 1.9 1.6 1.8 1.9 1.6 1.6 1.5 1.4 1.3
2
Source: NSE
Note: Individual investors include Individual / Proprietorship firms and HUF. Top ten districts are chosen based on data
119/133
Market Pulse
Asset category-wise open interest (average daily volume)

Figure 149: Average daily volume of open interest in Equity derivatives (million contracts)
Product Apr-20 Mar-20 % Change Current FYTD Previous FYTD % Change Previous FY CYTD
Equity Derivatives
FUTSTK 2,845 3,608 (21.1) 2,845 4,845 (41.3) 4,294 3,906
OPTSTK 917 1,319 (30.5) 917 1,445 (36.5) 1,490 1,458
Equity Derivatives - Index Futures
BankNifty 1.3 1.3 (6.0) 1.3 2.1 (39.6) 1.7 1.4
Nifty 11.5 17.5 (34.1) 11.5 18.4 (37.3) 17.9 14.7
NiftyIT 0.0 0.0 (48.9) 0.0 0.0 (90.7) 0.0 0.0
Equity Derivatives - Index Options
BANKNIFTY 9.3 10.9 (14.6) 9.3 15.8 (41.4) 14.7 13.6
NIFTY 89.1 109.0 (18.2) 89.1 99.6 (10.6) 104.2 105.1
NIFTYIT - - NA - - NA - -
Source: NSE
Figure 150: Average daily volume of open interest in Currency derivatives (no of contracts)
Category Apr-20 Mar-20 % Change Current FYTD Previous FYTD % Change Previous FY CYTD
Futures
EURINR 82,593 116,092 (28.9) 82,593 57,594 43.4 74,622 94,321
EURUSD 1,155 7,227 (84.0) 1,155 38,112 (97.0) 34,538 4,922
GBPINR 47,787 65,495 (27.0) 47,787 48,931 (2.3) 74,553 79,610
GBPUSD 1,060 5,166 (79.5) 1,060 3,353 (68.4) 4,877 3,031
JPYINR 37,312 59,439 (37.2) 37,312 26,505 40.8 49,206 43,563
USDINR 4,654,636 6,719,880 (30.7) 4,654,636 2,476,966 87.9 3,123,879 4,215,912
USDJPY 57 206 (72.2) 57 243 (76.4) 297 206
Options
EURINR 6 3,820 (99.8) 6 1,538 (99.6) 807 1,341
EURUSD 0 0 NA 0 0 NA 0 0
GBPINR 0 6,021 (100.0) 0 1,041 (100.0) 1,770 3,833
GBPUSD 0 15 (100.0) 0 0 NA 3 7
JPYINR 2 91 (98.2) 2 22 (92.7) 170 103
USDINR 2,278,731 3,305,390 (31.1) 2,278,731 2,623,455 (13.1) 2,932,818 3,135,176
Source: NSE
Figure 151: Average daily volume of open interest in Interest rate derivatives II (no of contracts)
Category Apr-20 Mar-20 % Change Current FYTD Previous FYTD % Change Previous FY CYTD
Interest rate futures
645GS2029 64,610 98,951 (34.7) 64,610 - NA 67,979 89,957
726GS2029 3,738 10,683 (65.0) 3,738 28,890 (87.1) 89,711 23,116
795GS2032 8,500 8,500 0.0 8,500 25,375 (66.5) 24,646 11,285
757GS2033 8,500 6,375 33.3 8,500 - NA 4,525 6,163
Interest rate options
645GS2029 5,344 35,491 (84.9) 5,344 NA NA 6,093 20003
726GS2029 0 0 NA 0 NA NA 975 1817
Source: NSE
120/133
Market Pulse
Internet-based trading
In April, average daily turnover of internet-based trading declined significantly across all
segments except the Equity derivatives, as can be seen in the following table. Notably,
average turnover of cash market fell by 61.4% to reach Rs125.6bn daily in A
daily turnover of Equity derivatives rose by 25.5% over the month. Besides, internet based
daily trading fell sharply in both the Currency and interest rate derivatives segments by
18.8% and 31.8% over the month to reach Rs86bn and Rs1.1bn respectively.
Figure 152: Average daily turnover of internet-based trading (Rsm)

Segment Current Previous
Apr-20 Mar-20 % Change % Change Previous FY CYTD
FYTD FYTD
Cash Market 125,639 77,836 61.4 125,639 106,876 17.6 90,639 88,647
Equiity Derivatives 2,892,980 2,305,808 25.5 2,892,980 3,556,066 (18.6) 3,530,890 3,158,916
Index Futures 124,611 118,766 4.9 124,611 67,625 84.3 82,859 94,312
Stock Futures 103,951 86,247 20.5 103,951 146,362 -29.0 121,620 105,328
Index Options 2,581,072 2,034,579 26.9 2,581,072 3,193,693 -19.2 3,213,370 2,870,248
Stock Options 83,346 66,217 25.9 83,346 148,386 (43.8) 113,041 89,029
Currency Derivatives 86,117 106,116 (18.8) 86,117 94,210 (8.6) 83,206 83,431
Currency Futures 42,149 50,753 (17.0) 42,149 36,808 14.5 31,610 36,118
Currency Options 43,968 55,363 (20.6) 43,968 57,402 (23.4) 51,596 47,313
Interest Rate Derivatives 1,149 1,685 (31.8) 1,149 1,517 (24.3) 1,547 1,209
Interest Rate Futures 1,063 1,309 (18.8) 1,063 1,517 (29.9) 1,494 1,031
Interest Rate Options 86 376 (77.2) 86 0 NA 53 179

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 notional turnover is considered
in case of futures and options contracts.
Record statistics
Rise in uncertainty over the outbreak of Covid-19 and its plausible implications on the
economy had raised overall volatility in the market in March. This may have resulted a
sharp increase in total trading across all segments at NSE, particularly in Index derivatives
segment. Index options recorded its highest ever premium turnover on March 19, 2020
-time high of Rs22bn
on March 18, 2020. Though other major segments have recorded a significant growth in
their average turnover, they did not cross their previous record levels.
Cash market recorded its highest turnover of Rs828bn on November 26, 2019 mainly due
to a significant rise in FPI inflows in equity over the month. 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 153: Segment-wise record turnover till April 30th, 2020

Segment Turnover (Rsbn) Trading Date
Cash market 828 26-Nov-19
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
121/133
Market Pulse
Investment through mutual funds in India

The overall trend of total investment through mutual funds in India shows that total
number of mutual fund schemes had declined significantly over the first half of FY20
partly due to significant fall in the number of new schemes.
The recent fall in the number of schemes has resulted an overall decline in the average
exponential rise of COVID-19 cases and total number of fatalities in India. The recent
decline in AAUM has completely wiped out the growth in AAUM over the previous fiscal
year.
Figure 154: Monthly trend of total schemes and average AUM

AAUM for the month (Rstrn) - RHS No. of Schemes
1,980 30
1,960
25
1,940
1,920 20
1,900
15
1,880
1,860 10
1,840
5
1,820
1,800 0
Source: AMFI. *AAUM-Average Asset under Management.
Data further reveals that total investment has concentrated marginally with fewer
schemes between Apr-
period. The following figure, on the other hand, has shown several ups and downs in net
investments of mutual funds over the last financial year. MFs net inflows jumped up into
the positive territory after a continuous decline over the previous two months to end with
Rs460bn net investment over
market.
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Market Pulse
Figure 155: 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 unprecedented coronavirus pandemic, rise in market uncertainty and impending
global recession, only five new schemes were launched in April and Rs21bn funds got
mobilised through these new schemes.
Figure 156: 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.
123/133
Market Pulse
Policy developments
India
Policy measures by the SEBI
Apr 13th, 2020 The regulator has extended several timelines related to remat request, transmission request, and
requests for consolidation/split/replacement of share/amalgamation of shares, submission date
of audit reports and compliance reports for equal number of lock down days declared by the
government.
Apr 16th, 2020 SEBI extended the timelines for compliance with regulatory requirements by trading/clearing
members related to reporting of client funding, AI & ML, margin trading risk-based supervision,
audit reports, net worth certificates, penalty for non-collection and maintaining call recordings of
orders and instructions received from clients till May 17, 2020.
Apr 17th, 2020 SEBI has given additional relaxation on a) prior intimation to stock exchanges about meetings of
the board, and b) intimation to stock exchanges regarding loss of share certificate and issue of
duplicate certificates. Further, companies are allowed to use digital signature for any filing and
submission under the LODR.
April 21st, 2020 The regulator has announced one-time relaxation for the validity of SEBI observations for six
months in case they have expired/will expire between March 1 and September 30, 2020. Further,
SEBI has permitted an issuer to increase/decrease its issue size by up to 50% of the estimated
issue size without any fresh draft offer document.
In a separate Circular, the regulator has relaxed certain provision of the SEBI (Issue of capital and
disclosure requirements) Regulation. Under this condition, the eligibility criteria for Fast Track
Rights Issue and the minimum subscription criteria are relaxed significantly. The minimum
threshold requirement for not filing draft letter of offer with SEBI is relaxed from Rs100m to
Rs250m.
April 23rd, 2020 During the lockdown period, SEBI has decided to offer temporary relaxation for the period of
restriction provided in the Buy-back Regulations. Now, companies will be able to raise additional
funds only after six months (instead of one year) from the date of expiry of the Buy-back.
April 23rd, 2020 SEBI has reviewed the provisions under the SEBI (Mutual Funds) Regulations, 1996 and issued a
circular to offer a differential treatment to issuers in case of default, keeping in mind the negative
impacts of nation-wide lockdown and three months moratorium permitted by RBI. According to
this Circular, AMFI appointed valuation agency may not consider a delay in payment of interest/
principal or an extension of maturity by an issuer as default for the purpose of valuation of money
market or debt securities held by mutual funds if the agency finds that the delay was solely due
to the nation-wide lockdown and three months moratorium. This relaxation will be applicable till
the period of moratorium by the RBI.
April 24th, 2020 SEBI has extended timelines for several compliance with regulatory requirements by Depositories
and Depository Participants in view of the current situation arising out of the COVID-19 pandemic
April 27th, 2020 SEBI has extended the implementation date the margin framework for cash and derivatives
segment except commodities derivatives (as per the circular dated February 24 th, 2020) from May
1st, 2020 to June 1st, 2020.
124/133
Market Pulse
Global
Federal Reserve Board announced temporary change to its supplementary leverage
ratio rule to ease strains in the Treasury market resulting from the coronavirus (FED,
April 1, 2020)20
The Federal Reserve announced temporary change to its supplementary leverage ratio
rule to ease strains in the Treasury market resulting from the coronavirus and increase
banking organizations' ability to provide credit to households and businesses. The change
would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the
calculation of the rule for holding companies, and will be in effect until March 31, 2021.
SEC proposed to modernize framework for fund valuation practices (SEC, April 21 st,
2020)21
SEC has voted to propose a new rule that would establish a framework for fund valuation
practices. The rule is designed to clarify how fund boards can satisfy their valuation
obligations in light of market developments, including an increase in the variety of asset
classes held by funds and an increase in both the volume and type of data used in
valuation determinations. The SEC had last addressed valuation practices in a
comprehensive manner in 1969 and 1970. The markets have evolved considerably since
then, such as many funds now engage third-party pricing services to provide pricing
information, particularly for thinly traded or more complex assets. In addition, significant
regulatory developments have altered how boards, investment advisers, independent
auditors, and other market participants address valuation under the federal securities
laws. The proposal recognizes and reflects these changes, including the important role
The
ion to
determine fair value in good faith for purposes of the Investment Company Act of 1940.
The rule would require a board to assess and manage material risks associated with fair
value determinations; select, apply and test fair value methodologies; oversee and
evaluate any pricing services used; adopt and implement policies and procedures; and
maintain certain records.
20
https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200401a.htm
21
https://www.sec.gov/news/press-release/2020-93
125/133
Market Pulse
Comparison of trading activities across major exchanges globally

This edition of the Market Pulse has analysed the trading pattern in the securities market in different segments across
-
A total of 96 exchanges are covered in the analysis; 54 from the EMEA region, 24 from Asia-Pacific and the rest from the
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:
• 31% YoY to reach US$1.5trn in Mar NSE lost

two positions to end up as 14 globally based on domestic market capitalisation
th
(DMC) in Mar'20 due to a sharp fall in market cap over the month amid the
unprecedented coronavirus pandemic. Among Indian stock exchanges, BSE held
13th position with similar market cap in Mar NYSE remains the top exchange
globally over the last two years 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 with US$2.0trn DMC as on March 58bn in
Mar valued at US$1.7trn in
amid ongoing global slowdown owing to Covid-19. However, NY

increased by 10% on YoY basis and maintained its 1st position globally.
• In the Cash market, Shanghai Stock Exchange (SSE) and Shenzhen Stock
Exchange (SZSE) maintained top two positions in terms of number of trades,
whereas NSE slipped to fifth position globally in Mar (vs. fourth in the previous
month). NSE slipped below fourth position for the first time in the last two years.
Data also reveals the volatility of total trades has increased significantly across all
exchanges particularly over the last three months. Notably, all large exchanges
have recorded a significant rise in total volume over the last two months due to rise
in uncertainty over the securities market.
• NSE hold sixth position in stock options: Distibution of total trade volume is quite
diverse across exchnages for Stock options vs. Stock futures. In stock options,
Nasdaq-US
CBOE Global where 94mn contracts were treaded over the month. B3 - Brasil Bolsa
Balcão slipped to third position with 85m contracts traded over the month, while
NSE ranked sixth with 12.6m contract trade over the month.
• Korea Stock Exchange topped in the stock futures segment in terms of total
number of contracts traded over the last two years, followed by Borsa Istanbul
Exchange, Moscow Stock Excnange and NSE. NSE retained slipped to fourth
position globally in terms of total number of contracts trades in stock futures over
• NSE retains its top position in equity index options with ~55% of trade share in
: equity index options market declined sharply from 63%
20, still it maintains its top position in 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 position with
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Market Pulse
merely 11% market share each, followed by Deutsche Boerse AG with 10% market
share over the month.
• global position improved to 10th in the Equity index futures 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. Out of total trade volume
in , about 27% are traded in B3 - Brasil Bolsa Balcão (significantly lower than
40% in the previous month) followed by 22% in CME group, 16% in Deutsche
Boerse and 10% in Japan stock exchange, whereas NSE market share increased
~1% over the previous month).
• In case of Currency segment, NSE holds top position in options market: NSE
topped in the Currency options with 67% contracts traded in March; 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 21% and 12% market shares respectively.
Figure 157: Market Cap and number of trades in different products of top ranked exchanges ( - )*
a. Domestic market capitalization (US$bn)* b. Number of trades - Cash market (mn)

800
NYSE SZSE CBOE
Nasdaq - US SSE
Nasdaq - US
700 NSE KRX
JPX
SSE
600
HKEX
Euronext
500
SZSE
LSE Group 400

Mar'20 Mar'19 Mar'18
Tadawul
TMX Group 300

SIX
DBAG 200
BSE
NSE 100
Mar-18 Sep-18 Mar-19 Sep-19 Mar-20
0 5,000 10,000 15,000 20,000 25,000 30,000
127/133
Market Pulse
c. Number of contracts traded - Stock d. Number of contracts traded - Stock options (mn)
160 futures (mn)
Nasdaq - US CBOE Global
KRX BIST MOEX NSE DBAG 120
140 B3 - Brasil Bolsa Balcão MIAX
DBAG NSE
120
90
100
80
60
60
40 30
20
0 0
Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20
e. Number of contracts traded - Stock f. Number of contracts traded - Stock index

index futures (mn) options (mn)
NSE KRX CBOE Global
B3 - Brasil Bolsa Balcão
450 CME Group 525 DBAG CME Group
DBAG
400 JPX 450
KRX
350 SGX
MOEX 375
300
300
250
200 225
150
150
100
75
50
0
0
128/133
Market Pulse
g. Number of contracts traded - Currency h. Number of contracts traded - Currency

futures (mn) options (mn)
120 100
MOEX NSE
NSE BSE JSE MOEX TASE
B3 - Brasil Bolsa Balcão BSE
100
CME Group 80
80
60
60
40
40
20
20
0 0
Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20
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.
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Market Pulse
Economic calendar for major countries (June 2020)

Prior
Date Country Indicator Name Period Reuters Poll Unit
Period
1 Jun 2020 China (Mainland) Caixin Mfg PMI Final May 49.6 49.4 Index (diffusion)
1 Jun 2020 India IHS Markit Mfg PMI May 27.4 Index (diffusion)
1 Jun 2020 Euro Zone Markit Mfg Final PMI May 39.5 39.5 Index (diffusion)
1 Jun 2020 United Kingdom Markit/CIPS Mfg PMI Final May 40.6 Index (diffusion)
1 Jun 2020 United States Markit Mfg PMI Final May 39.8 Index (diffusion)
1 Jun 2020 United States ISM Manufacturing PMI May 42.5 41.5 Index
3 Jun 2020 Euro Zone Unemployment Rate Apr 8.3% 7.4% Percent
4 Jun 2020 Euro Zone ECB Refinancing Rate Jun 0.00% 0.00% Percent
4 Jun 2020 Euro Zone ECB Deposit Rate Jun -0.50% -0.50% Percent
4 Jun 2020 United States International Trade $ Apr -40.5B -44.4B USD
5 Jun 2020 United States Non-Farm Payrolls May -7,450k -20,500k Person
5 Jun 2020 United States Unemployment Rate May 19.8% 14.7% Percent
7 Jun 2020 China (Mainland) Exports YY May 3.5% Percent

7 Jun 2020 China (Mainland) Imports YY May -14.2% Percent
8 Jun 2020 Japan GDP Rev QQ Annualised Q1 -3.4% Percent

10 Jun 2020 China (Mainland) CPI YY May 3.3% Percent
10 Jun 2020 China (Mainland) CPI MM May -0.9% Percent

10 Jun 2020 United States Fed Funds Target Rate 10 Jun 0-0.25 Percent
10 Jun 2020 India Trade Deficit Govt -USD May 6.76B USD
10 Jun 2020 India Imports - USD May 17.12B USD

10 Jun 2020 India Exports - USD May 10.36B USD
12 Jun 2020 United Kingdom GDP Estimate YY Apr -5.7% Percent
12 Jun 2020 Euro Zone Industrial Production YY Apr -12.9% Percent
12 Jun 2020 India Balance Payments $ Q1 21.6B USD
12 Jun 2020 India CPI Inflation YY May 5.91% Percent

12 Jun 2020 India Industrial Output YY Apr -16.7% Percent
15 Jun 2020 China (Mainland) Industrial Output YY May 3.9% Percent
16 Jun 2020 United Kingdom ILO Unemployment Rate Apr 3.9% Percent
17 Jun 2020 Japan Trade Balance Total Yen May -930.4B JPY
17 Jun 2020 United Kingdom CPI MM May -0.2% Percent
18 Jun 2020 United Kingdom BOE Bank Rate Jun 0.10% 0.10% Percent
23 Jun 2020 United Kingdom Flash Manufacturing PMI Jun Index (diffusion)
25 Jun 2020 United States GDP Final Q1 Percent

30 Jun 2020 Japan Unemployment Rate May Percent
30 Jun 2020 United Kingdom GDP YY Q1 -1.6% Percent

30 Jun 2020 India External Debt Q1 563.9B USD
Source: RefinitivDatastream
130/133
Market Pulse
Annual Macro Snapshot

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
National income
GDP (Current) Growth (%) 19.9 14.4 13.8 13.0 11.0 10.5 11.8 11.1 11.0 7.5
GDP (Current) (Rs trn) 76.3 87.4 99.4 112.3 124.7 137.7 153.9 171.0 189.7 203.8
GVA (Constant) Growth (%) 8.0 5.2 5.4 6.1 7.2 8.0 8.0 6.6 6.0 4.9
Agriculture growth (%) 8.8 6.4 1.5 5.6 -0.2 0.6 6.8 5.9 2.4 3.7
Industry growth (%) 7.9 3.6 3.3 3.8 7.0 9.6 7.7 6.3 4.9 1.8
Services growth (%) 7.8 5.9 8.3 7.7 9.8 9.4 8.5 6.9 7.7 7.0
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 1,52,012
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 1.8
Primary articles (%) 17.9 9.8 11.4 9.9 2.2 -0.4 3.5 1.3 2.8 6.9
Fuel & power (%) 12.3 13.9 7.1 7.1 -6.1 -19.7 -0.2 8.1 11.6 -1.7
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 -4.9
POL exports growth (%) 47.8 34.9 8.7 4.3 -10.7 -46.1 3.4 18.8 24.5
Non-POL exports (%) 39.3 19.3 -4.2 5.1 0.8 -8.6 5.4 9.0 6.6
Imports growth (%) 28.5 32.4 0.2 -8.4 -0.3 -15.0 1.0 21.2 10.5 -9.3
POL exports growth (%) 21.9 46.4 5.7 0.7 -16.4 -40.1 5.3 25.0 29.9
Non-POL exports growth (%) 31.3 26.8 -2.3 -13.0 9.1 -3.8 -0.2 20.1 4.5
Net FDI (US$bn) 11.3 21.9 19.8 21.6 31.3 36.0 35.6 30.3 30.7 38.7
Net FII (US$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$bn) -118.6 -183.4 -190.1 -134.0 -137.5 -118.2 -108.5 -162.1 -184.1 -152.6
Current Acc. Balance (US$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
131/133
Market Pulse
Our latest reports on the markets and the economy
Sr. No. Date Report
1. 29-May-20 India Ownership Tracker March 2020
2. 22-May-20 Macro: Review: RBI Monetary Policy
3. 17-May-20 Macro Review: Indiia COVID-19 Stimulus Package (Fifth Tranche)
4. 16-May-20 Macro Review: Indiia COVID-19 Stimulus Package (Fourth Tranche)
5. 15-May-20 Macro Review: Indiia COVID-19 Stimulus Package (Third Tranche)
6. 14-May-20 Macro Review: Indiia COVID-19 Stimulus Package (Second Tranche)
7. 13-May-20 Macro Review: Indiia COVID-19 Stimulus Package (First Tranche)
8. 13-May-20 Macro Review: IIP and Inflation
9. 27-Apr-20 COVID-19: India Macro and Market Outlook
10. 17-Apr-20 RBI response to COVID-19
11. 16-Apr-20 Macro Review: India monthly trade
12. 14-Apr-20 Macro Review: IIP and Inflation
13. 14-Apr-20 Key takeaways from RBI Monetary Policy Report
14. 27-Mar-20 India policy response to COVID-19
15. 20-Mar-20 Market Pulse March 2020: A monthly review of Indian Markets
16. 16-Mar-20 Macro Review: Q3FY20 Balance of Payments
17. 11-Mar-20 A deep dive into Investment in India
18. 09-Mar-20 India Ownership Tracker December 2019
19. 02-Mar-20 Macro Review: Q3FY20 GDP
20. 29-Feb-20 Quarterly Briefing: Takeover and Corporate Governance in India
21. 20-Feb-20 Market Pulse February 2020: A monthly review of Indian Markets
22. 06-Feb-20 Macro Review: RBI Monetary Policy
23. 01-Feb-20 Decoding the Union Budget FY2020-21
24. 20-Jan-20 Market Pulse January 2020: A monthly review of Indian Markets
25. 08-Jan-20 Macro Review: FY20 GDP Advance Estimates
26. 01-Jan-20 Macro Review: Q2FY20 Balance of Payments
132/133
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.
133/133

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May 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

Internet-based trading .......................................................................................................................................... 121

Story of the month

20% of the NSE-listed universe saw promoter acquiring shares in the

reduced absolute portfolio allocation, largely explained by a 100 8

most under-owned sectors, reflecting the FIIs cautious view on

Source: CMIE Prowess, AMFI, NSE.

▪ Concentration of institutional ownership to larger companies 76

Ownership pattern March 2020

Sector-wise ownership pattern and allocation to key stakeholders

DMFs reduced their exposure to Financials but maintained an overweight stance:

incrementally more bullish on Communication Services.

0 10 20 30 40 50 -400 -300 -200 -100 0 100 200 300

Figure 17: DMF vs. Nifty 50 Sector-wise OW/UW trend (bps)

Financials 44.4 -316

0 20 40 60 -500 -250 0 250 500 750 1000

Figure 20: FII vs. Nifty 50 Sector-wise OW/UW trend (bps)

In terms of overall foreign ownership (including foreign promoters), Consumer Staples

DMFs remained cautious on smaller financial companies: DMFs allocation to

9.0 Energy -149

8.5 Realty -20

8.4 Cons. Disc. 60

7.2 Materials 104

3.9 Utilities 114

0.4 Industrials 256

0 10 20 30 40 -400 -300 -200 -100 0 100 200 300

Communication Services Consumer Discretionary Consumer Staples Energy

0 10 20 30 40 50 -400 -200 0 200 400 600 800 1000

Institutional ownership concentration analysis

Institutional money gets incrementally more concentrated in large-caps amidst a

20 14.9 14.4 15.1 15.6 15.5 15.0 15.8 16.4 16.1

Ownership concentration in terms of number of companies with holding greater than

Chart of the month

(Cumulative, <1000) cases till May 27th, 2020

(Cumulative, 1000-5000) till May 27th, 2020

(Cumulative, 5000+) till May 27th, 2020

30,000 Tamil Nadu

Haryana Share in total deceased cases

Maharashtra Tamil Nadu Delhi

Gujarat Rajasthan Madhya Pradesh

West Bengal Uttar Pradesh Karnataka

Telangana Punjab Jharkhand

2,000 8% 2000 50% 10%

Odisha Haryana Jammu & Kashmir

Kerala Puducherry Himachal Pradesh

Bihar Assam Arunachal Pradesh

3000 50% 800 2 80%

Chandigarh Tripura Chattisgarh

250 250 25%

Haryana UTTARAKHAND Goa

remains to be the most affected state in the country.

Figure 42: State-wise comparison of no. of tests per confirmed case

West Bengal May 15th

0 20 40 60 80 100 120 140 160