NSE Market Pulse

July 2020
Volume 2, Issue 7
Market Pulse
A monthly review of Indian economy and markets
Market Pulse
July 2020 | Vol. 2, Issue 7
Indian
A Monthly Review
Economy and
Markets
Volume 2, Issue 7
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
Q4FY20 Earnings Review: Lock-down hits corporate earnings; estimates cut sharply .......................... 3
Chart of the month ........................................................................................................................................................ 23
The roller-coaster market ride of 2020 so far: Sector concentration and rotation ................................23
Macro economy .............................................................................................................................................................. 29
s target range ..........................................................29
Industrial production contracts for the third month in a row ..................................................................34
Trade balance turns surplus in June ...........................................................................................................39
Current account balance turns surplus in Q4FY20; FY20 CAD at -0.9%.................................................42
Fiscal pressures mounting; deficit monetisation by RBI not ruled out ...................................................47
Rainfall above normal thus far; sowing activity strong.............................................................................52
Insights ............................................................................................................................................................................ 55
Invited article: Asset Management is ripe for leadership evolution ........................................................55
RBI Financial Stability Report: NPA woes to worsen in FY21 ..................................................................63
Prompt policy actions ease financial conditions after a sharp COVID19-led deterioration .................67
Market Performance ..................................................................................................................................................... 70
Market Round-up ..........................................................................................................................................70
Market performance across asset classes..................................................................................................74
Institutional flows across market segments in India................................................................................81
Fund mobilisation through NSE ................................................................................................................................. 83
Market Statistics: Primary market ..............................................................................................................83
New listings in the month .............................................................................................................................84
............................................................................................. 85
Long term trends and impact of macro indicators .....................................................................................85
Institutional investments through NSE platform ......................................................................................89
Total turnover in CM and derivatives market .............................................................................................91
Average daily turnover in CM and derivatives market ..............................................................................91
Turnover of top traded symbols over the month........................................................................................95
Client category-wise participation in total turnover .................................................................................96
Asset category-wise open interest (average daily volume) ................................................................... 102
Market Pulse
Internet-based trading .............................................................................................................................. 103

Spatial distribution of trading activities ................................................................................................................ 105
Region-wise distribution of new investors registered ........................................................................... 105
Region-wise distribution of individual investor turnover in the cash market ..................................... 107
Investment through mutual funds in India ........................................................................................................... 109
Policy developments .................................................................................................................................................. 111
Comparison of trading activities across major exchanges globally ................................................................ 115
Economic calendar for major countries (August 2020) ...................................................................................... 119
Annual Macro Snapshot ............................................................................................................................................. 120
Market Pulse
Executive Summary
Risk-on rally continues for yet another month
As the number of COVID-19 cases in India continues to rise, states have resorted to localised lockdowns, even as
restrictions continue to ease in areas with declining caseloads. The rapid spread this time in the hinterland is particularly
concerning, posing downside risks to the agriculture sector which otherwise has thus far emerged as the only silver
lining. An unprecedented contraction in the first quarter of FY21 followed by expectations of a slow and gradual recovery
ahead is already reflected in several high frequency indicators such as industrial production, merchandise trade, PMI,
amongst others. Equity markets worldwide, however, seem to be unwary of the ongoing macroeconomic downturn as
they continue to derive comfort from a sharp surge in global liquidity something that is here to stay at least for the
foreseeable future. Positive cues around development of a COVID-19 vaccine has also supported market sentiments. A
portion of this ample global liquidity is finding its way into emerging market (EM) equities, resulting in India and the
broader EM pack outperforming the developed markets in June as well as July thus far. The benchmark Nifty 50/Nifty
500 Index rose by 7.5%/8.3% in the month of June and further by 8.1% and 6.5% in July (as of July 27 th).
Fixed income markets remained strong for yet another month amid continued liquidity injection by global central banks.
While long-end remained largely steady, short-end of the curve came off further, resulting in further steepening of the
yield curve. India was no different, with the decline in Government as well as corporate yields at the short-end being
much higher than at the long-end. While the short-end benefited from a steep cut in policy rates and a slew of liquidity
enhancement measures taken by the RBI, the long-end remained relatively elevated owing to growth and fiscal
concerns. In fact, the short-end (3-month G-sec yield) has been hovering closer to or below the reverse repo rate (the
de facto policy rate in a surplus liquidity environment) since April-end. India Rupee has remained broadly steady over
the last couple of months, thanks to renewed foreign capital inflows and a surplus trade and current account balance.
Our Story of the Month features a review of the corporate performance for the Nifty 50 and Nifty 500 companies for the
quarter ending March 2020. Aggregate net sales declined for the second consecutive quarter led by a sustained
slowdown in consumption and investment demand that got accentuated by the COVID-19 outbreak and attendant
containment measures as well as benign commodity prices. Operating profits declined at a steeper pace, resulting in
margin contraction, as aggressive cost rationalisation failed to compensate for revenue contraction. Consequently,
aggregate adjusted profits fell sharply, notwithstanding tailwinds from lower corporate tax rate. Consensus estimates
have seen sharp downgrades, with aggregate FY21 profit for the top 200 covered companies pegged to fall by 0.2% YoY.
In the Chart of the Month section, we have taken a deeper look at the contributors to
last 12-month period ending June 2020 and compared this with a similar period during the Global Financial Crisis. While
Financials has contributed the most to the market movement this year, it was Energy and Materials that drove the
markets during the GFC. Our analysis also shows how a part of this differed outcome is a derivative of the meaningful
change in sector weightings and sector concentration during these two periods of study.
Meanwhile, incoming macro data (refer to the Macro economy section) remained weak, confirming our fears of a slow
and gradual recovery ahead. Industrial production declined by 34.7% YoY in May marking the third consecutive month
of contraction, merchandise imports fell by 48% YoY in June resulting in trade balance turning surplus for the first time
in more than 18 years, and GST collections declined by a huge 41% YoY in Q1 FY21. An expected economic contraction
s Financial Stability Report and the
takeaways on both have been provided in detail in the Insights section.
Our invited article this month from the Arguden Academy articulates how asset managers can play an active role in
having an impact on the environment, social and governance (ESG) issues. While they, being fiduciary owners of the
companies they invest in, can help shape management decisions and thereby the final outcome, regulatory agencies as
well as global stock exchanges can create standards to ensure there is trust in the system and fill the gap between
investors and other market participants.
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Market Pulse
We first analysed the impact of COVID-19 in the February edition of Market Pulse. Six months, and the pandemic
continues to rage across the World, with India adding ~50k cases daily now. Even as the numbers continue to be a small
fraction of our population, the spread of the Coronavirus measured in both number of cases and across states remains
uncomfortably high. Even with ~1.5m cases, the doubling rate (Time for confirmed cases to double from current levels)
is just 19 days. In contrast, while Brazil and the US have more cases, the rate of growth is meaningfully lower, implying
we are on course to have the highest figures worldwide soon. One notes that the number of active cases remains below
500,000, and that the recovery rates are rising, but the civic/medical infrastr on gross cases.
Further, marginal improvement in cities like Mumbai and Delhi is more than offset by the sharp rise seen recently in
many states, with much relatively weaker facilities. Large parts of the country remain on intermittent lockdown,
hampering the nascent recovery.
On that sobering note, we bring you the July issue of the Market Pulse. We hope you find it useful, and as always, we
look forward to your comments and suggestions.
Dr. Tirthankar Patnaik

Chief Economist
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Market Pulse
Story of the month

Q4FY20 Earnings Review: Lock-down hits corporate earnings; estimates cut sharply
Aggregate net sales fell by 4.4%/5.9% YoY in the fourth quarter of FY20 for the Nifty 50/Nifty 500 universe1, marking
the second consecutive quarter of contraction. An already weak consumption and investment demand was accentuated
by the COVID-19 outbreak and attendant containment measures, including a strict nation-wide lock-down. The
contraction was largely led by Consumer Discretionary (continued demand weakness aggravated by supply chain
disruptions from China), Materials (weak demand), Energy (lower realisations and inventory losses), Industrials
(sustained weakness in private capex) and Real Estate. Notably, essential sectors such as Consumer Staples,
Healthcare, Communication Services and Utilities fared relatively better. Operating profit also witnessed a contraction
despite tailwinds from lower input costs and cost rationalisation by companies. Consequently, aggregate adjusted PAT2
fell by 42%/57% YoY for the Nifty 50/Nifty 500 universe in Q4 FY20.
The Consensus earnings estimate (from Refinitiv) for the top 200 covered companies by market cap has been
downgraded by nearly 36% since the beginning of 2020 and 35% in this fiscal year thus far. This has translated into an
expected YoY contraction in FY21 profits of 0.2% vs. +19% growth in mid-June. The downgrades have been largely led
by Consumer Discretionary, Materials, Industrials, Financials and Energy, reflecting expectations of a lacklustre
consumption and investment demand, sustenance of benign commodity prices and elevated credit cost for financials.
However, downgrades in FY22 earnings have been relatively modest, potentially indicating the impact of COVID-19 to
be temporary in nature. The sharp cut in earnings post the COVID-19 outbreak is also evident in the Earnings Revision
Indicator3 trend for Nifty 50 which fell deep into the negative zone and touched the lower limit of -1 in mid-May, implying
downgrades across the board.
Earnings are expected to see a meaningful contraction this year, in-line with an expected drop in nominal GDP growth.
That said, a confluence of fiscal and monetary measures taken thus far should provide some respite to the ailing
economy in the medium-term, even as a meaningful recovery looks quite hazy and far-fetched at this point.
 Top-line contraction in Q4FY20 the weakest since the GFC: Aggregate net sales
for Nifty 50 companies declined by 4.4% YoY the steepest contraction in the last Aggregate net sales for the
Nifty 50 universe contracted
18 quarters, as a persistent weakness in consumption demand was further
by 4.4% YoY the steepest
impacted by the imposition of a strict nation-wide lockdown towards the end of the
since September 2015.
quarter to contain the COVID-19 outbreak, leading to supply chain bottlenecks and
disruptions in economic activities. Sales growth for Nifty 500 companies also The contraction was led by
declined by 5.9% YoY the first in the last four years. The contraction in sales was non-essential sectors
including Consumer
largely led by Consumer Discretionary (continued demand weakness aggravated by
Discretionary, Materials,
supply chain disruptions from China), Materials (weak demand), Energy (lower
Industrials and Real Estate,
realisations and inventory losses), Industrials (sustained weakness in private
while essential sectors fared
capex) and Real Estate. somewhat better.
Sectors that supported revenue growth in the March quarter amid a weak economic
environment included Utilities (robust pre-lockdown power demand), Healthcare
(increased demand) and Communication Services (higher tariffs and limited impact
of lockdown). Baring Insurance companies, Financials witnessed a decent revenue
growth of 7% YoY, despite muted credit growth. Consumer staples companies
engaged in the manufacturing of food and beverages fared better compared to
household and personal items.
1
49/50 companies in the Nifty 50 Index and 478/500 companies in the Nifty 500 Index reported earnings data for Q4FY20 as on July 21st, 2020.
2
Refers to as calculated by Prowess after adjusting for all prior period and extraordinary transactions. It is derived by deducting all prior period and
extraordinary (P&E) income from PAT and adding all P&E expenses to PAT.
3
Earnings Revision Indicator over a period is calculated as (no of upgrades no of downgrades)/(total number of upgrades and downgrades). A value less than zero
indicates downgrades outnumbering upgrades.
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Market Pulse
 Operating profits declined despite cost rationalisation: EBITDA for the Nifty
50/Nifty 500, ex-Financials and Communication Services, contracted in the March
quarter by 22.8%/21.0% YoY respectively. Operating margins for the same
universe witnessed a decline by 281 bps/267 bps YoY, thanks to lower revenue
realisation partly offset by cost cutting initiatives undertaken by the companies.
EBITDA growth in Communication Services (55.3%/58.2% YoY) and Utilities

(306%/87.4% YoY) was optically high due to low base; barring these sectors the
negative growth in operating profits and margin compression was broad-based.
 PAT growth plunged on weak consumption and commodity prices: Aggregate

Aggregate adj. PAT growth
adj. PAT growth for the Nifty 50/Nifty 500 universe nosedived -42.1%/-56.8% YoY. plunged partly attributed to
This was largely owing to a sharp drop in profits reported by Energy, Consumer huge decline in profits
Discretionary, Financials and Industrials. While the upstream companies in the reported by Energy (low
Energy sector got hit from lower realisations in the wake of a sharp drop in crude crude oil prices), Financials
oil prices, the oil marketing companies suffered owing to weak demand amid travel (high COVID-19 related
restrictions and a complete lockdown towards March-end as well as significant provisions) and Consumer
inventory losses. Significant increase in provisioning on account of COVID-19 Discretionary (lackluster
demand) sectors.
impacted profitability for the Financials sector. Continued demand weakness,
supply chain bottlenecks from China and domestic supply issues were the key
factors hurting profitability of Consumer Discretionary companies. Decline in order
flows and deferred private corporate capex adversely impacted Industrials sector.
Within the Nifty 500 universe, Information Technology was the only sector to report
a modest growth in profits, partly attributed to a weak currency, while the
Healthcare sector benefited from a strong domestic demand.
 Consensus FY21 PAT estimates slashed sharply this year: The COVID-19
outbreak and attendant control measures including lockdown and complete Consensus aggregate FY21
shutdown of non-essential activities have accentuated the downgrade cycle. The PAT estimate for top 200
Consensus earnings estimate (from Refinitiv) for the top 200 covered companies companies by market cap
has been downgraded by
by market cap has been downgraded by nearly 36% since the beginning of the year
~35% in this fiscal year
and 35% in this fiscal year thus far. This has translated into expected YoY
thus far.
contraction in FY21 profits of 0.2% vs. an estimated growth of 19% in mid-June.
The downgrades have been largely led by Consumer Discretionary, Materials,
Industrials, Financials and Energy, reflecting expectations of a lacklustre
consumption and investment demand, sustenance of benign commodity prices and
elevated credit cost for financials. However, downgrades in FY22 earnings have
been relatively modest, potentially indicating the impact of COVID-19 to be
temporary in nature. Consequently, FY22 profit growth is estimated at a strong
45% YoY which appears optimistic and is therefore susceptible to downside risks.
 ERI fell deep into the contraction zone: The ERI fell deep into the negative zone
to the lowest level since the data is available (2007) as corporate earnings outlook
got adversely impacted due to massive supply and demand disruptions caused by
mass-scale COVID-19-induced lockdowns worldwide. In fact, except for one or two
companies, rest all the Nifty 50 companies witnessed significant earnings
downgrades until May 2020, taking ERI to its lower limit of -1 in mid-May, implying
downgrades across the board. The ERI has since improved led by upward revisions
in Healthcare and Information Technology.
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Market Pulse
Nifty 50 Q4FY20 results
Top-line contracted sharply on weak consumption demand and lower commodity

prices: Aggregate net sales for Nifty 50 companies declined by 4.4% YoY the steepest
contraction in the last 18 quarters, as a persistent weakness in consumption demand was
further impacted by the imposition of a strict nation-wide lockdown towards the end of
the quarter to contain the COVID-19 outbreak, leading to supply chain bottlenecks and
disruptions in economic activities. Within the Nifty 50 universe, 26/49 companies
reported negative YoY sales growth in the March quarter.
Sectors that contributed to the sharp decline in aggregate sales in Q4FY20 included: a)
Consumer Discretionary: Sustained weak demand in auto sales was aggravated by a
nation-wide lockdown announced by the Government in late-March, with supply chain
bottlenecks from China further adding to the woes. Excluding Automobiles, net sales for
Nifty 50 companies contracted by a much lower 1.7% YoY. b) Materials: lockdown-
induced demand contraction. c) Energy: The highest quarterly decline in crude oil prices
(-65.9% QoQ/-67% YoY) impacted realisations of upstream oil companies, while weak
demand owing to travel restrictions and lockdown as well as inventory losses impacted
profitability of downstream oil marketing companies. d) Consumer Staples: Excluding
companies engaged in food and beverages, revenues were impacted due to weak demand
and logistical constraints owing to the lockdown. Notably, essential sectors such as
Consumer Staples, Healthcare, Communication Services and Utilities fared relatively
better, while Information Technology benefited from rupee depreciation.
Net sales in the first quarter of FY21 are expected to see a much sharper contraction in
the wake of a stringent and extended lockdown that lasted for more than two months in
some areas. Rural demand, however, is expected to fare better than urban, thanks to a
favourable monsoon and expectations of a bumper Kharif harvest. An impending recovery
in private investment cycle has also got de-railed meaningfully as companies delay capex
spending amid uncertainty around domestic and global economic recovery.
Figure 1: Net sales growth of Nifty 50 companies in Q4FY20

QoQ growth (%) YoY growth (%)
Sector Mar-19 Dec-19 Mar-20 Mar-19 Dec-19 Mar-20

Communication Services 0.7 3.0 7.6 6.6 6.3 14.0
Consumer Discretionary 7.8 9.7 (14.2) 7.8 (3.6) (23.4)
Consumer Staples 2.2 (0.3) (6.7) 15.3 3.5 (5.6)
Energy (7.5) 8.5 (6.1) 37.6 (6.8) (5.4)
Financials 5.5 1.0 (1.8) 24.5 14.8 6.9
Health Care (0.1) (2.4) 0.5 9.6 8.4 9.1
Industrials 25.2 2.6 20.5 5.8 5.6 1.7
Information Technology 1.2 2.8 0.7 16.9 7.9 7.4
Materials 9.1 2.7 (0.4) 29.7 (5.1) (13.4)
Utilities (3.3) 4.0 8.3 13.1 (0.7) 11.2
Nifty 50 0.5 5.3 (3.2) 24.5 (0.7) (4.4)
Nifty 50 ex-Energy 6.1 3.3 (1.4) 17.6 3.6 (3.8)
Nifty 50 ex-Financials (0.3) 6.1 (3.5) 24.5 (3.3) (6.4)
Nifty 50 ex-energy ex-fin 6.3 4.2 (1.3) 15.6 (0.0) (7.2)
Nifty 50 ex-Comm Svcs. 0.5 5.3 (3.4) 24.9 (0.8) (4.7)
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Market Pulse
Source: CMIE Prowess, Refinitiv Datastream, NSE
Figure 2: Sector-wise net sales growth of Nifty 50 companies in Q4FY20

Net sales growth (%YoY)
Cons. Disc. (23.4%)
Materials (13.4%)
Nifty 50 ex-Energy ex-Fin (7.2%)
Nifty 50 ex-Fin (6.4%)
Cons. Stap. (5.6%)
Energy (5.4%)
Nifty 50 (4.4%)
Nifty 50 ex-Energy (3.8%)
Industrials 1.7%
Financials 6.9%
IT 7.4%
Healthcare 9.1%
Utilities 11.2%
Comm. Svcs. 14.0%
-30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20%

Source: CMIE Prowess, Refinitiv Datastream, NSE.
Figure 3: Net sales YoY growth trend of Nifty 50 companies

Sales growth trend for Nifty 50 companies
50%
Nifty 50 Nifty 50 ex-Energy Nifty 50 ex-Fin Nifty 50 ex-energy ex-Fin
40%
30%
20%
10%
0%
-10%
Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20
Lower revenues offset cost savings from lower input prices and cost rationalisation:
EBITDA for the Nifty 50 universe, excluding Financials and Communication Services,
contracted in the March quarter by 22.8% YoY. Operating margins for the same universe
witnessed a decline by 281 bps YoY, thanks to lower revenue realisation partly offset by
cost cutting initiatives undertaken by the companies. Within the Nifty 50 universe, 25/49
companies reported negative YoY sales growth in the March quarter.
Sectors that dragged down the aggregate EBITDA growth and margins are: a) Energy:
lower refining margins for the oil marketing companies, and weak realisations for the
upstream oil companies, b) Consumer Discretionary sustained weak demand in auto
sector was further impacted by the nation-wide lockdown due to the COVID-19 situation,
c) Materials: weak demand and lower metal prices, and d) Industrials: decline in orders
owing to the lockdown and deferred capex spending amid an imminent gloom in the
economy.
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Market Pulse
EBITDA growth in Communication Services and Utilities looked optically high due to a
favourable base. Information Technology reported a modest growth in operating profits,
as the sector benefited from a~6% rupee depreciation in the March quarter.
Figure 4: EBITDA growth of Nifty 50 companies in Q4FY20

QoQ growth YoY growth
Communication Services (6.0) (0.5) 11.8 (10.5) 27.5 55.3
Consumer Discretionary 6.2 9.0 (53.2) (13.9) 6.4 (53.1)
Consumer Staples 10.0 1.1 (6.9) 16.9 12.5 (4.8)
Energy 25.2 9.8 (52.1) 44.5 5.2 (59.7)
Financials (4.0) 3.3 (14.1) 45.8 14.4 2.3
Health Care (19.4) (13.1) (21.2) 2.7 (3.9) (6.1)
Industrials 15.6 8.7 (2.7) 9.8 5.7 (11.0)
Information Technology (0.9) 3.7 (1.6) 14.4 7.1 6.4
Materials 11.6 4.5 5.5 22.0 (14.2) (18.9)
Utilities (67.3) 16.7 13.5 (59.2) 17.4 306.7
Nifty 50 0.8 5.4 (17.6) 23.4 8.7 (11.1)
Nifty 50 ex-Energy (5.0) 4.5 (9.8) 18.1 9.5 3.9
Nifty 50 ex-Financials 4.0 7.0 (20.2) 12.6 4.8 (19.5)
Nifty 50 ex-energy ex-fin (5.9) 5.8 (5.1) (1.0) 4.6 5.6
Nifty 50 ex-Comm Svcs. 1.0 5.6 (18.6) 24.7 8.1 (12.8)
Figure 5: EBITDA margin of Nifty 50 companies in Q4FY20

Sector EBITDA Margin QoQ change (bps) YoY change (bps)
Communication Services 48.9 182 1298
Consumer Discretionary 7.6 (632) (481)
Consumer Staples 32.8 (8) 25
Energy 6.6 (630) (886)
Financials 61.3 (885) (273)
Health Care 18.0 (497) (290)
Industrials 19.2 (456) (272)
Information Technology 26.5 (62) (25)
Materials 19.0 106 (129)
Utilities 44.0 201 3197
Nifty 50 23.1 (402) (173)
Nifty 50 ex-Energy 33.0 (307) 247
Nifty 50 ex-Financials 15.4 (321) (251)
Nifty 50 ex-energy ex-fin 22.6 (91) 275
Nifty 50 ex-Comm Svcs. 22.5 (419) (209)
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Market Pulse
Figure 6: Sector-wise EBITDA growth of Nifty 50 Figure 7: Sector-wise EBITDA margin of Nifty 50
companies in Q4FY20 companies in Q4FY20
EBITDA growth (%YoY) EBITDA margin (%)
Energy (59.7%) Energy 6.6%
Cons. Disc. (53.1%) Cons. Disc. 7.6%
Nifty 50 ex-Fin (19.5%) Nifty 50 ex-Fin 15.4%
Materials (18.9%) Healthcare 18.0%
Nifty 50 (11.1%) Materials 19.0%
Industrials (11.0%) Industrials 19.2%
Healthcare (6.1%) Nifty 50 ex-energy ex-Fin 22.6%
Cons. Stap. (4.8%) Nifty 50 23.1%
Financials 2.3% IT 26.5%
Nifty 50 ex-Energy 3.9% Cons. Stap. 32.8%
Nifty 50 ex-energy ex-Fin 5.6% Nifty 50 ex-Energy 33.0%
IT 6.4% Utilities 44.0%
Comm. Svcs. 55.3% Comm. Svcs. 48.9%
Utilities 306.7% Financials 61.3%
-30% -20% -10% 0% 10% 20% 30% 0.0% 20.0% 40.0% 60.0% 80.0%
Figure 8: EBITDA growth trend of Nifty 50 companies

EBITDA growth trend for Nifty 50 companies
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
Figure 9: EBITDA margin trend of Nifty 50 companies

EBITDA margin trend for Nifty 50 companies
45%
40%
35%
30%
25%
20%
15%
10%
8/123
Market Pulse
PAT growth plunged due to further deterioration in consumption demand and lower
commodity prices: Aggregate adjusted PAT growth for the Nifty 50 companies declined
42.1% YoY in the March quarter. This was largely on account of a) an extant slowdown in
auto sales worsened by a nation-wide lockdown and supply chain disruptions from China,
leading to the sector reporting losses in Q4 FY20, b) highest quarterly decline in global
crude oil prices, c) weak commodity prices including metals, and d) decline in order intake
in industrials sector as private capex got deferred due to lockdown and rising economic
uncertainty. Within the Nifty 50 universe, 33/50 companies reported negative YoY PAT
decline in the March quarter.
Sectors that aided profit growth of Nifty 50 companies are: a) Health care: Increased
demand in the wake of COVID-19 outbreak, b) Information Technology: Tailwinds from
rupee depreciation and limited impact in business activities due to the lockdown
Figure 10: PAT growth of Nifty 50 companies in Q4FY20

QoQ growth (%) YoY growth (%)

Communication Services (589.6) 57.0 93.4 (135.9) 1382.2 NA
Consumer Discretionary (12.7) 55.9 (158.6) (36.8) (0.6) (166.7)
Consumer Staples 13.2 (3.0) (5.6) 19.0 21.3 1.2
Energy 30.7 17.6 (92.6) 36.5 (0.2) (94.4)
Financials (15.0) 14.4 (45.4) NA 56.7 0.6
Health Care (33.7) (17.7) (24.4) (16.3) (6.3) 6.9
Industrials 36.6 22.6 (5.5) 16.5 7.7 (25.5)
Information Technology (0.2) 4.4 (1.4) 15.7 3.8 2.5
Materials 20.4 (35.0) (17.0) 10.0 (40.5) (59.0)
Utilities 50.9 13.5 11.4 64.9 25.5 (7.4)
Nifty 50 9.2 9.5 (44.4) 39.7 13.8 (42.1)
Nifty 50 ex-Energy 2.0 7.4 (30.8) 41.1 18.4 (19.7)
Nifty 50 ex-energy ex-fin 9.4 3.2 (21.0) 5.5 1.9 (26.6)
Source: CMIE Prowess, Refinitiv Datastream, NSE. NA: Not Applicable
Figure 11: PAT margin of Nifty 50 companies in Q4FY20

Sector PAT Margin QoQ change (bps) YoY change (bps)
Consumer Discretionary (3.4) (842) (734)
Consumer Staples 22.3 27 149
Energy 0.4 (487) (656)
Financials 9.8 (785) (61)
Health Care 9.5 (314) (19)
Industrials 7.8 (216) (287)
Materials 3.4 (68) (377)
Utilities 15.5 43 (311)
Nifty 50 5.3 (395) (348)
Nifty 50 ex-Energy 8.3 (352) (164)
Nifty 50 ex-energy ex-fin 7.8 (193) (204)
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Figure 12: Sector-wise PAT growth of Nifty 50 Figure 13: Sector-wise PAT margin of Nifty 50
PAT growth (%YoY) PAT margin (%)
Cons. Disc. (166.7%) Cons. Disc. (3.4%)
Materials (59.0%) Materials 3.4%
Nifty 50 ex-Fin (51.3%) Nifty 50 ex-Fin 4.4%
Nifty 50 (42.1%) Nifty 50 5.3%
Nifty 50 ex-energy ex-Fin (26.6%) Nifty 50 ex-energy ex-Fin 7.8%
Industrials (25.5%)
Industrials 7.8%
Nifty 50 ex-Energy 8.3%
Healthcare 9.5%
Utilities (7.4%)
Financials 9.8%
Financials 0.6%
Comm. Svcs. 10.5%
Cons. Stap. 1.2%
Utilities 15.5%
IT 2.5%
IT 17.6%
Healthcare 6.9%
Cons. Stap. 22.3%
-30% -20% -10% 0% 10%
(10.0%) 0.0% 10.0% 20.0% 30.0%
Figure 14: PAT growth trend of Nifty 50 companies

PAT growth trend for Nifty 50 companies
60% Nifty 50 Nifty 50 ex-Energy Nifty 50 ex-Fin Nifty 50 ex-energy ex-Fin
40%
20%
0%
-20%
-40%
-60%
Figure 15: PAT margin trend of Nifty 50 companies

PAT margin trend for Nifty 50 companies
14%
12%
10%
8%
6%
4%
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Nifty 500 Q4FY20 results
Net sales for Nifty 500 companies contracted sharply: Aggregate sales growth for the
Nifty 500 companies was in-line with the Nifty 50 universe and came in at -5.9% YoY
marking the first YoY contraction in the last 17 quarters led by a sharp slowdown in
discretionary spending by households, deferment in investment activities by corporates
and fall in global metal and energy prices. Within the Nifty 500 companies 277/478
companies reported negative YoY sales growth in the March quarter.
Sectors that were laggards included Consumer Discretionary (an extant demand
slowdown accentuated by the lockdown situation), Materials (weak demand and decline
in global commodity prices), Energy (lower crude oil prices and slowdown in demand for
petrochemicals) and Real Estate (lower property sales and office leasing in the month of
March due to lockdown). Sectors that supported sales growth of Nifty 500 companies
include Information Technology, Healthcare, Communication Services.
Figure 16: Net sales growth of Nifty 500 companies in Q4FY20
Communication Services (1.0) 3.6 3.5 24.6 (0.4) 5.7
Consumer Discretionary 2.5 (4.0) (8.3) 7.5 (4.2) (14.5)
Energy (7.3) 9.0 (6.1) 31.2 (6.6) (5.4)
Financials 8.9 3.7 (10.4) 25.6 15.4 (4.8)
Health Care 2.9 8.1 (0.9) 12.5 10.1 6.1
Industrials 19.3 5.0 13.2 13.6 (1.2) (9.6)
Information Technology 1.8 5.6 (1.0) 15.9 9.6 6.5
Materials 8.1 5.4 (3.2) 22.0 (1.7) (12.0)
Real Estate 45.7 30.0 (8.2) 17.2 10.1 (30.0)
Utilities (3.0) (0.8) 4.1 19.9 0.6 8.0
Nifty 500 2.7 4.6 (4.6) 21.2 1.4 (5.9)
Nifty 500 ex-Energy 6.8 3.1 (4.0) 18.0 4.6 (6.1)
Nifty 500 ex-Financials 1.3 4.8 (3.0) 20.2 (1.8) (6.2)
Figure 17: Sector-wise net sales growth of Nifty 500 companies in Q4FY20
Net sales growth (%YoY)
Reality (30.0%)
Cons. Disc. (14.5%)
Materials (12.0%)
Industrials (9.6%)
Nifty 500 ex-Energy & Fin (6.5%)
Nifty 500 ex-Fin (6.2%)
Nifty 500 (5.9%)
Energy (5.4%)
Financials (4.8%)
Cons. Stap. (0.9%)
Comm. Svcs. 5.7%
Healthcare 6.1%
IT 6.5%
Utilities 8.0%
(33%) (28%) (23%) (18%) (13%) (8%) (3%) 2% 7% 12%

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Figure 18: Net sales YoY growth trend of Nifty 500 companies
Sales growth trend for Nifty 500 companies
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
Slowdown in revenue realisation drag down aggregate operating profits for Nifty 500
companies: Contraction in revenues compressed operating margins for the Nifty 500
companies, partly offset by lower commodity prices and cost cutting initiatives. EBITDA
for the Nifty 500 universe, excluding Financials and Communication Services, contracted
by 21.0% YoY, translating into a decline in EBITDA margin of 267bps YoY. Within the Nifty
500 universe, 276/478 companies reported negative YOY EBITDA growth in the March
quarter. The contraction in EBITDA was broad-based, with all sectors except Information
Technology (thanks to rupee depreciation) reporting a decline.
Figure 19: EBITDA growth of Nifty 500 companies in Q4FY20

Communication Services 0.2 3.2 8.4 (1.9) 42.4 58.2
Consumer Discretionary 4.9 5.8 (40.6) (6.6) 5.0 (41.7)
Energy 30.9 11.7 (62.6) 44.1 6.0 (69.7)
Financials (8.1) 6.5 (21.9) 70.5 16.3 (0.4)
Health Care 4.5 0.3 (21.2) 15.9 17.5 (11.4)
Industrials 26.0 13.7 (2.1) 15.3 (4.4) (27.4)
Materials 9.9 5.7 13.0 13.2 (10.9) (7.9)
Real Estate 23.6 (36.8) (10.0) (26.6) (0.7) (27.0)
Utilities (42.8) 3.8 (6.8) (31.4) 15.1 87.4
Nifty 500 0.7 6.4 (20.5) 30.9 10.4 (12.7)
Nifty 500 ex-Energy (3.5) 5.7 (14.8) 28.6 11.0 (1.7)
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Figure 20: EBITDA margin of Nifty 500 companies in Q4FY20

Sector EBITDA Margin QoQ change (bps) YoY change (bps)
Consumer Discretionary 7.7 (420) (361)
Consumer Staples 21.1 (156) (251)
Energy 4.6 (698) (981)
Financials 51.0 (747) 227
Health Care 19.5 (504) (385)
Industrials 15.1 (235) (369)
Information Technology 23.3 (9) 2
Materials 20.5 295 92
Real Estate 33.0 (68) 137
Utilities 33.9 (397) 1436
Nifty 500 21.8 (439) (171)
Nifty 500 ex-Energy 28.0 (357) 125
Nifty 500 ex-energy ex-fin 19.4 (106) 71
Figure 21: Sector-wise EBITDA growth of Nifty 500 Figure 22: Sector-wise EBITDA margin of Nifty 500
EBITDA growth (%YoY) EBITDA margin (%)

Cons. Disc. (41.7%) Cons. Disc. 7.7%
Industrials (27.4%) Nifty 500 ex-Fin 14.5%
Reality (27.0%) Industrials 15.1%
Nifty 500 ex-Fin (21.4%) Nifty 500 ex-Energy & Fin 19.4%
Nifty 500 (12.7%) Healthcare 19.5%
Cons. Stap. (11.4%) Materials 20.5%
Healthcare (11.4%) Cons. Stap. 21.1%
Materials (7.9%) Nifty 500 21.8%
Nifty 500 ex-Energy & Fin (3.0%) IT 23.3%
Nifty 500 ex-Energy (1.7%) Nifty 500 ex-Energy 28.0%
Financials (0.4%) Reality 33.0%
IT 6.6% Utilities 33.9%
Comm. Svcs. 58.2% Comm. Svcs. 42.2%
Utilities 87.4% Financials 51.0%
(75%) (55%) (35%) (15%) 5% 25% 0.0% 15.0% 30.0% 45.0%
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Figure 23: EBITDA growth trend of Nifty 500 companies

EBITDA growth trend for Nifty 500 companies
40%
30%
20%
10%
0%
-10%
-20%
-30%
Figure 24: EBITDA margin trend of Nifty 500 companies

EBITDA margin trend for Nifty 500 companies
40%
35%
30%
25%
20%
15%
10%
Contraction in Nifty 500 profitability was broad-based: Aggregate adjusted PAT growth
for Nifty 500 companies came in at -56.8% YoY the lowest in 21 quarters. This was
largely led by huge losses reported by Energy, Consumer Discretionary and Financials.
While the upstream companies in the Energy sector got hit from lower realisations in the
wake of a sharp drop in crude oil prices, the oil marketing companies suffered owing to
weak demand amid travel restrictions and a complete lockdown towards March-end as
well as significant inventory losses. Significant increase in provisioning on account of
COVID-19 impacted profitability for the Financials sector. Continued demand weakness,
supply chain bottlenecks from China and domestic supply issues were the key factors
hurting profitability of Consumer Discretionary companies. Within the Nifty 500 universe,
Information Technology was the only sector to report a modest growth in profits, partly
attributed to a weak currency, while the Healthcare sector benefited from a strong
domestic demand.
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Figure 25: PAT growth of Nifty 500 companies in Q4Y20

Communication Services NA NA NA (375.1) NA NA
Consumer Discretionary (1.6) 23.9 (113.4) (22.6) (6.0) (112.8)
Energy 40.5 23.9 (111.7) 38.9 1.1 (108.4)
Financials (94.7) 50.8 (104.5) NA 111.3 (2344.3)
Health Care 3.7 (13.3) (25.6) (32.9) 11.8 (19.8)
Industrials 34.6 26.5 (16.3) 12.9 (28.4) (53.5)
Materials 8.5 (17.7) 14.6 (6.9) (28.5) (23.8)
Real Estate 34.0 (68.1) (8.6) (50.5) (13.9) (40.3)
Utilities 11.7 (12.4) (38.5) 10.3 45.1 (20.0)
Nifty 500 (0.2) 14.2 (63.0) 78.2 15.4 (56.8)
Nifty 500 ex-Energy (10.6) 12.3 (52.3) 101.7 19.0 (35.5)
Nifty 500 ex-Financials 17.5 4.0 (46.3) 3.2 (2.6) (55.3)
Nifty 500 ex-energy ex-fin 10.1 (1.4) (24.3) (6.7) (3.8) (33.4)
Source: CMIE Prowess, Refinitiv Datastream, NSE. NA: Not applicable.
Figure 26: PAT margin of Nifty 500 companies in Q4FY20

Sector PAT Margin QoQ change (bps) YoY change (bps)
Communication Services (5.9) 277 439
Consumer Discretionary (0.6) (501) (491)
Consumer Staples 12.7 (129) (286)
Energy (0.6) (533) (723)
Financials (0.5) (998) (49)
Health Care 8.1 (269) (261)
Industrials 4.7 (165) (445)
Materials 6.0 94 (93)
Real Estate 10.6 (5) (181)
Utilities 6.9 (480) (243)
Nifty 500 2.8 (436) (326)
Nifty 500 ex-Energy 4.0 (403) (182)
Nifty 500 ex-energy ex-fin 5.7 (172) (228)
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Figure 27: Sector-wise PAT growth of Nifty 500 Figure 28: Sector-wise PAT margin of Nifty 500
PAT growth (%YoY) PAT margin (%)
Financials (2344.3%) Comm. Svcs. (5.9%)
Cons. Disc. (112.8%) Cons. Disc. (0.6%)
Energy (108.4%) Energy (0.6%)
Nifty 500 (56.8%) Financials (0.5%)
Nifty 500 ex-Fin (55.3%) Nifty 500 2.8%
Industrials (53.5%)
Nifty 500 ex-Fin 3.6%
Nifty 500 ex-Energy 4.0%
Reality (40.3%)
Industrials 4.7%
Nifty 500 ex-Energy & Fin 5.7%
Nifty 500 ex-Energy & Fin (33.4%)
Materials 6.0%
Materials (23.8%)
Utilities 6.9%
Utilities (20.0%)
Healthcare 8.1%
Healthcare (19.8%)
Reality 10.6%
Cons. Stap. (19.0%)
Cons. Stap. 12.7%
IT 1.9% IT 15.2%
-50% -40% -30% -20% -10% 0% (5%) 0% 5% 10% 15% 20%
Figure 29: PAT growth trend of Nifty 500 companies

PAT growth trend for Nifty 500 companies
150%
100%
50%
0%
-50%
-100%
Figure 30: PAT margin trend of Nifty 500 companies

PAT margin trend for Nifty 500 companies
10%
8%
6%
4%
2%
0%
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Market Pulse
Earnings revision analysis
Consensus FY21 PAT estimates slashed by 33%+ in this fiscal year thus far: We have
analysed earnings revisions for top 200 companies by one-year average market cap
ending June 30th, 2020 covered by at least five or more analysts during the last one year
using IBES estimates from Refinitiv Datastream. Our analysis shows that consensus profit
estimate for these companies for FY21 have been downgraded by 33.5% since the
beginning of the fiscal and 36.2% since January 2020 (as of July 24th), translating into an
expected YoY contraction in aggregate profits of 0.2% for the full year vs. an estimated
profit growth of +19% in mid-June. Consumer cyclicals have witnessed the sharpest
downgrades, followed by Materials, Industrials, Financials and Energy, reflecting
expectations of a lacklustre consumption and investment demand, sustenance of benign
commodity prices and elevated credit cost for Financials. Aggregate profit growth for
Financials, however, is still estimated at a strong 39.5% for FY21, and is therefore
susceptible to earnings downgrades, particularly if asset quality pressures intensify once
the moratorium expires. Besides Financials, Healthcare, Consumer Non-Cyclicals and
Utilities are the only sectors expected to post a modest profit growth this year.
Despite significant cut in FY21 earnings estimates, risks remain to the downside, as Q1
profits are expected to see a significant contraction reflected in several high frequency
indicators including industrial production, PMI, merchandise trade, amongst others.
Aggregate earnings estimate for FY22 for the top 200 companies, however, has been
downgraded by a much lower 19%, potentially indicating the impact of COVID-19 to be
temporary in nature. Consequently, consensus profit growth estimate for FY22 currently
stands at ~45% (as of July 24th, 2020), albeit off a low base. This appears quite optimistic
given our expectations of a slow and gradual recovery ahead and is therefore prone to
significant downward revisions. That said, a confluence of monetary and fiscal measures
that have been already taken and are in the offing, coupled with expectations of a faster
recovery in global demand, should provide some support to the ailing economy and
consequently corporate earnings.
Figure 31: Aggregate consensus profit growth estimate Figure 32: Aggregate consensus earnings revisions in
for top 200 covered companies (% YoY) 2020 till date for top 200 covered companies
Aggregate consensus profit growth estimate for top Aggregate consensus earnings revisions for top 200
200 covered companies covered companies since the beginning of 2020
50% 10%
FY21 FY22 44.9% FY21 FY22
40%
0%
30%
-10%
20%
-20.5%
-20%
10%
0% -30%
-0.2%
-10% -40% -36.2%

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20
Note: Based on IBES earnings estimates of top 200 companies by one-year average market cap ending June 30th, 2020, covered by at least five analysts at any given point
of time over the last one year.
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Market Pulse
Figure 49: Monthly trend of sector-wise FY21 consensus earnings growth estimate (% YoY)
Sectors Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20
Basic Materials 21.9 26.9 25.9 8.9 (11.0) (35.3) (46.6)
Consumer Cyclicals 23.1 23.6 23.5 16.8 (0.9) 0.4 (17.0)
Consumer Non-Cyclicals 16.3 15.2 15.2 14.0 10.0 8.7 4.4
Energy 17.8 20.7 17.4 12.0 8.1 (0.0) (13.5)
Financials 45.9 46.0 48.1 44.1 49.2 51.3 39.5
Healthcare 17.9 18.5 18.4 16.2 18.0 11.5 9.1
Industrials 22.2 20.5 16.1 9.8 12.4 (14.1) (20.7)
Technology 10.0 9.9 9.6 4.2 (2.4) (3.4) (1.2)
Utilities 10.6 10.4 10.0 9.3 9.4 4.8 0.8
Total 28.9 29.9 29.3 23.5 18.7 9.1 (0.2)
Source: Refinitiv Datastream, NSE.
Figure 49: Monthly trend of sector-wise FY22 consensus earnings growth estimate (% YoY)
Sectors Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20
Basic Materials 15.2 16.6 18.8 29.3 51.4 75.4 85.7
Consumer Cyclicals 20.2 22.0 22.6 27.9 44.5 76.8 103.8
Consumer Non-Cyclicals 14.7 13.5 13.5 13.7 15.3 16.4 19.5
Energy 8.1 10.0 14.7 17.3 22.6 29.7 43.0
Financials 23.1 22.8 23.7 25.6 31.9 38.6 47.2
Healthcare 13.8 16.2 16.2 16.6 17.1 20.0 22.0
Industrials 16.8 17.6 20.0 24.0 18.7 68.3 76.0
Technology 9.3 9.6 9.6 10.1 12.6 13.3 13.4
Utilities 9.5 10.7 10.9 10.7 11.1 14.9 18.7
Total 16.4 17.2 18.9 21.7 27.5 36.6 44.9
Nifty 50 2020 Consensus EPS downgraded by 35% YTD: The chart below shows how
Consensus estimates usually begin the year (calendar) with a bullish view on earnings,
but are then brought back to terra firma with downgrades, year after year, as the macro
environment overhang prevails over optimism. The market was most optimistic on
corporate performance in 2014, partly explained by increasing hopes of a decisive BJP
victory in the 2014 General Elections. While electoral expectations were comfortably met
that year, corporate earnings failed to pick up, with 2016 earnings eventually coming in
17% lower than the estimate at the beginning of the year.
While the market believed that corporate performance has hit bottom and is bound to
witness a strong recovery, first the Bank AQR (Asset Quality Review) weighed on systemic
to the path-breaking GST reform in 2017 delayed a broad-based recovery.
An already weak domestic and global slowdown has now got accentuated by the COVID-
19 outbreak and attendant containment measures undertaken to control the spread of
the virus including large-scale and stringent lockdowns across the globe. This has
resulted in a 35% downgrade in 2020 (calendar year) Nifty 50 consensus EPS estimate
since the beginning of the year and 29% since March 2020.
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Market Pulse
Figure 33: Yearly trend of NIFTY 50 Consensus EPS estimates
Nifty 50 Earnings Revision Indicator falls deep into the negative zone: The Earnings
Revision Indicator (ERI)4 for the Nifty 50 universe has remained in the negative zone for
more than five years now, implying more downgrades of earnings estimates than
upgrades. In fact, the 12-month moving average trend points to a negative ERI since
2011. The number of downgrades peaked out in March 2016 and kept on declining until
September 2018. However, the pace of downgrades increased since October 2018,
thanks to worsening domestic and global economic activity, declining commodity prices
and tightness in domestic liquidity post the IL&FS crisis, leading to ERI falling back deep
into the negative zone. The ERI moved back into the positive territory for the first time in
five years following the corporate tax cut announcement in September 2019, albeit for a
brief period, only to fall back into the negative zone owing to sustained weakness in
reported earnings.
The COVID-19 outbreak and attendant control measures including lockdown and
complete shutdown of non-essential activities have accentuated the downgrade cycle.
The ERI fell deep into the negative zone to the lowest level since the data is available
(2007) as corporate earnings outlook got adversely impacted due to massive supply and
4
The ERI -1 to 1.
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Market Pulse
demand disruptions caused by mass-scale COVID-19-induced lockdowns worldwide. In

fact, except for one or two companies, rest all the Nifty 50 companies witnessed
significant earnings downgrades until May 2020, taking ERI to its lower limit of -1 in mid-
May, implying downgrades across the board. The ERI has since improved led by upward
revisions in Healthcare and Information Technology.
Figure 34: Nifty 50 Earnings Revision Indicator (since January 2019)
Source: Refinitiv Datastream, NSE
Figure 35: Nifty 50 Earnings Revision Indicator (10-year trend)
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Figure 36: Short-term trend of Earnings Revision Indicator across MSCI sectors
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Market Pulse
Figure 37: Long-term trend of Earnings Revision Indicator across MSCI sectors
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Market Pulse
Chart of the month

The roller-coaster market ride of 2020 so far: Sector concentration and rotation
The Coronavirus outbreak has led to global equities witnessing some of the highest volatilities ever in 2020, and Indian
markets are no exception. From life-time high levels in January to the fastest ever drop to a bear market in March, and
then a dizzying recovery in April, markets have oscillated to the global economic uncertainty in the wake of an
unprecedented crisis. While the recovery might have stalled in May, the rally resumed in earnest in June as a sharp rise
in global liquidity moved all risk assets. Indian equity markets rose 7.5% (Nifty 50) in June, after a tepid May (-2.8%)
and July has been steady thus far.
On the lines of our work on market concentration in in the previous edition of Market Pulse (refer to the detailed report
here (Jan-Jun 2020). Sector-wise, the
divergence across sectors has been stark; Pharma (~+24%) and IT (~+12%) have improved at the expense of Financials
(-31%). Our analysis below shows this in somewhat greater detail, for the NIFTY 50 Universe of companies.
Analysis
To delve deeper into the mechanics of sector contribution to the NIFTY, we compare the
12-month period ending in June 2020 with the 12-month period ending in May 2009 from
the GFC. Significantly high levels of volatility apart, both the periods differed in their final
outcome; markets were up 10% by May 2009 as liquidity measures announced by global
central banks appeared, while the NIFTY remains ~7% below July 2019 levels.
Sector contribution to index movement has typically been directly proportional to

weights, and this year, Financials have led both in the sharp drop of the NIFTY50 and its
rise since April. Comparing the period to a similar one in the Global Financial Crisis (GFC)
of 2008 shows similar behavior, but by different sector leaders. It was Energy and
Materials then reflecting the (relatively) external nature of the crisis.
Another, major cause of such an outcome was also the relative weighting across sectors
in the NIFTY basket then. In 2008-09 the top sectors in the index were Energy (~25% avg.
over the 12-month period of study), Financials (~12%), Communications (~11%),
Information Technology (~10%) and Materials (~8%). The top five sectors thus
constituted ~66% of the index.
constitute an avg. 38% share of the market -
risen steadily over the last 12 years, at the expense of all other sectors: Energy at ~13%
has lost ~50% of relative share, Communications (~3%) and Materials (~6%) are shadows
of their former selves, while Technology has remained steady at ~13%. Sectors like
Consumer Staples have ~9% of the NIFTY basket now. The market churn has translated
in a sharp drop in the weightage of Financials in the index, despite the recovery; 40% in
July 2019 is now ~34%. Energy has gained favour again, at ~15% of the portfolio.
Our analysis echoes a clear trend of rising concentration in the Indian markets, first
illustrated in the previous edition of Market Pulse. While the recent drop and the partial
recovery has served to balance the portfolio to some extent, the market remains relatively
more concentrated, as evident in quick measures of concentration like the Herfindahl-
Hirshman Index (HHI) or the C4. While the simpler C4 metric (total share of the top four
sectors) hovered around 61% in 2008-
comprehensive sector HHI was ~1335 in our initial period of study in 2008-09, it
has since increased considerably to 2100 levels in 2019-20.
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Market Pulse
In the last one year ending June 2020, Financials have led both in the sharp drop of the
NIFTY50 and its rise since April 2020. During the
and Materials drive the market movement on either side, reflecting the (relatively)
external nature of the crisis.
Figure 38: -J
NIFTY 50 index returns (%) across sectors (Jul 2019-Jun 2020)
Comm. Cons. Disc Cons. Stap Energy
Financials Health Industrials IT
30% Materials R.Est Utilities Change
20%
10%
0%
-10%
-20%
-30%
Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Figure 39: Nifty 50 Index returns (%) across sectors during the period Jun 08-May 09
NIFTY 50 index returns (%) across sectors (Jun 2008-May 2009)
Comm. Cons. Disc Cons. Stap Energy
Financials Health Industrials IT
30%
Materials R.Est Utilities Monthly Change
20%
10%
0%
-10%
-20%
-30%
Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
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Market Pulse
Figure 40: Sector-wise break- -
Figure 41: Sector-wise break- -
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Market Pulse
A part of this differed outcome between the two periods is attributed to relative weighting
across sectors in the Nifty 50 basket. In 2008-09, Energy had the highest weight (~25%
average over the 12-month period of study), followed by Financials (~12%),
Communications (~11%), Information Technology (~10%) and Materials (~8%), together
Financials weight rising steadily over the last 12 years to constitute an average 38% share
-
Figure 42: Nifty 50 sector weightage in July 2019 Figure 43: Nifty 50 sector weightage in June 2020
NIFTY 50 Sector Weightage, July 2019 NIFTY 50 Sector Weightage, June 2020
Comm., Comm.,
Utilities, Cons. Disc, Utilities,
2.35 Materials, 3.89
Materials, 2.84 6.13 2.54 Cons. Disc,
6.54
6.40 6.44
Cons. Stap,
8.52
Cons. Stap,
IT, 14.16
IT, 14.80 10.80
Industrials,
Industrials, 3.26
Energy,
4.44
11.94 Energy,
Health, 14.96
Health, 2.31 3.03
Financials, Financials,
40.25 34.38
Source: CMIE Prowess, Refintiiv Datastream, NSE
Figure 44: Nifty 50 sector weightage in June 2008 Figure 45: Nifty 50 sector weightage in May 2009
NIFTY 50 Sector Weightage, June 2008 NIFTY 50 Sector Weightage, May 2009
Cons. Disc, Cons. Disc,
R.Est, 3.92 2.46 3.23
Utilities, Comm., Comm.,
Utilities,
9.38 11.18 R.Est, 3.05 9.27 Cons. Stap,
Cons. Stap, 12.89
4.76 4.28
Materials,
Materials,
9.83
8.26
IT, 12.07 IT, 8.18

Energy, Energy,
25.29 26.29
Industrials, Financials,
Industrials, 8.37 14.21
7.95 Health, Financials, Health,
3.12 10.02 1.94
Source: CMIE Prowess, Refintiiv Datastream, NSE.
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Market Pulse
Figure 46: Nifty 50 index percentage change across sectors (Jul 2019-Jun 2020)
Cons. Cons. Real
Month Return Comm. Energy Financials Health Industrials IT Materials Utilities
Disc Staples Est.
Jul-19 -5.7% 0.0% -1.1% -0.2% -1.2% -2.4% 0.0% -0.5% 0.2% -0.4% 0.0% -0.2%
Aug-19 -0.9% 0.1% 0.3% -0.2% 0.3% -1.1% 0.0% -0.2% 0.4% -0.4% 0.0% -0.1%
Sep-19 4.1% 0.0% 0.5% 1.5% 1.0% 1.4% -0.2% 0.4% -0.9% 0.4% 0.0% 0.0%
Oct-19 3.5% -0.1% 0.8% 0.4% 1.1% 1.6% 0.2% 0.0% -0.4% 0.0% 0.0% 0.0%
Nov-19 1.5% 0.5% -0.5% -0.5% 0.4% 2.4% 0.1% -0.4% -0.5% 0.1% 0.0% -0.1%
Dec-19 0.9% 0.1% 0.1% -0.2% -0.7% 1.1% -0.1% -0.1% 0.5% 0.2% 0.0% 0.0%
Jan-20 -1.7% 0.4% -0.1% 0.2% -1.1% -1.2% 0.0% 0.2% 0.2% -0.2% 0.0% -0.1%
Feb-20 -6.4% 0.0% -0.8% -0.5% -0.8% -2.3% -0.2% -0.5% -0.7% -0.4% 0.0% -0.1%
Mar-20 -23.2% -0.7% -1.9% -0.4% -2.1% -13.9% 0.0% -1.2% -1.7% -1.1% 0.0% -0.3%
Apr-20 14.7% 0.6% 1.2% 0.4% 3.5% 5.0% 0.8% 0.4% 1.6% 0.9% 0.0% 0.3%
May-20 -2.8% 0.4% 0.3% 0.1% -0.1% -3.8% 0.1% 0.2% -0.2% 0.2% 0.0% 0.0%
Jun-20 7.5% 0.2% 0.4% 1.0% 1.5% 3.6% -0.1% 0.0% 0.6% 0.2% 0.0% 0.1%
Figure 47: Nifty 50 index percentage change across sectors (Jun 2008-May 2009)
Cons. Cons. Real
Disc Staples Est.
Jun-08 -17.0% -2.3% -0.5% -0.6% -2.2% -2.5% 0.0% -1.9% -1.7% -2.2% -1.4% -1.6%
Jul-08 7.2% 1.1% 0.0% 0.3% 2.0% 1.7% -0.1% 1.3% -0.9% -0.2% 0.7% 1.3%
Aug-08 0.6% -0.7% 0.2% 0.1% -0.4% 0.5% 0.2% 0.1% 0.6% 0.1% -0.2% 0.1%
Sep-08 -10.1% -0.9% -0.1% 0.0% -1.7% -0.9% -0.8% -1.1% -2.3% -1.8% -1.2% 0.8%
Oct-08 -26.4% -2.6% -0.7% -0.8% -8.0% -2.5% -0.6% -2.8% -1.1% -3.2% -1.4% -2.8%
Nov-08 -4.5% -0.3% -0.2% 0.6% -1.9% -1.0% 0.2% -0.3% -1.0% -1.1% -0.4% 1.0%
Dec-08 7.4% 1.2% 0.0% 0.1% 1.3% 1.7% 0.0% 0.5% -1.3% 1.1% 1.0% 1.7%
Jan-09 -2.9% -1.8% 0.2% 0.3% 0.4% -0.5% -0.1% -0.6% 0.1% 0.0% -1.0% 0.2%
Feb-09 -3.9% -0.2% 0.2% 0.0% -0.3% -1.7% -0.2% -0.2% -0.7% -0.3% -0.3% -0.2%
Mar-09 9.3% 0.0% 0.5% -0.2% 3.9% 1.5% 0.2% 0.7% 0.9% 1.4% 0.2% 0.1%
Apr-09 15.0% 1.9% 0.5% 0.0% 3.7% 2.9% 0.3% 1.3% 1.8% 0.8% 0.7% 1.1%
May-09 28.1% 1.7% 0.9% -0.1% 7.6% 5.4% 0.1% 3.3% 1.1% 3.5% 1.7% 3.0%
Figure 48: Nifty 50 index movement across sectors (Jul 2019-Jun 2020)
Cons. Cons. Real
Disc Staples Est.
Jul-19 -671 -5 -128 -22 -137 -287 3 -56 29 -43 0 -25
Aug-19 -95 7 29 -22 38 -123 0 -21 48 -39 0 -12
Sep-19 451 -5 52 169 113 156 -19 49 -101 42 0 -5
Oct-19 403 -12 97 46 124 181 18 -4 -47 -1 0 5
Nov-19 179 53 -62 -61 52 284 9 -46 -55 17 0 -14
Dec-19 112 13 17 -26 -89 135 -7 -14 64 23 0 1
Jan-20 -206 53 -17 20 -131 -145 3 21 21 -22 0 -10
Feb-20 -760 1 -97 -57 -96 -271 -27 -60 -88 -51 0 -18
Mar-20 -2,604 -74 -217 -46 -233 -1,553 1 -133 -194 -119 0 -34
Apr-20 1,262 49 107 33 299 429 73 34 135 77 0 22
May-20 -280 38 30 12 -6 -374 14 17 -23 16 0 0
Jun-20 722 17 43 99 142 348 -9 -1 54 19 0 10
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Market Pulse
Figure 49: Nifty 50 index movement across sectors (Jun 2008-May 2009)
Cons. Cons. Real
Disc Staples Est.
Jun-08 -830 -110 -23 -30 -108 -120 -2 -95 -85 -108 -71 -79
Jul-08 292 44 2 10 80 69 -3 54 -38 -7 30 52
Aug-08 27 -27 9 3 -15 21 6 3 23 5 -7 4
Sep-08 -439 -40 -4 -1 -73 -38 -36 -48 -102 -78 -52 34
Oct-08 -1036 -100 -28 -32 -314 -99 -24 -108 -42 -124 -56 -108
Nov-08 -131 -8 -6 16 -55 -30 5 -9 -28 -32 -13 28
Dec-08 204 34 1 4 37 48 1 14 -37 31 28 46
Jan-09 -84 -53 5 8 12 -14 -2 -19 3 1 -31 5
Feb-09 -111 -6 7 -1 -9 -49 -6 -6 -19 -10 -8 -5
Mar-09 257 0 15 -5 109 43 7 18 25 40 5 2
Apr-09 453 57 14 1 112 88 8 39 53 25 22 32
May-09 975 60 30 -5 263 188 3 113 38 120 59 106
Figure 50: Nifty 50 index weights across sectors (Jul 2019-Jun 2020)
Cons. Real
Month Comm. Cons. Disc Energy Financials Health Industrials IT Materials Utilities
Staples Est.
Jul-19 2.35 6.13 8.52 11.94 40.25 2.31 4.44 14.80 6.40 0.00 2.84
Aug-19 2.43 6.45 8.39 12.39 39.48 2.33 4.29 15.36 6.10 0.00 2.76
Sep-19 2.29 6.65 9.53 12.89 39.29 2.07 4.55 13.88 6.23 0.00 2.61
Oct-19 2.11 7.24 9.59 13.50 39.48 2.15 4.36 13.01 6.01 0.00 2.56
Nov-19 2.52 6.62 8.94 13.73 41.25 2.19 3.91 12.36 6.06 0.00 2.41
Dec-19 2.60 6.70 8.64 12.87 41.98 2.11 3.76 12.77 6.19 0.00 2.40
Jan-20 3.09 6.67 8.96 12.00 41.49 2.17 4.00 13.17 6.11 0.00 2.36
Feb-20 3.31 6.26 9.06 11.96 41.89 2.08 3.74 13.28 6.07 0.00 2.36
Mar-20 3.45 5.63 11.27 12.87 36.51 2.72 3.33 15.04 6.52 0.00 2.68
Apr-20 3.51 5.99 10.16 14.25 36.19 3.11 3.25 14.48 6.47 0.00 2.56
May-20 4.01 6.48 10.58 14.60 33.34 3.35 3.52 14.66 6.83 0.00 2.63
Jun-20 3.89 6.44 10.80 14.96 34.38 3.03 3.26 14.16 6.54 0.00 2.54
Figure 51: Nifty 50 index weights across sectors (Jun 2008-Man 2009)
Cons. Real
Month Comm. Cons. Disc Energy Financials Health Industrials IT Materials Utilities
Staples Est.
Jun-08 11.18 2.46 4.76 25.29 10.02 3.12 7.95 12.07 9.83 3.92 9.38
Jul-08 11.44 2.33 4.68 25.43 10.94 2.85 8.67 10.39 9.00 4.35 9.94
Aug-08 10.74 2.52 4.72 24.93 11.36 2.98 8.68 10.86 9.06 4.16 9.96
Sep-08 10.93 2.71 5.23 25.86 11.66 2.40 8.42 9.48 8.08 3.29 11.95
Oct-08 11.37 2.71 5.99 24.26 12.40 2.42 7.70 11.43 6.67 2.54 12.49
Nov-08 11.62 2.63 6.86 23.41 11.91 2.73 7.74 10.96 5.83 2.20 14.10
Dec-08 11.97 2.48 6.51 23.04 12.72 2.57 7.67 8.95 6.46 2.98 14.68
Jan-09 10.48 2.72 6.97 24.15 12.59 2.58 7.23 9.30 6.68 1.98 15.29
Feb-09 10.69 3.08 7.22 24.81 11.33 2.48 7.31 9.00 6.60 1.77 15.71
Mar-09 9.79 3.32 6.43 26.32 11.79 2.49 7.29 9.05 7.35 1.80 14.44
Apr-09 10.15 3.28 5.62 26.11 12.79 2.40 7.47 9.39 7.12 2.20 13.47
May-09 9.27 3.23 4.28 26.29 14.21 1.94 8.37 8.18 8.26 3.05 12.89
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Market Pulse
Macro economy
Headline CPI inflation moderated from imputed prints of 7.2%/6.3% in April/May to 6.1% in June 2020, higher than
consensus estimate of 5.3% (source: Refinitiv Datastream). This was primarily on the back of a decline in food inflation,
particularly for vegetables and fruits, partly offset by a sharp rise in pan, tobacco & intoxicants and fuel inflation as well
as a modest pick-up in core inflation. That said, headline inflation has remained -point target
and the upper end of its target range of 6% for the ninth and third month in a row.
Headline inflation should gradually taper off amid expectations of a normal monsoon, continued easing of supply chain
bottlenecks and a significant and prolonged deterioration in aggregate demand. This should facilitate frontloading of
rate cuts by the RBI to support an ailing economy. We expect another 25-50bps cut in policy rates, ceteris paribus.
 Retail inflation moderates but rema target range: Retail

Retail inflation moderated
inflation (CPI) inflation moderated from the imputed prints of 7.2%/6.3% in in June 2020 but remained
April/May to 6.1% in June, higher than consensus estimate of 5.3% (source: -6%
Refinitiv Datastream). The moderation was largely on account of a further decline target range.
in food inflation to an eight-month low of 7.3% led by price normalisation of
vegetables/fruits as supplies improved following a temporary lockdown-induced
disruption. This was partly offset by a sharp surge in inflation in pan, tobacco and
intoxicants to a 59-month high of 9.7%, higher fuel inflation reflecting a pick-up in
crude oil prices, and a spike in personal care & effects inflation to 95-month high
12.4%. Headline inflation -point target and
the upper end of its target range of 6% for the ninth and third month in a row.
 Core inflation inches up: Imputed core inflation (ex-food and fuel) inched up for
the third month in a row to 5% in June 2020. This was primarily on account of a Core inflation inched up for
sharp rise in personal care & effects inflation, reflecting a surge in gold prices, and the third month in a row in
June 2020.
higher transportation inflation due to hike in petrol and diesel prices. This was
partly offset by a significant drop in inflation in household goods & services and
recreation & amusement, reflecting a collapsed demand owing to lockdown
restrictions. That said, weak aggregate demand should gradually bring down core
inflation over the coming months.
 RBI to ease further: Continued surge in COVID-19 cases despite an extended and
stringent lockdown is likely to significantly de-rail an economic recovery,
notwithstanding policy intervention. While supply-side situation is expected to
continue to improve, aggregate demand is expected to remain weak in the
foreseeable future as the second-order effect of the lockdown in the form of decline
in disposable incomes and job losses feeds in. This, along with expectations of a
normal monsoon, should bring down retail inflation lower over the coming months.
This should facilitate frontloading of rate cuts by the RBI to support an ailing
economy. We expect a cut in policy rates by another 25-50bps, ceteris paribus.
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Market Pulse
Figure 52: Consumer price inflation in June 2020 (%YoY)

Weight (%) Jun-20 May-20 Jun-19 FY21TD FY20TD
CPI 6.1 6.3 3.2 6.5 4.8
Food & Beverages 45.9 7.3 7.4 2.4 7.8 3.1
Pan, Tobacco & Intoxicants2 2.4 9.7 6.3 4.2 7.3 8.0
Clothing & Footwear 2
6.5 3.5 3.4 1.5 3.5 5.4
Housing 10.1 3.5 3.7 4.8 3.7 8.5
Fuel & Light 6.8 2.7 1.4 2.2 2.3 6.1
Miscellaneous 2
28.3 5.7 5.8 4.5 5.6 5.3
Core CPI inflation 1, 2
44.9 5.0 4.9 4.1 4.9 6.1
Source: CSO, NSE. NA = Not Available.
Note: 1 Headline inflation excluding food & beverages, pan, tobacco & intoxicants and fuel & light.
2
Inflation data for these components for April and May 2020 are based on the imputed index calculated by MOSPI.
Figure 53: Headline CPI inflation trend

%
Headline inflation remains elevated led by a pick-up in core and fuel inflation
13
CPI Food & Beverages Fuel & Light Core inflation
11
(1)
(3)
Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20
Source: CMIE Economic Outlook, NSE.
Figure 54: Real interest rates have remained negative for quite some time now
30/123
Market Pulse
Figure 55: Category-wise contribution to India consumer price inflation (CPI)
Figure 56: Category-wise contribution to India Food and Beverages inflation (CPI)
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Market Pulse
 Wholesale prices remained in deflation for the third month in a row: Wholesale
price inflation (WPI) remained in the negative zone for the third month in a row, WPI inflation remained in
even as the pace of deflation moderated on a sequential basis. WPI inflation in June the negative zone for the
came in at -1.8% vs. -3.2% in the previous month. This was primarily led by a third month in a row in
continued sharp drop in prices of crude, petroleum & natural gas as well as mineral June.
oils, deflation in non-food primary articles and benign inflation in manufactured
products, partly offset by an increase in food and electricity inflation.
Within primary articles, food inflation inched up to 2.0% in June after moderating
to a 17-month low of 1.1% in May, non-food primary articles remained in deflation
at -2.8% for the third consecutive month, fell to a 35-month low of -2.9%, crude,
petroleum & natural gas prices fell by 33.7% YoY reflecting lower crude oil prices,
while inflation in minerals also moderated to 0.5%. Fuel & power inflation stood at
-13.6%, led by drop in mineral oils prices by 27.5% YoY, partly offset by a surge in
electricity inflation to 5.2%. Manufactured products inflation remained benign at
0.1%, marking the 12th month of a sub-1% reading.
 Gap between CPI and WPI inflation widens: Gap between retail and wholesale
price inflation widened to 55-month high of 9.5% in May 2020 and remained
elevated at 7.9% in June 2020. This was primarily on the back of a) a much higher
weight of food in the retail basket (45.9%) as compared to the wholesale basket
(15.3%), where prices shot up over the last few months due to supply-side issues,
and b) a higher weightage of manufactured goods in the wholesale basket (64.2%)
as compared to the retail basket, where prices have fallen sharply in the wake of a
plunge in commodity prices and a significant drop in consumption demand.
Sustained drop in wholesale prices should ideally feed into final consumer prices,
albeit with a delay, further supporting the prognosis of a decline in consumer
inflation trajectory ahead.
Figure 57: Wholesale price inflation for May 2020 (%YoY)
Weight (%) Jun-20 May-20 Jun-19 FY21TD FY20TD
WPI (1.8) (3.2) 2.0 (2.2) 2.7
Primary articles 22.6 (1.2) (2.9) 6.4 (1.7) 6.6
Food articles 15.3 2.0 1.1 7.3 2.3 7.0
Non-food articles 4.1 (2.8) (3.5) 5.1 (3.1) 5.7
Minerals 0.8 0.5 2.2 24.5 0.0 18.3
Crude petroleum & natural gas 2.4 (33.7) (46.2) (7.3) (42.2) (1.6)
Fuel & power 13.2 (13.6) (19.8) (2.1) (15.4) 1.2
Coal 2.1 2.0 2.3 0.8 2.2 0.6
Mineral oils 8.0 (27.4) (37.4) (3.4) (30.3) 1.8
Electricity 3.1 5.2 2.9 (1.2) 4.7 0.3
Manufactured products 64.2 0.1 (0.4) 1.0 (0.1) 1.5
Food group 24.4 3.1 2.3 5.4 3.2 5.1
Source: CSO, NSE.
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Market Pulse
Figure 58: India wholesale price inflation (WPI)
Figure 59: Gap between wholesale and retail inflation

percentage points
Gap between CPI and WPI inflation
12.0
10.0
8.0
6.0
4.0
2.0
0.0
-2.0
-4.0
Apr-12 Jun-13 Aug-14 Oct-15 Dec-16 Feb-18 Apr-19 Jun-20
33/123
Market Pulse
Industrial production contracts for the third month in a row

Industrial production contracted by 34.7% YoY in May 2020 marking the third consecutive month of contraction, albeit
lower than the 57.7% decline seen in the previous month, and Reuters poll of 37.8% drop. All sectors of the industrial
economy witnessed a huge decline, led by manufacturing as a significant part of discretionary manufacturing was largely
shut for the second month in a row in May. Electricity and mining sectors fared relatively better. Within the manufacturing
sector, the contraction was far more severe in capital goods and consumer durables while essential categories such as
primary goods and consumer non-durables performed somewhat better. During Mar-May 2020, industrial production
fell by 36% YoY.
With incremental lifting of restrictions on non-essential activities, industrial activity is expected to improve over the
coming months, even as contraction is likely to persist for now. Initial signs of this are visible in manufacturing PMI,
electricity generation and e-way bills for the month of June. However, downside risks remain significant in the wake of
continued rise in COVID-19 cases and consequent potential tightening of restrictions.
 Lockdown impacts data collection: Like consumer prices, data flow from factories
and establishments has also got impacted due to lockdown, even as the response
rate has improved for the month of May. The weighted average response in April
was 87% in the provisional estimates, which has now been revised upwards to 91%
in the first revision, albeit still lower than 94%/93% in the final revision for
December 2019/January 2020.
 Industrial production contracts for the third month in a row: Following a sharp
Industrial production
57.7% YoY contraction in the previous month, industrial production fell by 34.7%
declined by 34.7% in May
YoY in May 2020, marginally higher than the consensus estimate of -37.8% after a 57.7% drop in the
(source: Reuters poll). This translates into a decline of 36% YoY in March-May previous month, marking
2020. This was primarily led by a huge 39.3% YoY decline in manufacturing output the third consecutive
as a significant part of discretionary manufacturing was largely shut during the month of contraction.
month in the wake of an extended lockdown. The YoY decline in electricity and
mining sectors, however, was much lower at 15.4% and 21% respectively. While
mining activity was hit by limited labour availability despite being categorised as an
essential activity, electricity production got impacted due to reduced demand from
industrial and commercial establishments. 13 out of 23 sub-sectors within the
manufacturing space recorded more than 50% YoY contraction, led by transport
equipment (-84% YoY), motor vehicles, trailers and semi-trailers (-80% YoY),
textiles (-73% YoY) and electrical equipment (-71% YoY). Pharmaceuticals was the
only sub-sector within the manufacturing space to register a growth in May.
On the use-based side, consumer durables and capital goods got impacted the
most, contracting by 68.5% and 64.3% respectively, followed by intermediate and
infrastructure/construction goods at -44.1% and -42% respectively. Primary goods
and consumer non-durables, largely falling under essential categories, saw a
relatively much lower YoY contraction of 20% and 11.7% respectively.
 Industrial recovery de-railed: With incremental lifting of restrictions on non-
essential activities, industrial activity is expected to improve over the coming
months, even as contraction is likely to persist for now. Initial signs of this are
visible in manufacturing PMI, electricity generation and e-way bills for the month of
June. However, downside risks remain significant in the wake of continued rise in
COVID-19 cases and consequent potential tightening of restrictions Further, a
significant deterioration of aggregate demand is also likely to weigh on industrial
production.
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Market Pulse
Figure 60: India industrial production for May 2020 (%YoY)

Weight (%) May-20 Apr-20 May-19 FY21TD FY20TD
IIP (34.7) (57.7) 4.5 (45.8) 3.8
Sector- Mining 14.4 (21.0) (27.0) 2.3 (24.0) 3.7

based Manufacturing 77.6 (39.3) (67.1) 4.4 (52.7) 3.5
indices Electricity 8.0 (15.4) (23.0) 7.4 (19.0) 6.7
Primary Goods 34.0 (20.0) (26.6) 2.2 (23.2) 3.6
Capital Goods 8.2 (64.3) (92.6) (2.1) (77.9) (1.8)
Intermediate Goods 17.2 (44.1) (65.4) 12.5 (54.1) 7.8
Use-based
Infra/Construction Goods 12.3 (42.0) (84.7) 3.0 (62.6) 1.2
Goods
Consumer Goods 28.2 (36.0) (69.1) 4.5 (52.1) 4.3
Consumer Durables 12.8 (68.5) (96.0) 0.2 (81.9) 1.2
Consumer Non-durables 15.3 (11.7) (48.7) 8.1 (29.6) 6.8
Source: CSO, NSE.
Figure 61: India industrial production (3MMA)
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Market Pulse
Figure 62: Long-term industrial production trend (12MMA)
36/123
Market Pulse
Figure 63: India industrial production use-based goods (3MMA)
37/123
Market Pulse
Figure 64: India eight-core sector growth (3MMA)
Figure 65: India Manufacturing and Services PMI improved further in June but remained in the contraction zone
for yet another month
Manufacturing PMI Services PMI
60
50
40
30
20
10
0
May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 May-20
38/123
Market Pulse
Trade balance turns surplus in June

surplus of US$ 793mn in June (vs. -US$ 3.1bn in May) the first since January
2002 led by a sharp fall in imports for the fourth month in a row, even as contraction in exports narrowed significantly
.4% YoY in June much lower than the 43% drop seen over the
previous three months, led by a significant recovery in exports of engineering goods as well as strong growth in exports
of essential commodities (agri commodities, pharma and other chemicals). Imports on the other hand barely recovered,
witnessing a contraction of 48% YoY in June, over and above the 47% drop seen during Mar-May 2020. While oil and
gold imports led the drop for yet another month, a 41% YoY contraction in non-oil non-gold imports worse than the
previous month despite continued easing of restrictions points to a significant and prolonged weakness in aggregate
demand.
Exports are expected to continue to recover as an aggressive global policy response globally should help revive global
demand faster. Recovery in imports, however, is expected to be slow and gradual as a stringent and prolonged lock-
down in India and its second-order impact in the form of job losses and decline in disposable incomes may keep
discretionary demand weak for an extended period. This is expected to keep trade balance fairly low over the coming
months, potentially translating into a current account surplus in FY21 the first in 17 years. Additionally, a surge in
foreign exchange reserves to all-time high levels (US$ 513bn as of July 3rd, +US$ 56bn YTD) bodes well for the INR.
 : After
registering a ~43% YoY drop during Mar-May 2020, thanks to a stringent nation- Exports recovered
wide lockdown that got extended until May-end, exports recovered meaningfully in meaningfully in June,
June, falling by just 12.4% YoY. This was led by a significant recovery in exports of falling by 12.4% YoY vs.
43% YoY drop during Mar-
engineering goods (-7.5% YoY), and a strong growth in exports of essential
May 2020.
categories for yet another month, viz. agricultural commodities (rice, spices), ores,
chemcials and pharmaceuticals. This was partly offset by a continued sharp decline
in exports of petroleum products (-31.6% YoY) and labour-intensive commodities
such as gems & jewellery (-50.1% YoY) and readymade textiles (-34.8% YoY), as
limited labour availability and social distancing norms kept production levels low,
despite further easing of restrictions during the month. Excluding these three, the
contraction in exports was much lower at 1.4% YoY in June.
 Unlike exports, imports

registered a lacklustre performance for the fourth month in a row, with the overall Imports fell by a much
higher 48% YoY in June.
bill falling by 47.6% YoY in June, following a 47% YoY drop during March-May
An equivalent drop in non-
2020. Oil imports declined by a huge 55.3% YoY, reflecting weak domestic demand
oil no-gold imports points
and lower crude oil prices compared to the year-ago period. While gold imports
to a significant and
recovered on a sequential basis, the YoY contraction remains huge at 77.4% YoY prolonged weakness in
despite a surge in gold prices. Excluding gold and oil, imports registered a huge consumption demand.
41.4% YoY drop in June higher than the 36.4% decline seen in the previous
month reflecting a significant and prolonged weakness in aggregate demand. Like
the trend seen in exports, imports of essential items including medicinal &
pharmaceutical products, and other chemicals were relatively less impacted.
 :A
Trade balance turned
much sharper contraction in imports as compared to exports, thanks to relatively surplus of US$ 793mn in
faster reopening of global economies and an aggressive policy response as June the first since
compared to India, resulted in a trade surplus of US$ 793mn in June the first since January 2002.
January 2002.
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Market Pulse
 Expect current account surplus in FY21: Exports are expected to fare better than
imports in FY21, benefiting from an aggressive global policy response and relatively A significant deterioration
in trade deficit is likely to
lenient lockdown restrictions. India, on the other hand, has seen one of the most
translate into a current
stringent and extended lockdowns which not only brought the economic activity to
account surplus in FY21 vs.
a stand-still for a couple of months, but has significantly deteriorated consumption a current account deficit of
as well as investment demand. In fact, discretionary demand is expected to remain 0.9% of GDP in FY20.
weak in India for an extended period in the wake of falling disposable incomes and
changing consumer behaviour. This, along with lower crude oil prices as compared
to FY20, should result in a significant contraction in trade deficit in FY21, translating
into a current account surplus vs. a current account deficit of 0.9% of GDP in FY20.
Moreover, a surge in foreign exchange reserves to all-time high levels (US$ 513bn
as of July 3rd, +US$ 56bn YTD) bodes well for the INR.
Figure 66: India monthly trade balance for June 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)
Jun-20 21.9 -12.4 21.1 -47.6 4.9 -55.3 16.2 -44.7 0.6 -77.4 0.8
May-20 19.1 -36.2 22.2 -52.4 3.5 -72.3 18.7 -45.1 0.1 -98.4 -3.1
Jun-19 25.0 -7.9 40.3 -10.1 11.0 -13.6 29.3 -8.7 2.7 13.0 -15.3
FY21TD 51.3 -36.6 60.4 -53.3 13.1 -62.8 47.4 -49.7 0.7 -94.0 -9.1
Source: Ministry of Commerce, CMIE Economic Outlook, NSE.
Figure 67: India monthly trade balance trend
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Market Pulse
Figure 68: Non-oil, non-gold imports trend Figure 69: Oil imports trend
Non-oil non-gold imports remained weak for yet another Oil imports fell by a much sharper 53% YoY in June,
month, falling by 41% YoY in June reflecting lower crude oil prices and weak demand.
US$bn Non-oil non-gold imports have nosedived % US$bn Oil imports trend %
35 Oil Imports % YoY (R)

Non-oil non-gold imports % YoY (R) 18 110
30 40
15
25 20 60
12
20
0
9 10
15
(20)
10 6
(40)
(40) 3
5
0 (60) 0 (90)
Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20
Source: Ministry of Commerce, CMIE Economic Outlook, NSE.
Figure 70: Oil imports vs. Brent crude oil prices trend
An increase in crude oil prices over the last few weeks, coupled with continued lifting of mobility restrictions, should
translate into a pick-up in oil imports on a sequential basis over the coming months.
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Market Pulse
Current account balance turns surplus in Q4FY20; FY20 CAD at -0.9%
of GDP in Q4FY20 the first in 13 years. This was primarily led by a sharp drop in non-oil imports (weak demand), strong
growth in remittances, steady software earnings and lower overseas investment income payments. On the capital
account, huge foreign portfolio outflows amid a strengthened risk-off environment in the wake of COVID-19 outbreak
were largely offset by a higher FDI (foreign direct investment) and ECB (external commercial borrowings) inflows,
resulting in a Balance of Payments (BoP) surplus of US$18.8bn in Q4FY20.
The Current Account Deficit (CAD) in FY20 moderated to three-year lows of 0.9% of GDP vs. 2.1% in FY19 due to a
significant contraction in trade deficit and steady growth in services receipts and remittances. Record-high net FDI
inflows (+40% YoY) and strong growth in ECB inflows more than compensated for lower foreign portfolio inflows and
NRI deposits. Consequently, BoP surplus expanded to five-year high of US$59.5bn in FY20.
Exports are likely to fare better than imports as an aggressive policy response globally should help revive global demand
faster. Moreover, a relatively more stringent and prolonged lockdown in India and its second-order impact in the form
of job losses and decline in disposable incomes may keep discretionary demand weak for an extended period. This is
expected to result in a significant contraction in trade deficit, aided by lower crude oil prices. Consequently, we expect
a current account surplus in FY21 for the first time in 17 years (on an annual basis), partly offset by lower remittances.
This would translate into a huge BoP surplus for yet another year, supported by strong FDI inflows, resulting in continued
accretion to FX reserves (US$ 513bn as of July 3rd, +US$ 56bn YTD).
 Weak domestic demand keeps trade deficit contained:

Current account turned
contracted to US$35bn in Q4FY20 from US$36bn in the previous quarter. This was
into surplus in Q4FY20 for
largely led by a sharp drop in non-oil imports, reflecting weak domestic demand,
the first time in 13 years.
even as exports also contracted in Q4FY20 as COVID-19 outbreak led to large-
scale disruptions in global supply chains and demand, thereby resulting in delays FY20 CAD contracts from
and cancellations of orders. Oil imports, however, inched up, reflecting higher crude 2.1% of GDP in FY19 to
oil prices during Dec- 0.9% in FY20.
YoY to US$158bn led by a steeper fall in imports as compared to exports.
 Current account turns surplus in Q4FY20: Invisibles grew by a strong 16.5% YoY
in Q4FY20 led by a steady growth in services receipts (+6.3% YoY), higher
remittances (+13.9% YoY) and lower overseas investment income payments. This,
along with lower trade deficit, led to current account turning surplus in Q4FY20 for
the first time in 13 years to US$0.6bn or 0.1% of GDP. FY20 CAD also contracted
to three-year lows of US$24.7bn or 0.9% of GDP from 2.1% in FY19 due to a huge
contraction in trade deficit and steady growth in services receipts and remittances.
 Strong FDI/ECB inflows compensate for FPI outflows, translating into strong
BoP surplus: On the capital account, substantial outflows by foreign portfolio Strong FDI/ECB inflows
investors (FPIs) in Q4FY20 amid a strengthened risk-off environment in the wake compensated for huge FPI
outflows, translating into a
of COVID-19 outbreak were largely offset by a sharp rise in FDI and ECB inflows,
BoP surplus of US$19bn/
resulting in a Balance of Payments (BoP) surplus of US$18.8bn. In FY20, BoP
US$59.5 in Q4FY20/FY20.
surplus expanded to five-year high of US$59.5bn, thanks to record-high net FDI
inflows (US$43bn; +40%) and strong growth in ECB inflows (+120%), more than
compensating for lower foreign portfolio inflows and NRI deposits.
 Current account expected to remain in surplus in FY21: Exports are likely to fare
better than imports as an aggressive policy response globally should help revive CAD is expected to remain
global demand faster. Moreover, a relatively more stringent and prolonged in surplus in FY21 due to
lockdown in India and its second-order impact in the form of job losses and decline further contraction in trade
in disposable incomes may keep discretionary demand weak for an extended deficit.
period. This, along with lower crude oil prices, is expected to result in a further
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Market Pulse
contraction in trade deficit. Consequently, we expect a current account surplus in

FY21 for the first time in 17 years (on an annual basis), partly offset by lower
remittances from the Gulf nations (account for ~50% of total remittances) in the
wake of a sharp drop in crude oil prices and muted software earnings amid weak
global demand. This would translate into a huge BoP surplus for yet another year,
supported by strong FDI inflows, resulting in continued accretion to FX reserves
(US$506bn as of June 19th, +US$48bn YTD).
Figure 71: Balance of Payments Quarterly account
US$ bn Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Current account -15.8 -19.1 -17.8 -4.6 -15.0 -7.6 -2.6 0.6
CAD/GDP (%) -2.3 -2.9 -2.7 -0.7 -2.1 -1.1 -0.4 0.1
Trade balance -45.8 -50.0 -49.3 -35.2 -46.8 -39.7 -36.0 -35.0
Merchandise exports 83.4 83.4 83.1 87.4 82.7 80.0 81.2 76.5
Merchandise imports 129.1 133.4 132.4 122.6 129.5 119.6 117.3 111.6
Oil imports 34.8 35.3 38.5 32.4 35.4 29.9 31.5 33.8
Non-oil imports 94.3 98.1 93.9 90.2 94.1 89.7 85.8 77.8
Invisibles 29.9 31.0 31.5 30.6 31.8 32.1 33.4 35.6
Net services 18.7 20.3 21.7 21.3 20.1 20.9 21.9 22.0
Software earnings 18.6 19.3 19.9 19.9 21.0 21.1 21.5 21.1
Transfers 17.0 19.3 17.4 16.2 18.0 20.0 18.9 18.4
Other invisibles -5.8 -8.6 -7.6 -6.9 -6.3 -8.8 -7.4 -4.8
Capital account 4.8 16.6 13.8 19.2 28.6 13.6 23.6 17.4
Foreign investments 1.4 7.6 5.2 15.9 18.8 9.8 17.6 -1.8
FDI 9.6 7.4 7.3 6.4 14.0 7.3 9.7 12.0
FII -8.1 0.2 -2.1 9.4 4.8 2.5 7.8 -13.7
Loans -4.3 6.9 2.9 10.3 9.6 3.1 3.1 9.9
ECBs -1.3 2.2 2.0 7.5 6.1 3.3 3.2 10.3
Banking capital 10.1 0.5 4.9 -8.1 3.4 -1.8 -2.3 -4.6
NRI deposits 3.5 3.3 0.1 3.4 2.8 2.3 0.8 2.8
Others -2.4 1.5 0.7 1.2 -3.2 2.5 5.2 13.8
Errors & Omissions -0.3 0.6 -0.3 -0.4 0.4 -0.9 0.6 0.9
Overall balance (BoP) -11.3 -1.9 -4.3 14.2 14.0 5.1 21.6 18.8
Source: RBI, CMIE Economic Outlook, NSE
Figure 72: Balance of Payments Annual account

US$ bn FY16 FY17 FY18 FY19 FY20
Current account -22.2 -14.4 -48.7 -57.3 -24.7
CAD/GDP (%) -1.1 -0.6 -1.8 -2.1 -0.9
Trade balance -130.1 -112.4 -160.0 -180.3 -157.5
Merchandise exports 266.4 280.1 309.0 337.2 320.4
Merchandise imports 396.4 392.6 469.0 517.5 477.9
Oil imports 82.6 86.9 108.7 141.1 130.5
Non-oil imports 313.9 305.6 360.3 376.4 347.4
Invisibles 107.9 98.0 111.3 123.0 132.8
Net services 69.7 68.3 77.6 81.9 84.9
Software earnings 71.5 70.8 72.2 77.7 84.6
Transfers 62.6 56.0 62.4 69.9 75.2
Other invisibles -24.4 -26.3 -28.7 -28.9 -27.3
Capital account 41.1 36.4 91.4 54.4 83.2
Foreign investments 31.9 43.2 52.4 30.1 44.4
FDI 36.0 35.6 30.3 30.7 43.0
FII -4.1 7.6 22.1 -0.6 1.4
Loans -4.6 2.4 16.7 15.9 25.7
ECBs -4.5 -6.1 -0.2 10.4 23.0
Banking capital 10.6 -16.6 16.2 7.4 -5.3
NRI deposits 16.1 -12.4 9.7 10.4 8.6
Others 3.2 7.5 6.1 1.0 18.4
Errors & Omissions -1.1 -0.5 0.9 -0.5 1.0
Overall balance (BoP) 17.9 21.6 43.6 -3.3 59.5
Source: RBI, CMIE Economic Outlook, NSE
43/123
Market Pulse
Figure 73: Quarterly current account
Figure 74: -year low of 0.9% of GDP in FY20
44/123
Market Pulse
Figure 75:
Figure 76:
45/123
Market Pulse
Figure 77:
Figure 78: Forex reserves are all all-time high levels, leading to a sharp rise in import cover
A significant accretion to forex reserves over the years, and particularly this year (+US$ 56bn in 2020 till date, as of July
3rd), has resulted in a significant improvement in import cover, further supported by moderation in domestic demand.
more than 15 months now, thereby
rability.
US$ bn Forex reserves and import cover (months) # of months
550 FX reserves (US$bn) Import cover ratio (months, RHS) 16

15
500
14
450 13
12
400
11
350
10
300 9
8
250
7
200 6
Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-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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Market Pulse
Fiscal pressures mounting; deficit monetisation by RBI not ruled out

T in the first two months of the fiscal reached Rs4.7trn or 58.6% of the budgeted target
already vs. 47.7% in the same period last year. This was primarily on account of a sharp drop in tax collections,
particularly income and indirect tax collections, as shutdown of small businesses and non-essential manufacturing and
services as well as a collapsed consumption demand amidst an extended and stringent COVID-19-induced lockdown
adversely affected incomes and sales. GST collections in the first quarter of FY21 declined by a huge 41% YoY/QoQ. The
growth in capital expenditure, largely attributed to a significant jump in spending on road transport & highways, food &
public distribution, petroleum & natural gas and railways. These together accounted for 73% of the total capital
expenditure during the first two months vs. 30% in the same period last year. Revenue expenditure, however, witnessed
a modest decline on the back of a huge drop in subsidy outgo.
The monthly fiscal figures suggest a significant slippage in the making even as budget estimates are irrelevant in current
unprecedented times. Increase in the Cent
which is expected to only make up for the revenue loss at best, is a testament of that. The States are also allowed to
borrow up to 5% of the state GDP, albeit with certain conditions. In the first six months of the fiscal, the combined gross
borrowing of the Centre and States is expected to exceed Rs10trn (Rs4.7trn in Q1FY21) based on the indicative
borrowing calendars, with exercise of green shoe option imparting additional upside pressure. Expectations of a
prolonged demand slowdown and a gradual recovery in industrial activity at best, tax collections are expected to remain
below the pre-COVID levels for quite some time now. Spending, however, is unlikely to be meaningfully curtailed in a
low growth environment. As such, market borrowing in the second half is expected to remain high, translating into
combined (Centre + states) borrowing for the fiscal to exceed Rs20trn. This is likely to result in supply meaningfully
exceeding demand by market participants, making it crucial for the RBI to continue doing OMO purchases. We also do
not rule out direct deficit monetisation by the RBI as the FRBM Act allows its usage in exceptional circumstances.
 icit reached 59% of the budgeted target in

Apr-May 2020: gross fiscal deficit during April-May 2020 came in at Gross fiscal deficit has
reached 58.6% of the
Rs 4.7trn or 58.6% of the G budgeted target for FY21, meaningfully
higher than 52% for the same period last year. Revenue deficit, however, is only
target in Apr-May 2020.
marginally higher at 67.6% of the full-year target vs. 66.3% in the year-ago period,
largely owing to lower revenue expenditure.
 Tax collections witnessed a significant drop: Gross tax revenues during April-May
2020 declined by 41% YoY to Rs1.3trn, representing just 5.2% of the budgeted Gross tax collections fell by
target. While direct tax collections fell by 14.6% YoY, thanks to lacklustre income 41% YoY in Apr-May 2020,
tax receipts even as corporate tax collections were robust in the wake of but devolution to states
significantly lower refunds as compared to last year, indirect tax collections fell by remained high.
-51% YoY) as well as custom

duty collections (-66.1% YoY). Shutdown of businesses and non-essential
manufacturing and services as well as a collapsed consumption demand impacted
incomes and sales. Net tax collections, however, declined by a huge 70.7% YoY as
transfer to states remained broadly steady despite strained finances of the Centre.
In fact, tax devolution to states stood at 73% in the first two months of the fiscal
vs. 46% in the same period last year.
 GST collections remained below Rs1trn mark for the fourth month in a row: An
extended and stringent lockdown implemented to contain the COVID-19 outbreak, GST collections fell by 41%
coupled with limited supply of non-essential goods/services, has severely YoY in Q1 FY21.
impacted sales, thereby hurting GST collections. Total GST collections have
remained below the Rs1trn mark for the fourth month in a row in June, declining by
a huge 41% YoY in Q1 FY21. Gradual reopening of the economy in June and delayed
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Market Pulse
filings have improved collections, even as it remains below the pre-COVID levels.
has impacted sales.
 Government capex remains strong amidst a pervasive economic slowdown: The

remained broadly steady on an YoY basis in the first two
months of the fiscal. This was led by a strong growth in capital expenditure, largely
attributed to a significant jump in spending on road transport & highways (21.4%
of total capex), railways (28.1%), food & public distribution (18.2%) and petroleum
& natural gas (5.4%). These together accounted for 73.2% of the total capital
expenditure during the first two months vs. 30% in the same period last year.
Revenue expenditure, however, witnessed a modest decline on the back of a huge
drop in subsidy outgo on food and petroleum, partly offset by higher interest
payments, transfer to states and union territories and higher spending on rural
development and health and family welfare.
 Fiscal pressures mounting: The monthly fiscal figures suggest a significant
slippage in the making even as budget estimates are irrelevant in current
unprecedented times. Expectations of a prolonged demand slowdown and a
gradual recovery in industrial activity at best, tax collections are expected to remain
below the pre-COVID levels for quite some time now. Spending, however, is
unlikely to be meaningfully curtailed in a low growth environment.
 Deficit monetisation by the RBI is probably inevitable:
borrowing plan for the year from Rs7.8trn to Rs12trn with upside risks, which is FY21 fisc to see massive
expected to only make up for the revenue loss at best, is a testament of a significant slippage, as already
fiscal slippage this year. The States are also allowed to borrow up to 5% of the state reflected in enhanced
GDP, albeit with certain conditions. In the first six months of the fiscal, the borrowing plan for the
year.
combined gross borrowing of the Centre and States is expected to exceed Rs10trn
(Rs4.7trn in Q1FY21) based on the indicative borrowing calendars, with exercise of
green shoe option imparting additional upside pressure.
Amid expectations of low tax collections and steady spending, market borrowing in
the second half is expected to remain high, translating into combined (Centre +
states) borrowing for the fiscal to exceed Rs20trn. This is likely to result in supply
meaningfully exceeding demand by market participants, making it crucial for the
RBI to continue doing OMO purchases. We also do not rule out direct deficit
monetisation by the RBI as the FRBM Act allows its usage in exceptional
circumstances. 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 79:
Figure 80: Gross fiscal deficit as % of budget targets during April-May

% Gross fiscal deficit as a % of budget target during Apr-May
80.0
68.3
70.0
58.6
60.0 55.3
52.0
47.7
50.0 45.3
42.9
37.5
40.0 33.3
31.7
26.5 27.6
30.0
20.0
10.0
0.0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 (BE) FY20 (RE) FY21 (BE)
Source: CMIE Economic Outlook, CGA, NSE.
Figure 81: Figure 82: A quick glance at FY21 fiscal balances

Fiscal deficit trend (% of GDP) Apr-
7.0 6.6 Rs bn FY20A* FY21BE %YoY** May % YoY
5.9 2020
6.0
Net tax revenues 13,559 16,359 8.7 339 -70.7
4.9 4.9
5.0 4.5 4.6
4.1 Non-tax revenues 3,262 3,850 11.4 108 -61.9
3.9 3.8
4.0 3.5 3.5 3.4 3.3 3.5
Non-debt cap rec. 686 2,250 175.7 8 -72.9
3.0 Total receipts 17,507 22,459 16.3 455 -69.0
2.0 Revenue Exp 23,496 26,301 11.9 4,566 -1.9
1.0 Capital Exp 3,367 4,121 18.1 552 15.7
- Total expenditure 26,864 30,422 12.7 5,118 -0.2

FY14
FY10
FY11
FY12
FY13
FY15
FY16
FY17
FY18
FY19
FY20A
FY20BE
FY20RE
FY21BE
Fiscal deficit 9,356 7,963 3.8 4,663 27.4
% GDP 3.8 3.5 2.1

Source: CMIE Economic Outlook, CGA, NSE. BE = Budget Estimates, RE = Revised Estimates, A = Actual. * FY20 actual figures are provisional number released by CGA.
** Growth in FY21 BE figures are based on the revised estimates for FY20.
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Market Pulse
Figure 83: Direct tax collections trend during Apr-May Figure 84: Indirect tax collections trend during Apr-May
Rsbn Direct tax collections trend % Rsbn Indirect tax collections trend %
Indirect tax collections % YoY (R)

700 Direct tax collections % YoY (R) 200 1800 60
600 150 1600 40
1400
500
100 1200 20
400
1000
50 0
300 800
0 600 -20
200
400
100 -50 -40
200
0 -100 0 -60
FY18
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY20
FY21
FY16
FY11
FY12
FY13
FY14
FY15
FY17
FY18
FY20
FY21
Source: CMIE Economic Outlook, CGA, NSE.
Figure 85: Gross tax collections trend during Apr-May Figure 86: GST collections trend
Rsbn Gross tax collections trend % Rs bn Monthly trend of GST collections
Gross tax collections % YoY (R) Monthly GST collections Monthly average
2500 50 1,200
40
1,000
2000 30
20 800
1500 10
600
0
1000 -10 400
-20
500 -30 200
-40
0
0 -50
Oct-19
Oct-17
Oct-18
Feb-18
Jun-18
Feb-19
Jun-19
Feb-20
Aug-17
Dec-17
Apr-18
Aug-18
Dec-18
Apr-19
Aug-19
Dec-19
Apr-20
FY15
FY11
FY12
FY13
FY14
FY16
FY17
FY18
FY20
FY21
Source: CMIE Economic Outlook, CGA, PIB, NSE.
Figure 87: Revenue and capital expenditure trend Figure 88: Expenditure mix during Apr-May
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
Rev exp
6 125 100
% YoY growth in rev exp 14.3 12.8 13.1 14.4 11.1 11.4 9.3 10.8
Millions
16.5 16.8
5 % YoY growth in capital exp 100
0.5 0.6 80
0.5 75
4
60
50
3
0.3 87.2 86.9 88.9 88.6 90.7 89.2
0.4 0.4 25 40 85.7 83.5 83.2 85.6
4.7 4.6
2 0.4 4.1
0.2 0
0.2 0.3
2.4 2.6 20
1 2.3
1.7 1.8 -25
1.3 1.4
0 -50 0
FY18
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY20
FY21
FY18
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY20
FY21
Source: CMIE Economic Outlook, CGA, PIB, NSE.
50/123
Market Pulse
Figure 89: A snapshot of government finances for April-May 2020

Items (Rs bn) FY20A FY21BE Apr-May 2020
% YoY on % YoY on
Rs bn % YoY Rs bn Rs bn % YoY
FY20RE FY20A
Net tax revenues 13,559 4.2 16,359 8.7 20.7 339 (70.7)
Gross tax revenues 20,099 (1.6) 24,230 12.0 20.6 1,261 (41.2)
Of which:
Direct Tax 10,372 (4.6) 13,060 12.8 25.9 527 (14.6)
Corporation tax 5,569 (12.3) 6,810 11.5 22.3 170 1,408.1
Income tax 4,803 6.0 6,250 14.3 30.1 357 (41.0)
Indirect Tax 9,727 1.8 11,170 11.0 14.8 734 (52.0)
Goods and service tax 6,014 2.9 6,905 12.8 14.8 514 (51.0)
Custom Duties 1,092 (7.3) 1,380 10.4 26.4 96 (66.1)
Excise Duties 2,396 3.8 2,670 7.7 11.4 110 (36.8)
Others 164 8.1 205 5.8 24.9 16 (12.6)
States Share (6,507) (12) (7,842) 19.5 20.5 (921) (7.1)
Transferred to NCCD (33) 82.8 (29) 5.0 (11.7) (2) 20.4
Non-Tax Revenue 3,262 50.0 3,850 11.4 18.0 108 (61.9)
Dividends and profits 1,861 89.8 1,554 (22.3) (16.5) 22 6,124.4
Other non-tax revenues 1,401 17.3 2,296 57.7 63.9 87 (69.5)
Central govt. revenue receipts 16,821 10.8 20,209 9.2 20.1 447 (68.9)
Non-Debt Capital Receipts 686 (20.4) 2,250 175.7 227.8 8 (72.9)
Recovery of Loans 183 (16.9) 150 (9.9) (18.3) 8 16.7
Misc. Receipts (inc. divestment) 503 (21.6) 2,100 223.1 317.5 0 (100.0)
Total Receipts 17,507 9.1 22,459 16.3 28.3 455 (69.0)
Revenue Expenditure 23,496 12.3 26,301 11.9 11.9 4,566 -1.9
Interest Payments 6,110 5.5 7,082 13.3 15.9 783 4.6
Major subsidies 2,232 (1.8) 2,278 0.2 2.1 675 (41.4)
Food 1,087 (15.9) 1,156 6.3 6.3 360 (53.5)
Fertilizer 811 10.3 713 (10.9) (12.1) 232 (1.2)
Petroleum 334 36.0 409 6.1 22.5 83 (41.4)
Capital Expenditure 3,367 40.9 4,121 18.1 22.4 552 15.7
Total Expenditure 26,864 15.2 30,422 12.7 13.2 5,118 -0.2
Fiscal Deficit 9,356 28.7 7,963 3.8 -14.9 4,663 27.4
Fiscal Deficit/GDP 4.6 3.5 2.1
Source: CMIE Economic Outlook, CGA, Budget Documents, NSE.
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Market Pulse
Rainfall above normal thus far; sowing activity strong

The Southwest monsoon season started on a strong note but faltered a bit in later June and early July. As per the Indian
Meteorological Department (IMD), cumulative rainfall over India as a whole through July 21 st is 6.6% above normal.
Except for North West India which has received deficient rainfall in the season thus far largely due to deficient rainfall in
West Uttar Pradesh, Rajasthan, Himachal Pradesh and J&K, the other three regions have received above normal rainfall.
As of July 21st, 72% of the sub-divisional area in the country has received normal to excess rainfall.
An above normal rainfall thus far, coupled with already high reservoir levels when the season started owing to
unseasonal rainfall in October-November 2019, has further improved reservoir levels. Live reservoir storage level as of
July 16th
of 27.1%. Sowing activity has also been pretty strong, with actual sown area rising by 21.2% YoY as of July 17 th, albeit
off a low base. All Kharif crops, except for Sugar Cane, has seen a sharp jump in sowing activity led by oilseeds, partly
reflecting better MSP hikes (refer to the previous edition of Market Pulse here for a detailed note on MSP hikes).
Overall, agri sector is expected to emerge as the only silver lining in the current bloom and doom scenario, with our
expectations of agri GDP growth in FY21 pegged at 2.8% (click here for the detailed report). A normal monsoon and
consequent strong reservoir levels bode well for agri production. This, along with stable MSP hikes, should help keep
farm incomes stable this year, notwithstanding the COVID-19 outbreak.
 Cumulative rainfall above normal thus far: The Southwest monsoon season
started on a strong note but faltered a bit towards in the later part of June and early Cumulative rainfall for
July. Nevertheless, cumulative rainfall for the country as a whole is 6.6% above India as a whole is 6.6%
normal as of July 21st, as per the IMD. Except for North West India which has above normal as of July
received deficient rainfall in the season thus far largely due to deficient rainfall in 21st.
West Uttar Pradesh, Rajasthan, Himachal Pradesh and J&K, the other three sub-
divisions have received above normal rainfall. Of the 36 subdivisions, 28
subdivisions have received normal to excess rainfall, accounting for 72% of the
area of the country as a whole.
 Sowing activity remains strong: Sowing has been pretty strong in this season, with
Net sown area for Kharif
actual sown area witnessing a growth of 21.2% YoY as of July 17 th, albeit off a low
crops has increased by
base. All Kharif crops, except for Sugar Cane, has seen a sharp jump in sowing led 21.2% YoY as of July 17th.
by oil seeds. The latter is partly attributed to relatively better MSP hikes for oil seeds
this year 6.2% on an average basis for the 2020-21 marketing season even as it
18.6% YoY, sowing of coarse cereals has jumped by 12.2% YoY. Pulses on the other
prices over the last 10 months following a deflation over the previous two years.
 Reservoir levels highest in the last seven years: An above normal rainfall thus
far, coupled with already high reservoir levels when the season started owing to Current reservoir levels as
unseasonal rainfall in October-November 2019, has further improved reservoir a share of live storage at
FRL is the highest in the
levels. Live reservoir storage level as of July 16 th stood at 36% of the live storage at
last seven years
FRL the highest in last seven years and
level of 27.1%. This, in turn, bodes well for the Rabi season.
 Agri sector expected to be the only silver lining this year: Agri sector is expected
to emerge as the only silver lining in the current bloom and doom scenario, with our
expectations of agri GDP growth in FY21 pegged at 2.8%. A normal monsoon and
consequent strong reservoir levels bode well for agri production. This, along with
stable MSP hikes, should help keep farm incomes stable this year, notwithstanding
the COVID-19 outbreak.
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Figure 90: Daily mean rainfall

milli metres %
Daily mean rainfall
14 Actual daily rainfall Normal daily rainfall 12
12 10
10
8
8
6
6
4
4
2 2
0 0
1-Jun 7-Jun 13-Jun 19-Jun 25-Jun 1-Jul 8-Jul 14-Jul 20-Jul
Source: CMIE Economic Outlook, IMD, NSE.
Figure 91: Cumulative rainfall (period: June 1st, 2020 to July 21st, 2020)
milli metres %
Cumulative rainfall
400 Cumulative actual rainfall Cumulative normal rainfall 120.0
Cumulative % deviation from normal (RHS)
350
100.0
300
80.0
250
200 60.0
150
40.0
100
20.0
50
0 0.0
3-Jun 8-Jun 13-Jun 18-Jun 23-Jun 28-Jun 3-Jul 9-Jul 14-Jul 19-Jul
Figure 92: Subdivision-wise distribution of cumulative rainfall

Cumulative rainfall (Period: June 1st to July 21st)
Subdivisions
Actual (mm) Normal (mm) % Deviation
East and North East India 744.1 648.5 14.7%
North West India 175.5 212.2 -17.3%
Central India 406.3 381.7 6.4%
South Peninsula 406.3 381.7 6.4%
Total 380.2 356.7 6.6%
Figure 93: Category-wise number of subdivisions and % area (sub-divisional) of the country
Period: June 1st to July 21st
Category
No. of subdivisions % area of the country
Large excess 2 5%
Excess 10 28%
Normal 16 39%
Deficient 8 28%
Large Deficient 0 0%
No rain 0 0%
Source: IMD, NSE.
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Figure 94: Actual sown area as % of normal area sown Figure 95: YoY change in actual sown area
% Actual sown area as % of normal area sown % % YoY change in actual sown area
120.0 2016 2017 2018 2019 2020 50.0 2016 2017 2018 2019 2020
40.0
100.0
30.0
80.0
20.0
60.0 10.0
0.0
40.0
-10.0
20.0
-20.0
0.0 -30.0
Cereals Pulses Sugar cane Oilseds Fibres Cereals Pulses Sugar cane Oilseds Fibres
Figure 96: Live reservoir storage levels

% Reservoir levels as of July 17th
Share of current live reservoir storage in live capacity at full reservoir level (FRL)
40
Storage as % of live capacity at FRL: Last 10 years average
35
30
25
20
15
10
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Figure 97: Trend of reservoir storage levels

% Trend of reservoir levels
100.0 Share of current live reservoir storage in live capacity at full reservoir level (FRL)
90.0 Storage as % of live capacity at FRL: Last 10 years average
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20
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Insights
Invited article: Asset Management is ripe for leadership evolution
There are different ways an organization can attract and engage its various stakeholders.
Having an inspiring purpose articulated in the form of a mission statement may be one of
the most effective ways. An even simpler concept is presented by Simon Sinek, the
British- as an influential notion in his impactful book
When trying to sell their goods and services, organizations often guide their customers on
value propositions using clever marketing strategies on pricing and promotions. However,
using marketing subterfuge in order to draw customers to make a purchase usually ends
up only achieving short term gains. On the other hand, sustainable sales and long-term
growth is often enabled when an organization is truly capable of inspiring trust in its
customers and stakeholders to the extent that they look up to the organization to define
their needs and solutions for the same. Therefore, Simon Sinek makes the following
entity does in the business environment. They need to establish the needs, wants and
Asset managers are the same. Just like in any other business, asset managers also need
they are offering their services. They not
only have to deliver on performance, but also need to figure out how they can inspire their
clients to entrust their life savings with them. This is responsibility, more so given the
asymmetric nature of information available to an asset manager over what his or her client
has access to. Accordingly, there are plenty of possible mission statements an asset
manager may articulate the concept of Environment, Social and Governance investing
(ESG) is one, and we believe offers the most opportunity for leadership and the ability to
resonate with clients and thereby build that trust bond.
Unlike many corporations, asset managers find it exceedingly difficult to commit to a

single statement of purpose because of certain contradictions. For instance, it is easy for
asset managers to focus on fiduciary duty and hide behind mandates which they have to
abide by, instead of looking to define their mission statement built on a set of shared
sustainability values. Regulators also do not make it easy. For example, in the United
financial return, while there is no written law to ensure ESG integration into investment
decisions.
Asset management firms manage funds for individuals and institutions by making
investment decisions on their behalf with an objective of delivering returns. At the same
Historically, discerning managers used to integrate ESG issues into their risk management
practices to ensure the sustainability of their investment processes. As ESG issues are
becoming mainstream, the challenge they face now is to move it from an internal process
to
their goals.
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similar personal situation. As individuals, there are times when we find difficult to
minds. The reason is because delivering on a purpose is easier than receiving

endorsement and buy-in from other parties. Acceptance from others requires leadership
skills to convert ideals into actionable goals.
Unlike many other industries, the asset management industry operates in an eco-system
where they not only have to satisfy customer expectations, but also operate within
boundaries defined by regulators. Consequently, any change requires leadership and an
ability to convincingly articulate ideas to multiple stakeholders. Also, asset managers may
have to balance the expectations of their shareholders, who may view ESG investments
as exclusionary and limiting to organizational growth.
The good news is that all parties are increasingly recognizing the need for ESG primacy,
though the inability to arrive at a common template is creating dissonance, which requires
further leadership for bridgebuilding.
The industry needs to step forward. Otherwise, they will have to live with consequences
of templates which are defined by stakeholders whose understanding of their needs may
be limited and many a times overwhelmed by extraneous circumstances.
REGULATORY MOMEN
Asset managers can play an active role in having an impact on ESG issues. As fiduciary
owners of companies they invest in, they can help shape management decisions and
thereby the final outcome. Regulatory agencies as well as global stock exchanges are
considered key stakeholders. Exchanges are capable of creating standards to ensure
there is trust in the system and fill the gap between investors and other market
participants. These initiatives when handled correctly lead to better and fair
investment decisions. Funds are consequently allowed to flow where they could make a
difference.
 Regulatory Challenges
One of the challenges asset managers face is the fact that regulations and practices are
developing in isolation from each other and not based on an adequate understanding of
investment practice. ESG policies must move away from the assumption that the impact
of an investment strategy is the same as the characteristics of the underlying portfolio.
Instead they should support and develop the full range of tools investors have available
to influence real-economy outcomes, including capital allocation, stewardship and real-
economy policy engagement.5
In their current form, ESG policies seem to be lacking two core elements: first, a universal
consensus on what constitutes an ESG investment and a way for asset managers to assess
ESG compliance in their portfolio; and second, reporting on ESG in a consistent
framework, which is comparable and helps measures impact.
5 https://esgclarity.com/a-generational-opportunity-pri-issues-recommendations-for-renewed-sustainable-finance-strategy/
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Global bodies like the UN Principles for Responsible Investment (UN-PRI) have helped
develop the European Union taxonomy. They are aware of the challenges and urge
investors to support the drive towards a common sustainability taxonomy. One of the
main goals is to prevent green-washing. It is not just about the carbon saved, or the waste
diverted from a landfill, but whether the economic activities we finance are consistent
with the future environmental state to which society and governments are committed. 6
The challenge towards coming to a common ground was highlighted in a Morningstar
con
Even the EU, which is a leader in ESG initiatives, is struggling to come up with common
standards. The Technical Expert Groups (TEGs) on sustainable finance set up in 2018,
published reporting guidelines in 2019, but they only provide non-binding advice for
disclosing climate change mitigation investments and activities. In order to express their
frustration with a lack of consensus on climate change, 631 institutional investors with
more than $ 37 trillion in assets organized the largest ever joint call on climate change
during the 2019 COP 25 in Madrid. These investors wrote and signed a petition reiterating
their full support for the Paris agreement. They urged all governments to implement the
actions that are needed to achieve the goals of the Agreement, with the utmost urgency.
MSCI in a recent study found that increasingly governments around the world are
becoming more active and writing new guidelines and regulations at a rapid pace to
ensure the industry is delivering on ESG commitments (as shown in the chart below). In
an environment where common templates are still being debated, the industry needs to
step forward to frame a common ground. Otherwise, very soon it will have to live with
the consequences of having to work with diverging guidelines issued by different
regulators who are responding to different pressures in their respective home countries.
6 https://www.ipe.com/how-the-eus-sustainability-taxonomy-will-work-for-investors/10031623.article
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 Some regulatory convergence is happening in spite of a Trans-Atlantic divide:
Concerns for ESG issues is global but practices and priorities vary around the world. This
is the biggest challenge that the asset management industry has to deal with especially
as many investing mandates are more global in their outlook than regulators who are
locally driven.
On a positive note, there is some regulatory convergence happening on how to approach

ESG in mandates and fiduciary duties in spite of a still existing Trans-Atlantic divide.
Europe represents almost half of the current $30.7 trillion of investable assets in
sustainability funds, according to the Global Sustainable Investment Alliance. The rise of
eco- have compelled
a wave of responsiveness.
Awareness is also growing among investors and companies in the United States. Despite
the fact that there is no consensus on ESG regulation on a federal level, some states in
the U.S. like California and Illinois are taking the lead in promoting sustainable investing
and setting standards via asset managers such as CalPERS and CalSTRS.
California has historically served as a pioneer for ESG integration in the management of
its pension systems and developing frameworks. This includes CalSTRS 21 Risk Factors,
which have served as a guide for other state pension funds for incorporating ESG
considerations. Additionally, Illinois later signed the Sustainable Investing Act into law,
signalling the next step in state ESG
January 2020, requires all public or government agencies that manage public funds to
implement responsible investment policies covering all public funds under their control. 7
CLIENT MOMENTUM MAY HELP
Client driven trends could propel asset managers in articulating their purpose. First of all,
there is an anticipation that the pool of wealth in the hands of ESG conscious millennials
will grow faster than the amount available in the hands of older generation asset owners
who have been less sustainability driven. Secondly, a pandemic that has upended our
lives is highlighting the value of ESG investments as the ensuing health crisis has
reminded society of the dangers of ignoring expert advice on sustainability.
7
https://malk.com/the-rise-of-esg-regulation/
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 Wealth of Transfer: Millennial Investors vs Investors aged over 60:
World Wealth Report 2020, more than a quarter (27%) of high

net worth individuals those with investible assets of $1 million or more said they were
interested in sustainable products. More than two-fifths (41%) of high net worth
individuals aged under 40 were drawn to sustainable investments compared with just
With millennials now accounting for the new wealth generation and many more
estimated to become beneficiaries of the so-called as baby
boomers pass on their possessions to their heirs more sustainable investments are
over the next 25 years, according to a report from financial services research firm Cerulli
Associates.
 COVID-19 & ESG-compliant companies outperforming in a major crisis:
survey of investors with combined assets of more than $13 trillion found that 71% of
investors thought Covid-19 could increase awareness for risks such as climate change
and biodiversity losses. 8
In another study, HSBC analyzed 140 stocks with highest ESG scores above the global
average. To evaluate Covid19 impact, it looked at performance from 23 March to 10
December 2019, the onset of the crisis. The ESG shares beat others by approximately
7%.9
An explanation for these results is quite obvious. A key part of environmental, social and
governance is to look at how companies serve society, and what this may mean for the
future. When a crisis like COVID-19 rears its face investors can appreciate the defensive
8 https://www.jpmorgan.com/global/research/covid-19-esg-investing
9 https://www.gbm.hsbc.com/-/media/gbm/insights/images/climate-and-esg-shares-beat-the-market-thumb1.png
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Market Pulse
quality of ESG with its emphasis on stronger governance. Companies which have pre-
established monitoring systems for the well-being of their employees and customers can
quickly adapt to a major crisis.
No wonder retail investors are putting more of their money into funds which are classified
as sustainable, as seen from the chart above. This is a trend which is incipient and
something that managers can no longer ignore as a fad.
 Client Education is essential:
ESG objectives may be simple, but their implementation through investment funds can be
complex in terms of impact and performance measurement. There is a need to use a
longer-term horizon than would be the norm for traditional products. Therefore, client
handholding and education may be required to ensure that they stay the course.
important to align their investments with their personal values and ethics. About 50% say
they do just that, but the other half say they lack the information needed to choose those
investments. An even greater percentage of financial advisors 68% globally say they
would be more likely to recommend ESG products to clients if there were better data and
reporting on these investments, while 71% of U.S. advisors worry that investments
labelled 10
This clearly shows that the market demand exists but the ability to satisfy it requires all
stakeholders to come together and help deliver on a common taxonomy so that the
dissonance between client expectations, regulatory mandates and what asset managers
can deliver is narrowed.
RECENT COLLECTIVE ACTION BY REGULATORY AGENCIES AND EXCHANGES
Inspired by lessons learned from the Covid-19 crisis, the London Stock Exchange has
started a new collective climate change action in collaboration with SSE (United Nations
10
https://www.thinkadvisor.com/2019/06/27/esg-data-is-missing-link/
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Sustainable Stock Exchanges Initiative) and supported by CalPERS. This partnership

intends to engage other global exchanges. It will be a coalition working to improve the
environmental data reported by global companies trading on these exchanges. 11
On another note, the Monetary Authority of Singapore (MAS) just issued a consultation
to ensure that asset managers: (a) incorporate environmental issues in their risk
management processes, (b) have a robust capacity building to ensure that their
organizations over time incorporate these principles and lastly (c) as part of their
stewardship responsibility engage with investee companies on environmental issues.
Additionally, Nasdaq recently lead by example by announcing an immediate action plan

to better deal with social issues. The statement was also meant as a response to recently
highlighted social issues in the U.S. where the health crisis has been turning into a crisis
of confidence and trust. Nasdaq is setting up a multi-dimensional approach that would
resources as well as a promise to release a new workforce diversity metrics. 12
The Colombia Securities Exchange has also been engaged in separate ESG initiatives
within July of 2020: (a) launch of their sustainability guidance, (b) a three-day virtual
event organized together with GRI and PRI to engage financial institutions, insurers as
well as government representatives and finally (c) announcement of their commitment to
task force for responsible investment which is a dialogue between public and private
actors to promote responsible investing in Colombia.
B3 (Bolsa do Brasil) recently got approved a new ESG Strategic Plan by its Sustainability
Committee. In the context of this plan, a climate strategy has also been created. The
ambition in the climate agenda is to be a hub on the theme in Brazil, connecting
customers, market players and specialized partners to develop the market, strengthen
their existing climate products portfolio (ISE, ICO2, Green Bonds) and opening new
More of these initiatives are needed to be designed and promoted by regulatory agencies,
global exchanges, corporations, investors and even individuals. According to an impact
research called
Academy, which evaluates companies through a governance lens, only 35% of leading
ESG-compliant global corporations align their overall strategy with SDG 17 (Partnership
for Goals.) The study therefore highlights an urgent need for many more collective action
plans. 13
According to Rajesh Chhabara, managing director of CSRWorks International, a Board-

level buy-in is still a big missing piece and delays acceptance from various
stakeholders. -up the Boardroom competence in
sustainability. Directors should be required to complete regular training to build the
necessary sustainability skills and knowledge. ESG should also be made part of the
11
https://sseinitiative.org/all-news/sse-launches-climate-disclosure-work-with-mark-carney-and-lseg/
12
https://www.nasdaq.com/articles/adena-friedman-believes-now-is-the-time-to-build-a-more-inclusive-economy-2020-06-19
13
https://sgscorecard.argudenacademy.org/
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Indeed, when personally invested and sincerely involved, board members could become
an most thorough supporters and strategists. Then it would be likewise
easier to bring to life such collective initiatives leading to stronger contribution to SDG17.
IN CONCLUSION
Asset management is at cross-roads, a time where circumstances are leading to rapid

adoption of ESG as a mainstream concept. Yet, as an industry it is torn between conflicting
pressures and responsibilities, and thus requires leadership to find a collective common
ground.
Asset management industry needs to come forward before it is too late. Without proper
leadership, it will face the difficult challenge of having to live with rules defined by a varied
set of stakeholders working to deliver on their own narrow set of goals. And those goals
can consequently be at cross purpose with the ultimate purpose of delivering a better
future for humanity today.
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RBI Financial Stability Report: NPA woes to worsen in FY21

-yearly Financial Stability Report (FSR) 14 highlights the unprecedented uncertainty faced by the domestic
as well as global economies induced by the COVID-19 pandemic. A combination of fiscal, monetary and regulatory
interventions, however, have helped keep financial markets stable even as risks remain to the downside emanating from
an expected economic contraction, overleveraged non-financial sector and sustained geopolitical tensions. A
considerable and broad-based weakness in credit growth in FY20 shows clear signs of risk aversion. Deposit growth also
uncertain environment. Asset quality improved meaningfully in FY20 despite muted credit demand, but the
improvement has been halted by the COVID-19 outbreak, with macro stress tests indicating an increase in GNPA ratio
from 8.5% in March 2020 to 12.5% by March 2021 under the baseline scenario. Regulatory interventions in the form of
loan moratoriums may have implications for the financial health of the banking sector. Unlike banks, the NBFC sector,
witnessed a deterioration in asset quality and capital position in FY20, accompanied with persistence of liquidity
challenges which got accentuated by the COVID-19 outbreak. However, contagion risks to the financial system have
moderated amid declining bilateral exposures and shrinking inter-bank market.
 Credit growth weakened, suggesting rising risk aversion and weak demand:
The slowdown in bank credit worsened in the second half of FY20, falling from 8.7% Bank credit growth
deteriorated further in
-based
H2FY20, thereby hurting
moderation across bank groups, reflecting risk aversion on the part of banks and
profitability.
lacklustre demand. Deposit growth also weakened in the second half, largely led by
private banks, even as it has improved in the early months of FY21, reflecting
in an uncertain macroeconomic environment. Weak
credit growth impacted net interest margins, thereby hurting profitability, partly
offset by an increase in other operating income and cost cutting initiatives.
 Asset quality improved in FY20 but macro stress tests point to a significant
deterioration in FY21: The overhang of stressed assets reduced further in H2 Asset quality at the system
FY20, with gross and net non-performing assets (GNPA and NNPA) ratios for all level improved further in
H2FY20 but is expected to
deteriorate meaningfully in
and better than the results of macro stress tests in the
June 2019 FSR. This was largely led by meaningful reduction in NPAs for public
tests point to GNPA ratio
sector banks (PSBs) from 12.7% to 11.3% and foreign banks (FBs) from 2.9% to
2.3%, while private banks (PVBs) witnessed an increase from 3.9% to 4.2% during
the same period. Sector-wise, GNPAs for the industry sector continued to decline the baseline scenario
while that in the Services sector swelled up further. Receding quarterly slippages
reduced the provisioning requirement for banks, resulting in an improvement in
The improvement in asset quality seen over the last couple of years, however, has
been halted by the COVID-19 outbreak and the attendant regulatory interventions
by the RBI to mitigate the impact of debt servicing. Macro-stress tests for credit
baseline scenario and 14.7% in a very severe stress scenario the highest in nearly
two decades.
 Capital position weakened in FY20 and is expected to fall further in FY21: After
witnessing an improvement in the first half of FY20, facilitated by recapitalisation
of PSBs and enhanced resolution by the Insolvency and Bankruptcy Code (IBC),
14
Please refer to the detailed report here.
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capital adequacy at the system level deteriorated in the second half, with capital to
CRAR is expected to
risk-
decline from 14.6% in
reduction was largely led by PSBs and foreign banks, even as private banks Ma
recorded a marginal improvement. Amid expectations of ballooning NPAs in FY21,
capital position is also expected to deteriorate, with CRAR at the system level scenario.
under the very severe stress scenario. Common equity Tier 1 (CET 1) capital ratio
under the baseline/very severe stress scenarios.

 Systemic Risk Survey (SRS) hints at deteriorating prospects for the banking
sector: In the latest SRS 18th in the series risks to domestic growth and fiscal Nearly 56% of the
systemic risk survey expect

reversal or slowdown of foreign capital and direct inflows, corporate sector
the health of the Indian
vulnerabilities, sharp drop in real estate prices and decline in household savings
banking sector to weaken
considerably in FY21.
the health of the Indian banking sector to deteriorate considerably in FY21 owing
to a slow post-lockdown economic recovery, muted credit growth, rising NPAs and
consequent increase in provisioning requirements. Tourism and hospitality,
construction & real estate and aviation are expected to be the most adversely
affected sectors by the COVID-19 pandemic, with corporates likely to favour
localisation over globalisation.
 Liquidity challenges for NBFCs accentuated by COVID- In the aftermath of

the IL&FS crisis and consequent waning of market confidence, the share of long-
from the market has
term market debt in
declined further, with part
to 40.8% at end- of the slack getting picked
over the by the banking sector.
same period. Over-reliance on bank funding and declining share of market funding
not only increases liquidity risk for NBFCs, thereby making them uncompetitive
over a host of financial products where they compete with banks, it also poses
contagion risks on the banking system by idiosyncratic failure of the former.
-rated NBFCs that have been able to borrow from
banks/markets, while smaller/mid-sized and AA and lower-rated NBFCs have been
facing liquidity issues, reflected in lacklustre response to TLTROs.
 Following an
Asset quality and capital
improvement in the first half of FY20, asset quality of the NBFC sector, deteriorated
position of the NBFC sector
deteriorated in H2FY20 .
and further to
 Contagion risks moderated on reducing bilateral exposures and shrining inter-

bank market: The total outstanding bilateral exposures among constituents of the
financial system narrowed during 2019-20. The size of the inter-bank market has
been persistently declining over the last few years, thanks to excess liquidity in the
banking system. This, along with better capitalisation of PSBs, has led to a
reduction in exposure to contagion losses that could result from a hypothetical
idiosyncratic failure of a bank/NBFC/HFC and macroeconomic distress.
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Figure 98: YoY credit growth trend distribution Figure 99: YoY deposit growth trend distribution
by bank groups by bank groups
% YoY Credit growth % YoY deposit growth
Mar-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 25 Mar-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20
25
20 20 17.5
15 11.3
15
10 7.2 11.1
5.9
5 3.0 10 8.6
6.9
0
5
-5
-10 0
PSBs PVBs FBs All SCBs PSBs PVBs FBs All SCBs
Source: RBI Financial Stability Report, NSE. PSBs = Public Sector Banks, PVBs = Private Sector Banks, FBs = Foreign Banks
Figure 100: Asset quality of SCBs improved in H2 Figure 101: Services and Agriculture sectors saw
FY20 but expected to deteriorate in FY21 an increase in NPAs
% SCBs GNPA ratios % Asset quality of broad sectors
Mar-17 Mar-18 Sep-18 Mar-19 (% to total advances of the respective sector)
18 Sep-19 Mar-20 Mar-21E* Mar-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20
15.2
25
15
12.5 20
11.3
12
14.1
8.5 15
9 7.3 10.1
10 7.2
6 4.2 3.9
3
2.3 5
2.0
0 0
PSBs PVBs FBs All SCBs Agriculture Industry Services Retail
Source: RBI Financial Stability Report, NSE. PSBs = P
under the baseline scenario.
Figure 102: Provision covered improved in FY20 Figure 103: Capital position weakened marginally
in FY20 and is expected to worsen further in FY21
% Provision coverage ratio % Capital to risk-weighted asset ratio
Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Mar-17 Mar-18 Sep-18 Mar-19
100 20 Sep-19 Mar-20 Mar-21E*
16.7 17.1
79.4
80 14.8
64.8 67.5 65.4 15 13.1 13.3
60
10
40
5
20
0 0
PSBs PVBs FBs All SCBs PSBs PVBs FBs All SCBs
Source: RBI Financial Stability Report,
under the baseline scenario
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Figure 104: Figure 105: Annualised Return on Assets (RoA)

% Components of SCBs' profit: YoY growth % Annualised RoA
Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20
40 2.0
28.5
30 24.8 1.4
1.5
20 13
1.0 0.7
10
0.5 0.2
0
-10 0.0
-8.4
-20 -0.5 -0.2
-30 -1.0
Net Other EBPT Provisions
Interest Operating -1.5
Income Income PSBs PVBs FBs All SCBs
Source: RBI Financial Stability Report, NSE. PSBs = Public Sector Banks, PVBs = Priv
under the baseline scenario. EBPT = Earnings before provisions and tax.
Figure 106: Asset quality trend of NBFCs Figure 107: CRAR for NBFCs
% NBFCs: Asset quality trend % CRAR for NBFCs
GNPA ratio NNPA ratio
7.0 6.4 28.0
6.1 5.8 6.1 5.9 26.2
5.6
6.0 26.0
24.3
5.0 4.5
4.1 4.4 24.0
3.8 22.1 22.8
4.0 3.3 3.1 3.2
2.9 22.0
2.6 2.5 20.1
3.0 2.5 19.6
19.9 19.5
20.0
2.0 1.4
18.0
1.0
0.0 16.0
Mar Mar Mar Mar Mar Mar Sep Dec Mar Mar Mar Mar Mar Mar Sep Dec Mar
'15 '16 '17 '18 '19 '20 '19 '19 '20 '16 '17 '18 '19 '20 '19 '19 '20
Source: RBI Financial Stability Report, NSE.
Figure 108: Total bilateral exposures between Figure 109: Fund and non-fund based inter-bank
entities in the financial system market
Rs trn Bilateral exposures % Rs trn Inter-bank market %
#REF! #REF! Fund based
37.0 20 10.0 Non-fund based
36.3 36.4 8.0
Inter-bank exposures as % of bank assets (R)
16.6 35.8 35.8 Fund-based inter-bank expsosures as % of bank assets (R)
36.0 15.4 16
8.0
35.0 1.3 6.0
35.0 12 0.9
10.4 6.0 0.8 1.2 1.1
1.0 1.2
34.0 8.5 8 4.0
7.7
33.0 4.0
33.0 4 6.8
6.1 5.7 5.5 5.7
5.1 4.8 2.0
2.0
32.0 0
-1.3
31.0 -4 0.0 0.0
Dec'18 Mar'19 Jun'19 Sep'19 Dec'19 Mar'20 Mar'17 Sep'17 Mar'18 Sep'18 Mar'19 Sep'19 Mar'20
Source: RBI Financial Stability Report, NSE.
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Market Pulse
Prompt policy actions ease financial conditions after a sharp COVID19-led deterioration
Global financial condition has improved in the recent months after a significant fall over the first quarter of the year.
There are several reasons behind the ease in financial situation including a significant fall in interest rates, prompt fiscal
and monetary policies, and a strong recovery in the
Stability Update (June 2020).15 Among others, the equity market recovered around 85% of their mid-January levels.
Though there are variations across several economies, most of them have bounced back to recoup all their losses, while
25% are still lower than their mid-Jan level. The overall volatility level has also fallen in tandem from their respective
peaks but remains above the long-term average level.
According to the report, prompt monetary policy responses helped securities market to
recover at a faster rate. For instance, the US Federal Reserve provided an additional
liquidity of US$2.3trn in the financial system, while the fed funds rate was slashed by a
total of 150bps in March alone to 0-0.25%. In India, the RBI announced a slew of
measures including policy rate cuts as well as conventional and unconventional liquidity
enhancement measures to cope up with the crisis. The Targeted Long-term Repo
Operations (TLTROs) of up to three years for a cumulative amount of up to Rs1trn,
reduction in Cash Reserve Ratio and expansion of borrowing limit under Marginal Standing
Facility provided additional liquidity in the system.
This, in turn, has reduced the spread in the credit market. However, there is a considerable
variation in spreads across regions and credit ratings. Bond issuance of high-rated issuers
increased significantly, while speculative bond market has reopened in the liquidity
surplus economy.
Post record outflows of portfolio inv

sentiments have improved significantly. Countries with higher credit rating have attracted
much more FII money than economies with lower ratings. Further, the market sentiments
have augmented with the unlock announcements across countries and accompanied with
a speedy recovery of the economy. Investors risk appetite has increased with an
expectation of continuing support from the central banks with cheap and easy availability
of liquidity for a long period of time. Central banks of several emerging economies have
purchasing government bonds, state-guaranteed bonds, corporate debt and mortgage-

backed securities.
Besides, countries have taken fiscal measures to provide essential support to people as
well as firms. According to the IMF estimate, fiscal measures worth of $11trn has been
However, there is a wide gap between the market performance and the real economy,
which has increased the probability of a further correction in risky asset prices. Market
valuation has also been stretched across many equity and bond prices due to easy and
cheap access to liquidity post monetary policy actions.
The IMF has raised serious concerns over the market valuation and the sudden jump in
corporate debts with a rise in probability of default across many countries. Data also
reveal that household debts and corporate debts have reached to an unmanageable level
which can trigger a deeper and longer recession in case of a severe economic recession
15
https://www.imf.org/en/Publications/GFSR/Issues/2020/06/25/global-financial-stability-report-june-2020-update
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Market Pulse
due to the unprecedented pandemic. Further, the non-banking financial companies are
vulnerable to the sudden crisis as a substantial shock in the market could exacerbate
investment outflows and fire sales which can further deteriorate market risk profile.
During this pandemic, many countries have become more dependent on external
financing requirements and recent credit rating downgrades may pose additional
pressure on them given portfolio outflows, particularly if they do not have flexible
exchange rate regime. In such situation, it becomes utmost important for policy makers
to continue to support the economic recovery while maintaining sound financial
institutions and sustaining financial stability.
The IMF has suggested prioritising the following financial policies to overcome from the
crisis. (i) Central banks should maintain their accommodative stance while controlling
inflation and financial stability mandates. They should continue conventional and
unconventional policy measures to support the flow of credit to households and firms.
These policy actions should emphasise on maintaining adequate liquidity in the money,
foreign exchange and securities market. (ii) Emerging market and developing economies
should use flexible exchange rate to incorporate all external pressure. (iii) Banks should
deploy their capital and liquidity to absorb losses and mange liquidity crunch in the
economy. (iv) Asset managers should apply robust and efficient liquidity management
framework. (v) Insurance companies need support from regulators to cope up with the
extreme market stress with some flexibility in their regulatory requirements and financial
support.
Figure 110: Equity markets rebounds partially across Figure 111 in emerging markets
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Market Pulse
Figure 112: Indian equity markets recovered partially Figure 113 by a sharp fall in
across all market sizes volatility
Figure 114: Advanced economies recorded a sharp fall Figure 115 Similar trend can be seen in India as well
in G-sec yields due to expansionary monetary policies... post policy rate cuts and huge liquidty surplus by RBI
Figure 116: US 10-year corporate bond spreads remain quite high amid impending economic recession and rise in
the probability of default
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Market Pulse
Market Performance
Market Round-up
Ample global liquidity leading to a risk-on rally in EMs
Global equity markets rallied for yet another month in June, marking the third consecutive month of positive returns, as
investor sentiments remained buoyant amid gradual revival in economic activities. Positive cues around development of
a COVID-19 vaccine also supported market sentiments. Meanwhile, policymakers worldwide continued to provide fiscal
and monetary support to tide over the near-term economic ramifications caused by the outbreak. Strengthened risk-on
environment in the wake of surplus global liquidity led to strong foreign capital inflows into emerging markets.
Consequently, the broader EM pack, including India, outperformed developed markets after underperforming in the
previous month. While the MSCI World Index ended the month with a 2.5% return after posting strong returns over the
previous two months, MSCI Emerging Market Index outperformed with a robust 7% return. Back home, the Nifty 50 and
Nifty 500 Index rose by 7.5% and 8.3% respectively in the month of June, supported by emerging signs of a pick-up in
economic activity.
Gilt curves across global markets have steepened meaningfully over the last couple of months, reflecting growth
concerns and increasing government borrowing requirements. India has been no different, with the decline in yields at
the short-end being much higher than at the long-end. A steep 155bps cut in reverse repo rate, coupled with a slew of
liquidity easing measures taken by the RBI, has brought the shorter end of the yield curve lower. A similar trend has
been observed in corporate yield curves. While the demand for shorter duration corporate bonds has risen following the
introduction of LTROs and TLTROs (Targeted Long-term Repo Operations) as well as a huge surplus systemic liquidity,
demand for longer duration papers has remained muted amid growth concerns. While the 10-year G-sec yield has fallen
by 34bps since March 26th to close the month of June at 5.9%, the 3-month G-sec yield has fallen by ~190bps during
the same period and has been hovering closer to or below the reverse repo rate since April-end.
 Domestic equity markets rallied sharply in June following a weak May: Indian
The Nifty 50 and Nifty 500
equity markets moved in line with the broader emerging market pack in June,
Index rallied by 7.5% and
significantly outperforming the developed markets, supported by strengthened
8.3% respectively in June,
risk-on sentiments on the back of gradual improvement in economic activities and led by strong FII buying and
positive cues around development of COVID-19 vaccine, leading to sustained emerging signs of a pick-up
buying by foreign institutional investors (FIIs). On the negative side, cases continue in economic activity.
to rise in India, with total number of positive cases at 1.24mn as of July 22 nd being
Market volatility came off for
the third highest in the world. However, case fatality rate has been gradually falling.
the third month in a row in
Moreover, despite rising number of cases, India continues to fare much better in
June.
terms of total cases and fatalities per mn population. The Nifty 50 and Nifty 500
Index ended the month of June 7.5% and 8.4% higher respectively. This strong
rally has continued in July as well, with Nifty 50 rising by another 8.1% through July
27th (YTD: -8.6%). The Mid (Nifty Mid-cap 100) and Small-cap (Nifty Small-cap 100)
indices also posted strong returns of 10.8% and 15.3% respectively in June. Market
volatility index, India VIX, fell by 3.7% in June following a 11.1% decline in the
previous month, even as it remains significantly higher than last year (150% YTD).
In cash markets, average daily turnover increased by a strong 16.6% MoM to

Rs614bn nearly 45% higher than the average daily turnover during FY2019-20
and 11.2% higher than the FY21 YTD (Apr-June 2020) average. Average daily
derivative turnover also improved further in June, rising by 14.9% MoM, following
a 7.5% MoM increase in the previous month. This is ~25% higher than the average
daily turnover during FY2019-20 and 11.9% higher than the FY21 YTD (Apr-June
2020) average.
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Market Pulse
All sectors ended in green in June, with the rally primarily led by Banks and Autos,
which reported gains of 10.7% and 8.1% respectively. Media and Real Estate also
reported huge gains of 14.1% and 12.5% respectively. Gains in other sectors,
including FMCG and Pharma, has been relatively muted, even as they continue to
outperform the broader market in terms of YTD returns. Pharma has been the best
performing sector this year, generating an YTD return of 24%.
 Fixed income market rallied on expectations of continued monetary easing:

Indian fixed income markets
Fixed income markets remained strong for yet another month amid continued rallied in June amid
liquidity injection by global central banks. While long-end remained largely steady, expectations of continued
short-end of the curve came off further, resulting in further steepening of the yield monetary easing by the RBI.
curve. Corporate debt, particularly in the US, outperformed safe haven assets, The 10-year yield ended the
thanks to strengthened risk-on environment amid aggressive policy interventions. month 13bps lower at 5.9%.
Yields in India came off but at a much sharper pace in the short-end than in the
long-end resulting in further steepening of the yield curve. A similar trend has been
observed in the corporate bond yield curve. While the demand for shorter duration
G-sec and corporate bonds has risen following the introduction of LTROs and
TLTROs (Targeted Long-term Repo Operations) as well as a huge surplus systemic
liquidity, demand for longer duration papers has remained muted amid growth
concerns. While the 10-year G-sec yield has fallen by 34bps since March 26th to
close the month of June at 5.9%, the 3-month G-sec yield has fallen by ~190bps
during the same period and has been hovering closer to or below the reverse repo
rate since April-end.
On the global front, while China 10-year bond yield inched up by 19bps (-28bps
YTD) , Germany, Japan and US 10-year bond yields remained broadly steady,
ending the month at -0.46% (-27bps YTD), 0.027% (+5bps YTD) and 0.65% (-
126bps YTD) respectively.
 FIIs were strong buyers of Indian equities for the second month in a row but
Equity markets saw a strong
remained sellers of Indian debt: FIIs turned strong buyers of Indian equities in buying from FIIs in June even
May after remaining sellers over the previous two months and remained so in June as net buying by DIIs was
as well, and incrementally more so, as a part of the ample liquidity injection by relatively modest.
global central banks continued to feed into into riskier asset classes such as EM
equities. Net FII inflows in June stood at US$2.9bn (Source: Refinitiv Datastream),
translating into net inflows of US$3bn in Q1 FY21. FII buying, however, has tapered
sharply in July. While FII selling in debt has continued for the eighth month in a row
in June, the extent has come off meaningfully, with net outflows at US$204mn in
June vs. net outflows of US$6.5bn during Apr-May 2020. Domestic institutional
investors (DIIs) were modest buyers of Indian equities for the second month in a
row, with net inflows at Rs 24bn, but turned sellers in July.
 EMs drove the global market rally in June: Rally in global equity markets
Developed markets
continued for the third consecutive month in June, largely led by emerging markets,
underperformed emerging
as investor sentiments remained buoyant amid gradual recovery in economic
activities. Positive cues around development of a potential COVID-19 vaccine also
World gained 2.5% in June,
supported market sentiments. Meanwhile, policymakers worldwide continued to MSCI EM moved up by a
provide fiscal and monetary support to tide over the near-term economic strong 7%.
ramifications caused by the outbreak. Strengthened risk-on environment in the
wake of surplus global liquidity led to strong foreign capital inflows into emerging
markets. Consequently, the broader EM pack outperformed developed markets
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Market Pulse
after underperforming in the previous month. While the MSCI World Index ended
the month with a 2.5% return after posting strong returns over the previous two
months, MSCI Emerging Market Index outperformed with a robust 7% return.
US: The positive momentum in US equity markets continued for yet another month,
even as the strength diminished marginally. After registering strong returns over
the previous two months, the S&P 500 Index and Dow Jones Index rose by a
modest 1.8% and 1.7% respectively in June as investor sentiments remained
strong owing to continued revival of economic activities and positive cues around
the development of a COVID-19 vaccine, partly offset by sustained US-China
geopolitical tensions and continued surge in cases, the latter promoting some
states to reverse the easing of lockdown measures.
On the macro front, activity is gradually picking up. The unemployment rate
moderated from more than 80-year high of 14.7% in April to 13.3%/11.1% in
May/June. Weekly jobless claims have come off significantly. Consumer demand
has picked up meaningfully following a sharp decline in the first quarter. Retail
sales surged 7.5% MoM in June, higher than market expectations, following an
upwardly revised record 18.2% MoM jump in May, reflecting a recovery in business
activity and trade. The Manufacturing and Services PMI also improved meaningfully
to 49.8 and 47.9 in June vs. 39.8 and 37.5 respectively in the previous month as
non-essential businesses reopened following the easing of COVID19-induced
lockdown restrictions.
Europe: European markets also ended the month of June in green, as the daily
COVID-19 infection rate came of meaningfully and economic activity resumed post
lifting of restrictions. The announcement of a EUR750bn recovery fund or 5.4% of
EU GDP as part of the recovery plan submitted by the European Commission, over
an above the EUR540bn relief package announced in April, also provided a boost
to investor sentiments. On the policy front, while the ECB in the recent policy review
meeting nearly doubled the size of its COVID-19 related bond purchases, extending
the purchase program to at least end of Jun 2021, even as interest rates were left
unchanged, the Bank of England added another £100bn to its bond buying program
to take the total stock of asset purchases to £750bn. While the FTSE 100 rose by
1.5% in May, DAX and CAC 40 increased by 6.3% and 5.1% respectively.
On the macro front, consumer and business confidence have strengthened further,
supported by easing of lockdown restrictions. Manufacturing/Services PMI have
improved from 13.6/12.0 in April and 31.9/30.5 in May to 47.5/48.3 in June. Retail
sales grew by a record 17.8% MoM in May 2020, even as it is still down 5.1% on an
YoY basis. In the UK, Q1 GDP fell by 2.2% QoQ the worst since 2008, and slightly
lower than then preliminary estimate of -2.0%. Manufacturing PMI moved back into
the expansion zone to 50.1 in June, pointing to a stabilised business environment
following a steep contraction over the previous three months.
Asia: Emerging Asian markets generated strong returns in June, outperforming the
developed markets. While the Hong Kong market (Hang Seng Index), Indian (Nifty
50 Index) and Chinese market (SSE Composite Index) went up by 6.4%, 7.5% and
4.6% respectively in June, the Japanese market (Nikkei 225 Index) ended the
month with a modest 1.9% return.
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Market Pulse
Incoming macro data remained weak for India, with industrial production
contracting by 34.7% YoY in May 2020 marking the third consecutive month of
contraction. While manufacturing PMI has recovered meaningfully from 30.8 in
May to 47.2 in June, Services PMI still remains in deep contraction at 33.7. While
the lockdown restrictions were incrementally relaxed in June, rising number of
cases in some parts of the country are prompting state government to tighten
restrictions selectively. Meanwhile, economic activity in China has recovered
further in China, with manufacturing PMI rising to 51.2 in June, and industrial
production grew by 4.8% YoY in June 2020 the largest increase in six months.
 Crude prices surged further in June amid reviving economic activity and
Oil prices recovered have
production curbs: After falling sharply during April 2020, crude oil prices rallied meaningfully from their
sharply over the next two months, with the Brent crude ending the month of June March lows due to
16% higher at US$41/bbl, translating into a rise of 83% in Q1 FY21. This was coordinated production cuts
largely on the back of easing supply amid production curbs by the OPEC+ and by oil producing economies.
improving demand as economies worldwide gradually removed lockdown
restrictions.
Safe-haven commodities such as gold and silver gained 3% and 1.7% in June.
Other hard commodities, including aluminium, copper, lead, zinc, tin and nickel
all moved up further in June as economic activity and demand picked up.
 INR remained steady amid strong FII inflows and trade surplus: INR remained
INR remained broadly steady
broadly steady in the month of June, ending the month at 75.5 to US dollar and in June led by strong FII
outperforming other emerging market currencies, despite strengthened growth inflows and trade surplus.
concerns and downgrade in the sovereign rating outlook by global rating agencies.
This was primarily on the back of strong foreign capital inflows into equity markets
and trade surplus. As of July 23rd, the INR has depreciated by 4.5% against the
US dollar since the beginning of the year.
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Market Pulse
Market performance across asset classes

Figure 117: Performance across equity indices, fixed income, currency and commodities
Indicator Name Jun-20 1M ago 3M ago 12M ago 1M (%) 3M (%) 6M (%) 12M (%) YTD (%)
Equity Indices
NIFTY 50 10,302 9,580 8,598 11,789 7.5 19.8 -15.3 -12.6 -15.3
NIFTY 500 8,475 7,822 6,997 9,658 8.3 21.1 -14.2 -12.3 -14.2
MSCI INDIA 1,196 1,122 995 1,336 6.6 20.2 -12.7 -10.5 -12.7
India Volatility Index (%) 29 30 64 15 -3.7 -54.8 149.6 94.7 149.6
MSCI WORLD 2,202 2,148 1,853 2,178 2.5 18.8 -6.6 1.1 -6.6
S&P 500 COMPOSITE 3,100 3,044 2,585 2,942 1.8 20.0 -4.0 5.4 -4.0
DOW JONES INDUSTRIALS 25,813 25,383 21,917 26,600 1.7 17.8 -9.6 -3.0 -9.6
HANG SENG 24,427 22,961 23,603 28,543 6.4 3.5 -13.4 -14.4 -13.4
FTSE 100 6,170 6,077 5,672 7,426 1.5 8.8 -18.2 -16.9 -18.2
NIKKEI 225 22,288 21,878 18,917 21,276 1.9 17.8 -5.8 4.8 -5.8
Fixed Income
India 10YR Govt Yield (%) 5.89 6.01 6.14 6.88 -13bps -25bps -67bps -99bps -67bps
India 5YR Govt Yield (%) 5.28 5.43 5.68 6.57 -15bps -40bps -120bps -129bps -108bps
India 1YR Govt Yield (%) 3.73 3.62 4.80 6.19 11bps -106bps -183bps -246bps -183bps
India 3Month T-Bill Yield (%) 3.19 3.31 4.32 6.15 -12bps -113bps -196bps -296bps -196bps
US 10YR Govt Yield (%) 0.65 0.64 0.70 2.00 1bps -5bps -126bps -135bps -126bps
Germany 10YR Govt Yield (%) -0.46 -0.45 -0.46 -0.33 -1bps 0bps -27bps -13bps -27bps
China 10YR Govt Yield (%) 2.90 2.71 2.66 3.28 19bps 23bps -28bps -38bps -28bps
Japan 10YR Govt Yield (%) 0.03 0.01 0.02 -0.16 2bps 1bps 5bps 19bps 5bps
Currency
USD/INR 75.5 75.6 75.7 69.0 -0.1 -0.2 5.8 9.4 5.8
EUR/USD 1.1 1.1 1.1 1.1 1.0 2.4 0.1 -1.4 0.1
GBP/USD 1.2 1.2 1.2 1.3 -0.1 -0.4 -6.7 -2.9 -6.7
USD/YEN 107.9 107.7 108.0 107.7 0.1 -0.1 -0.7 0.1 -0.7
USD/CHF 1.1 1.0 1.0 1.0 1.4 2.1 2.2 2.9 2.2
USD/CNY 7.1 7.1 7.1 6.9 -1.0 -0.3 1.6 3.0 1.6
Commodities
Brent Crude Oil (US$/bbl) 41.3 35.4 22.6 66.9 16.4 82.5 -37.8 -38.3 -37.8
LME Aluminium (US$/MT) 1,602 1,526 1,493 1,780 5.0 7.3 -10.1 -10.0 -10.1
LME Copper (US$/MT) 6,005 5,352 4,939 5,982 12.2 21.6 -2.4 0.4 -2.4
LME Lead (US$/MT) 1,763 1,655 1,734 1,917 6.5 1.7 -7.9 -8.0 -7.9
LME Nickel (US$/MT) 12,758 12,260 11,435 12,617 4.1 11.6 -8.6 1.1 -8.6
LME Tin (US$/MT) 16,819 15,503 14,667 18,833 8.5 14.7 -2.1 -10.7 -2.1
LME Zinc (US$/MT) 2,037 1,993 1,895 2,565 2.2 7.5 -10.7 -20.6 -10.7
SHC Iron Ore Spot (US$/MT) 102 102 84 117 0.0 20.8 10.3 -12.9 10.3
Gold Spot Price (US$/troy ounce) 1,784 1,732 1,612 1,412 3.0 10.6 17.3 26.3 17.3
Silver Spot Price (US$/troy ounce) 18 18 14 15 1.7 29.8 1.7 18.6 1.7
Platinum Spot Price (US$/ounce) 814 825 727 818 -1.3 12.0 -16.2 -0.5 -16.2
Palladium Spot Price (US$/ounce) 1,905 1,920 2,307 1,524 -0.8 -17.4 -0.8 25.0 -0.8
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Market Pulse
Figure 118: Performance across NSE sector indices

Indicator Name Jun-20 1M ago 3M ago 12M ago 1M (%) 3M (%) 6M (%) 12M (%) YTD (%)
Auto 6,719 6,219 4,731 7,928 8.1 42.0 -18.5 -15.3 -18.5
Bank 21,370 19,297 19,144 31,105 10.7 11.6 -33.6 -31.3 -33.6
FMCG 30,063 29,297 27,319 29,546 2.6 10.0 -0.2 1.8 -0.2
IT 14,754 14,011 12,764 15,936 5.3 15.6 -5.7 -7.4 -5.7
Media 1,343 1,178 1,040 2,040 14.1 29.2 -25.5 -34.1 -25.5
Metals 1,991 1,880 1,586 2,980 5.9 25.6 -28.9 -33.2 -28.9
Pharma 9,985 9,769 7,177 8,065 2.2 39.1 24.2 23.8 24.2
Real Estate 203 180 176 285 12.5 15.5 -32.1 -28.8 -32.1
Figure 119: NIFTY sector performance over the last month (rebased to 0)
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Market Pulse
Figure 120: India 10Y G-sec yield long-term trend Figure 121: 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
10 6.9 last 12 months
9 6.7
6.5
8
6.3
7
6.1
6
5.9
5
5.7
4 5.5
Jul-02 Jul-05 Jul-08 Jul-11 Jul-14 Jul-17 Jul-20 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20
Figure 122: India sovereign yield curve

The India sovereign yield curve has steepened -19
outbreak. The short end of the curve has fallen by as much as 200bps since March 26 . This has been primarily on the
th
back of a steep 155bps cut in reverse repo rate which has effectively become the policy rate in surplus liquidity
conditions and a slew of liquidity easing measures taken by the RBI, including the LTROs and TLTROs (Targeted Long-
term Repo Operations). The longer-end of the curve (10-year and above), however, has come down by just 40-50bps,
reflecting strengthened growth concerns, FPI outflows and a huge demand-supply mismatch amid heavy supply of
government paper.
% India sovereign yield curve
31-Dec-19 26-Mar-20 30-Jun-20
8.0
7.2 7.1
6.8
6.4 6.5
5.6
5.0
4.8
4.0
3.2 3.2
2.4
3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y 15Y 19Y 24Y 30Y
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Market Pulse
Figure 123: Sovereign yield curve across G20 countries as of June 30th, 2020
Dec 2019 3m 6m 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 30y
US 0.15 0.17 0.16 0.15 0.18 0.29 0.49 0.65 1.41
Japan (0.09) (0.23) (0.16) (0.14) (0.13) (0.12) (0.10) (0.10) (0.08) (0.05) 0.01 0.03 0.60
Germany (0.56) (0.63) (0.55) (0.69) (0.72) (0.72) (0.70) (0.68) (0.61) (0.59) (0.53) (0.46) (0.00)
France (0.52) (0.52) (0.52) (0.60) (0.60) (0.58) (0.53) (0.47) (0.37) (0.31) (0.19) (0.12) 0.62
UK 0.04 0.05 0.03 (0.08) (0.06) (0.07) (0.05) (0.05) 0.01 0.05 0.13 0.17 0.64
Italy (0.29) (0.24) (0.18) 0.09 0.25 0.52 0.72 0.86 0.91 1.11 1.17 1.33 2.24
Canada 0.21 0.24 0.28 0.29 0.30 0.30 0.37 0.37 0.53 0.99
EU (0.56) (0.63) (0.55) (0.69) (0.72) (0.72) (0.70) (0.68) (0.61) (0.59) (0.53) (0.46) (0.00)
Argentina 43.62 42.89
Australia 0.26 0.27 0.26 0.32 0.40 0.50 0.60 0.73 0.81 0.88 1.74
Brazil 2.03 2.14 2.39 3.31 4.64 5.51 6.33 6.70
China 2.16 2.26 2.37 2.57 2.87 2.90 3.61
India 3.15 3.40 3.73 4.17 4.40 4.80 5.28 5.48 5.80 5.97 5.99 5.89 6.55
Indonesia 3.58 3.75 4.89 6.19 6.57 7.22 7.73
South Korea 0.59 0.79 0.84 1.00 1.11 1.37 1.60
Mexico 4.91 4.82 4.77 4.75 4.83 5.48 5.83 7.00
Russia 4.26 4.19 4.22 4.62 4.63 5.32 5.57 5.95
South Africa 4.50 5.04 7.71 9.27 11.29
Turkey 8.05 8.42 9.29 10.00 10.46 11.50
Figure 124: Sovereign yield curve across G20 countries as of June 30th, 2018
Dec 2017 3m 6m 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y 30y
US 1.92 2.11 2.32 2.53 2.62 2.73 2.82 2.85 2.99
Japan (0.12) (0.11) (0.12) (0.12) (0.12) (0.11) (0.11) (0.08) (0.06) (0.03) 0.01 0.03 0.71
Germany (0.59) (0.56) (0.65) (0.68) (0.59) (0.47) (0.30) (0.20) (0.06) 0.06 0.19 0.31 1.03
France (0.64) (0.60) (0.57) (0.58) (0.46) (0.31) 0.02 (0.01) 0.17 0.32 0.48 0.67 1.55
UK 0.58 0.63 0.67 0.72 0.73 0.90 1.03 1.09 1.13 1.22 1.33 1.28 1.74
Italy (0.22) (0.13) 0.25 0.73 1.04 1.47 1.75 2.09 2.30 2.39 2.60 2.69 3.46
Canada 1.26 1.46 1.70 1.91 1.99 2.03 2.07 2.13 2.17 2.20
EU (0.59) (0.56) (0.65) (0.68) (0.59) (0.47) (0.30) (0.20) (0.06) 0.06 0.19 0.31 1.03
Argentina 39.94 21.96
Australia 1.94 2.02 2.08 2.20 2.29 2.41 2.50 2.56 2.61 2.66 3.11
Brazil 6.45 6.54 6.97 7.94 9.30 10.23 10.91 11.22
China 3.21 3.33 3.36 3.41 3.57 3.54 4.07
India 6.49 6.87 7.02 7.51 7.75 7.92 7.95 8.11 8.13 8.14 8.02 7.90 8.10
Indonesia 5.13 5.63 7.04 7.30 7.60 7.80 8.41
South Korea 1.85 2.03 2.12 2.33 2.35 2.56 2.55
Mexico 7.91 8.00 8.07 7.76 7.68 7.59 7.60 7.72
Russia 7.07 7.11 6.75 7.09 7.36 7.46 7.56 7.70
South Africa 6.95 7.39 7.94 8.54 9.42
Turkey 16.83 17.39 18.80 18.54 17.89 16.80 16.30
77/123
Market Pulse
Corporate bond market performance

Corporate bond spreads have come off meaningfully over the last couple of months across issuer categories and
particularly more so at the shorter end, following a sharp spike in the previous two months. This was largely led by a
significant easing of liquidity conditions in the economy, thanks to a slew of measures taken by the Central Bank. The
LTROs and TLTROs led to a surge in demand for better-rated corporate bonds by banks thereby reducing credit spreads,
even as the yield curve has steepened, in-line with the sovereign yield curve. In fact, the very short-end (3-6-month
AAA-rated corporate papers) fell below the repo rate in July. A sharp drop in yields has resulted in corporates prepaying
their bank loans by borrowing through bond markets in the wake of an incommensurate transmission of rate cuts in the
bank lending rates.
Figure 125: Spreads for 3-month corporate bonds across segments

Spreads for 3-month corporate bond have fallen sharply across issuer categories over the last two months. The drop
has been the steepest in NBFC papers, with the credit spread for AAA-rated NBFCs papers falling from the peak of 300+
bps in May-end to sub-50 bps in July 2020. Spreads for 3-month AAA-rated corporate and PSU papers have fallen by
nearly 200 and 150bps since May-end.
bps
Spreads for 3-month corporate bonds across segments
3M Corp (-) 3M G-sec 3M NBFC (-) 3M G-sec 3M PSU (-) 3M G-sec
340
300
260
220
180
140
100
60
20
-20
Mar-18
Jul-18
May-18
Sep-18
Jul-19
Oct-18
May-19
Sep-19
Jul-20
May-20
Nov-18
Mar-19
Nov-19
Oct-19
Mar-20
Jan-19
Jan-20
Feb-18
Jun-18
Feb-19
Feb-20
Aug-18
Jun-19
Aug-19
Jun-20
Apr-18
Dec-18
Apr-19
Dec-19
Apr-20
Source: Refinitiv Datastream, Bloomberg, NSE.
Figure 126: Spreads for 3-year corporate bonds across segments

Spreads for the 3-year paper have also fallen sharply, albeit not as steep as the 3-month corporate bonds and are now
hovering at levels below the last five-year averages for all issuer categories.
bps
Spreads for 3-year corporate bonds across segments
3Y Corp (-) 3Y G-sec 3Y NBFC (-) 3Y G-sec 3Y PSU (-) 3Y G-sec
320
280
240
200
160
120
80
40
0
May-18
May-19
Mar-20
May-20
Mar-18
Jul-18
Sep-18
Mar-19
Jul-19
Sep-19
Jul-20
Nov-18
Nov-19
Oct-18
Oct-19
Feb-18
Jan-19
Feb-19
Jan-20
Feb-20
Jun-18
Jun-19
Jun-20
Apr-18
Aug-18
Dec-18
Apr-19
Aug-19
Dec-19
Apr-20
78/123
Market Pulse

The trend has been similar for 5-year corporate bond spreads as well, even as the spreads have marginally increase in
July thus far.
bps
220
200
180
160
140
120
100
80
60
40
20
Jul-18
Jul-19
May-18
Sep-18
Nov-18
May-19
Sep-19
Nov-19
Mar-20
Jul-20
May-20
Mar-18
Oct-18
Mar-19
Oct-19
Feb-18
Jan-19
Jun-18
Feb-19
Jan-20
Aug-18
Jun-19
Feb-20
Aug-19
Jun-20
Apr-18
Dec-18
Apr-19
Dec-19
Apr-20

Corporate yields at the long-end remained broadly steady in June and have fallen slightly in July, resulting in a significant
steepening of the yield curve, in-line with the sovereign yield curve. This has been largely due to weak demand amid
worsening huge supply of Government paper in the long end.
bps
180
160
140
120
100
80
60
40
20
May-18
May-19
Mar-20
May-20
Jul-18
Jul-19
Jul-20
Mar-18
Sep-18
Oct-18
Mar-19
Sep-19
Nov-18
Oct-19
Nov-19
Feb-18
Jan-19
Feb-19
Jan-20
Feb-20
Jun-18
Jun-19
Jun-20
Apr-18
Aug-18
Dec-18
Apr-19
Aug-19
Dec-19
Apr-20
79/123
Market Pulse
Figure 129: AAA-rated corporate bond yield curve Figure 130: AA-rated corporate bond yield curve
% %
AAA-rated corporate bond yield curve AA-rated corporate bond yield curve
9.0 31-Dec-19 26-Mar-20 21-Jul-20 9.0 31-Dec-19 26-Mar-20
8.0
8.0
7.0
7.0
6.0
6.0
5.0
4.0 5.0
3.0 4.0
3M 6M 1Y 2Y 3Y 5Y 6Y 7Y 8Y 9Y 10Y 15Y 3M 6M 1Y 2Y 3Y 5Y 6Y 7Y 8Y 9Y 10Y 15Y
Source: Bloomberg, NSE.
Figure 131
Surplus liquidity in the banking system has come off over the last two months amid a decline in outstanding money
parked with the RBI under reverse repo operations. This is largely owing to incrementally higher investments by banks
in corporate securities under LTROs/TLTROs as well as SLR securities (government securities) over the last couple of
months, even as credit offtake has remained weak.
Rs bn
Net lending under RBI's Liquidity adjustment facility
Outstanding amount under repo operations
Outstanding amount under reverse repo operations Figure greater than zero
3000
Net lending under LAF indicates deficit liquidity in
the system
1000
-1000
-3000
Figure less than zero indicates
surplus liquidity in the system
-5000
-7000
Surplus liquidity in the banking system
has come off over the last two months
-9000
Jul-18
May-18
Sep-18
May-19
Sep-19
Jul-20
Nov-19
Jan-18
Feb-18
Oct-18
Jan-19
Mar-19
Jan-20
Feb-20
Jun-19
Apr-18
Dec-18
Aug-19
Jun-20
Apr-20
Source: CMIE Economic Outlook, NSE
80/123
Market Pulse
Institutional flows across market segments in India

After recording huge outflows during Feb-April
2020, thanks to a heightened risk-off environment in the wake of an imminent COVID-19-
induced global recession, Indian equity markets saw renewed FII interest, supported by
an ample global liquidity. Net FII inflows in June stood at US$2.9bn (Source: Refinitiv
Datastream), translating into net inflows of US$3bn in Q1 FY21. FII buying in Indian
equities, however, has tapered sharply in July. The situation, however, remains quite
gloomy in the debt segment. FII selling in debt has continued for the eighth month in a
row in June even as the extent has come off meaningfully, with net outflows at US$204mn
in June vs. net outflows of US$6.5bn during Apr-May 2020. This probably reflects
balances.
Figure 132: Overall net inflows of FIIs in India
mid-May:
s in FY20, particularly since end-
purchases in equities rose exponentially while FIIs started selling at a
faster pace particularly due to an exponential rise in coronavirus cases. During FY21, DIIs
net investment remained muted till the first half of May, followed by a sudden change in
trajectory with a spike in net investment in equity till the end of May. Then DIIs net
investment has seen several ups and downs and ended in the positive territory over the
month of June, as can be seen in the following chart.
81/123
Market Pulse
Figure 133: Overall net inflows by DIIs in Indian equity markets
82/123
Market Pulse
Fund mobilisation through NSE

Market Statistics: Primary market
PO to raise additional capital: Amid market
uncertainty, I
not contain the overall spread of the coronavirus in major industrial regions even after a
nationwide lockdown of more than 60 days. This has deteriorated the growth prospects
of the country and overall uncertainty of the financial market increased substantially. As
a result, not a single firm got listed over the last two months.
Unlike previous months, rights issue became the most preferred instrument in the
Primary market :
through rights issues which accounts for about 40% of total capital raised in the market.
This has resulted a significant rise in fund mobilisation through equity segment from
raise Rs40.0bn and 2 firms issued QIPs to raise Rs82bn over the month.
her than equity: Debt

remains to be the preferred instrument as compared to equities to mobilise additional
funds from the capital market. Out of Rs1,343bn funds raised through primary market,
firms utilised debt instruments to raise Rs690bn through debt, marginally higher than the
equity segment. However, total fund through debt declined by 16% over the month,
mainly due to a fall in private placement.
Private placement remains to be one of the major instruments: Over the month, 52
firms rose Rs420bn through private placement which is about 40% lower than Rs696.6bn
in the previous month, and continues to be the most preferred channel in the debt
segment with almost 31% share in the primary market. Besides, government issued G-
sec to raise Rs270bn in June, vs. Rs120bn over the previous month.
Figure 134: Funds mobilised through NSE platform

Particulars Jun-20 May-20
Amount Amount Amount Amount
No. of No. of
Raised Raised Raised Raised
Issues Issues
(Rsm) (US$ m) (Rsm) (US$ m)
Equity
Rights Issue 1 531,242 7,013 - - -
Preferential Allotment 8 39,677 524 7 2,959 39
QIPs 2 82,125 1,084 - - -
Debt
Public issue of Gsec 2 270,000 3,564 1 120,000 1,586
Private Placement 52 419,921 5,544 59 696,623 9,206
Total 1,342,965 17,729 819,582 10,831

Note: In case of debt issuances, the above table reports no. of ISINs instead of issues. Shares issued by Reliance Industries Limited pursuant to Rights issue are partly paid
up but the information is provided considering the same as fully paid up.
Source: NSE.
83/123
Market Pulse
New listings in the month

New listing remains nil over the month of June: Merely two firms migrated from SME
segment to the mainboard, while not a single adopted IPO route to raise capital in June
amid the impending recession globally as well as in the Indian economy.
Figure 135 0
Listing Market Gross Turnover
Listing Date Security Name Listing
Gain % Cap (Rsm) (Rsm)
22-Jun-20 Univastu India Limited 5.1 377 0.22 Migrated from SME to NSE Main Board
24-Jun-20 Aarvi Encon Limited 4.9 365 0.00 Migrated from SME to NSE Main Board
Source: NSE.
84/123
Market Pulse
Long term trends and impact of macro indicators
and 2019, after recording a magnificent growth over the previous year. The situation has
improved in 2020, particularly in the Cash market even as the growth prospect has
deteriorated globally as well as in India due to the unprecedented coronavirus outbreak.
This has also increased the downside risk in the securities market and market volatility
rose significantly, which has resulted a roller coaster ride in institutional flows. This is
reflected in the Equity derivative segment as well with multiple ups and downs over the
last several months.
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 put stricter
norms 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 at an
average monthly turnover of Rs3.6trn. This has further increased in 2020 partly due to a
significant depreciation of INR.
Figure 136 y turnover across segments
Source: NSE.
Note: Total turnover for derivatives includes gross traded value of futures and total premium turnover of options.
85/123
Market Pulse
et registered a record growth of 127% in June, thanks to a low base effect

and rise in uncertainty in the market amid a continuous rise in Covid-19 infections and
increased in Equity and Currency derivatives segment as well, given investors are trying
to hedge their funds against any adverse market movement in the following months.
Figure 137: Impact of global slowdown on overall turnover growth across segments
86/123
Market Pulse
Trading volume and economy have taken diverse routes in June: Trading activities have
increased significantly across all market segments due to rise in uncertainty in the market
over the deteriorating growth prospects in India as the overall spread of Covid-19 cases
continues to rise even after imposing a strict lockdown for more than 60 days.
Figure 138: Growth rates of Cash turnover and economic slowdown in India (IIP and GVA growth)
87/123
Market Pulse
Net institutional flows remains positive over the month of June: Net FII inflows rose
significantly for three consecutive months while net investments by DIIs remained stable
which has contributed significantly to a rise in turnover growth over the month.
Figure 139:
88/123
Market Pulse
Institutional investments through NSE platform

Net investment turned negative in Cash market for both FIIs and DIIs: FIIs net
investment through NSE turned negative in Cash market with a net outflow of Rs23bn
over June, vs. a net purchase of Rs89bn in . Similar trend was observed for DIIs as
well where net investment declined from Rs81bn net purchase in May to Rs8bn net sales
over the month of June.
Among major segments,

institutional investors remain net sellers in Equity derivatives with Rs45bn net sales by
DIIs and
than the previous month.
Institutional investments remain muted in Currency and Interest rate derivatives

segments: Institutional investment muted over the last two months in both Currency and
Interest rate segments which has resulted a significant decline in overall investment in
FY21 till June. In Currency segment, DIIs net investment declined from Rs22bn net
purchase in FY21 till June to net sales of Rs1bn over the same period in previous FY, while
FIIs dropped at a faster pace from Rs14bn net inflows to Rs33bn net outflows over the
same time period. Interest rate segment has also seen similar trend over the period and
finished in negative territory in FY21 till now.
Figure 140: Foreign and domestic institutional flows (Rsbn)

Jun-20 May-20 FY21TD FY20TD
Category Buy Sell Net Buy Sell Net Buy Sell Net Buy Sell Net
Cash Market
DII 938 945 (8) 841 760 81 2,504 2,443 61 1,955 1,959 (4)
FII 1,247 1,270 (23) 1389 1,300 89 3,830 3,812 18 3,216 3,139 76
Futures & Options
DII 759 804 (45) 699 746 (47) 2,041 2,148 (108) 2,200 2,321 (121)
FII 6,449 6,461 (11) 5,010 5,066 (56) 15,996 16,005 (9) 12,942 12,948 (6)
Currency Derivatives
DII 0 0 0 57 54 3 135 136 (1) 322 300 22
FII 0 0 0 631 635 (4) 1,288 1,322 (33) 1,660 1,646 14
Interest Rate Derivatives
DII 0 0 0 4 4 (0) 7 7 (0) 47 44 3
FII 0 0 0 0 0 0 0 2 (2) 12 9 3
Source: NSE. *DII Domestic Institutional Investors, FII Foreign Institutional Investors
89/123
Market Pulse
Figure 141: Foreign and domestic institutional flows (Rsbn) during FY20 and CY20TD
FY20 CY20TD
Category Buy Sell Net Buy Sell Net
Cash Market
DII 9,777 8,653 1124 5,721 4,961 760
FII 13,166 14,155 (989) 7,363 8,224 (861)
Futures & Options
DII 9,908 10,155 (248) 4,679 4,696 (17)
FII 56,304 56,153 151 32,278 32,220 57
Currency Derivatives
DII 1,007 999 8 396 410 (15)
FII 7,550 7,412 138 3,736 3,599 137
Interest Rate Derivatives
DII 174 178 (4) 44 43 1
FII 47 40 6 11 9 1
Source: NSE*DII Domestic Institutional Investors, FII Foreign Institutional Investors
90/123
Market Pulse
Total turnover in CM and derivatives market

Total turnover rose sharply across all segments at NSE: increased
significantly over the month of June, thanks to more trading days in the month, sudden
spike in market uncertainty and rise in gross investments by institutional investors. In the
Cash market, total turnover rose by 35% to reach Rs13.5trn in June vs. Rs10trn over the
previous month.
Similar trends were observed in other segments as well. After a significant fall in April in
Equity derivatives, total turnover rose over the last two months to reach Rs23trn in equity
39% in Interest rate derivatives to have Rs166bn turnover vs. Rs119bn in the previous
month.
Figure 142
Segment Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Cash Market 8,054 7,969 10,065 9,059 10,006 13,509

Equity futures 19,471 18,487 20,974 15,497 17,586 23,151
Index futures 5,433 5,393 9,214 5,947 6,406 8,597
Stock futures 14,038 13,094 11,760 9,550 11,180 14,554
Equity options 1,200 1,156 2,268 1,419 1,616 2,388
Index options 991 941 1,985 1,209 1,368 1,985
Stock options 209 214 283 210 248 403
Currency derivatives 3,882 3,982 7,243 3,733 3,687 4,573
Currency futures 3,871 3,973 7,220 3,722 3,678 4,562
Currency options 11 9 23 11 9 11
Interest rate derivatives 254 279 298 94 119 166
Interest rate futures 254 279 298 94 119 166
Interest rate options 0.03 0.10 0.17 0.02 0.02 0.01
Commodity futures 1.1 1.6 0.9 0.6 0.8 2.1
Source: NSE. *NA refers to not applicable as Interest rate
Average daily turnover in CM and derivatives market

Daily turnover continues to rise in the Cash market: On average, daily turnover rose by
16.6% in the Cash mark
month partly due to a partial recovery in the securities market and rise in volatility in the
market after the unprecedented outbreak of COVID-19 globally, and substantial rise in
gross investment by institutional investors.
Unlike previous months, daily turnover increased in the SME segment as well with a ~60%
rise from Rs14m in May to Rs22m over the month. Among other categories, total turnover
declined for ETF and InvITs while Sovereign Gold bonds and Mutual funds (Close ended)
registered a significant rise over the month.
Among all major stocks in the cash market, IndusInd Bank, Idea, Bajaj Finance recorded
a sharp increase in their total turnover over the month that has mainly contributed to the
increase in average daily turnover in the segment.
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Market Pulse
Figure 143: Average daily turnover in Cash market (Rsm)

Product Jun-20 May-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Cash Market 614,052 526,622 16.6 552,101 337,465 63.6 364,399 476,926
Exchange Traded Funds 2,463 2,629 (6.3) 2,688 2,005 34.0 2,069 2,449
SME Emerge 22 14 59.7 18 78 (77.3) 53 32
Sovereign Gold Bonds 15 15 4.8 19 5 268.5 10 17
InvITs 38 40 (3.0) 39 40 -4.4 51 55
Mutual Funds (Close Ended) 3 1 305.2 1 1 0.2 1 1
Source: NSE.
Daily turnover of Stock derivatives continues to rise in June: In case of Stock

derivatives, daily turnover increased by 12.4% for stock futures turnover and 40.2% for
stock options premium turnover over the month, amid a significant spike in market
uncertainty over the Covid-19 pandemic.
Among most traded stock derivatives, Bajaj Finance, SBI and Axis Bank recorded a
significant jump in total turnover in futures segment, while IndusInd Bank, SBI, Tata
Motors recorded a spike in their total trade activities in options segment.
Liquidity jumped up across all major index derivatives in June:

significantly for both Bank Nifty and Nifty across futures and options segment. In the index
futures, average daily turnover rose by 25% and 8% for Bank Nifty and Nifty in futures
segment to reach Rs189bn and Rs200bn respectively over the month. Similar trend was
visible in Index options as well, where N
and Bank Nifty increased by 19% to reach at Rs46bn over the month.
Figure 144: Average daily turnover in Equity derivatives (Rsm)

Single stock derivatives

Stock futures 661,530 588,433 12.4 598,027 600,726 (0.4) 602,216 603,050
Stock options premium 18,327 13,076 40.2 14,608 7,686 90.1 9,245 12,748
Index futures
Bank Nifty 189,964 151,592 25.3 160,727 98,150 63.8 113,155 141,447
Nifty 200,808 185,553 8.2 194,346 142,952 36.0 157,060 191,771
Nifty IT 19 26 (26.1) 26 229 (88.7) 121 45
Index options
Bank Nifty 46,089 38,697 19.1 39,276 17,228 128.0 22,493 33,723
Nifty 44,126 33,280 32.6 38,033 15,357 147.7 21,090 35,210
Nifty IT 0 0 NA 0 0 (28.2) 0 0
Source: NSE. *premium turnover for options.
92/123
Market Pulse
USDINR continues to dominate in the currency derivatives segment: EURINR remains

the top traded currency pair at NSE, with 79% market share in futures and 99% market
share in options, even as its daily turnover declined by 2.3% and 3% in futures and options
respectively over the month.
Among others, GBPINR and EURINR contributed 12% and 6% of total turnover in futures
segment. Further, they gained momentum with 23% and 16% growth to reach Rs25bn
and Rs13bn respectively over the month.
Figure 145: Average daily turnover in Currency derivatives (Rsm)

Currency futures
EURINR 13,002 11,184 16.3 10,646 5,557 91.6 7,000 9,704
EURUSD 248 128 93.7 159 496 (67.9) 472 263
GBPINR 25,425 20,611 23.4 20,472 10,933 87.3 15,368 20,953
GBPUSD 359 204 75.9 242 471 (48.6) 514 423
JPYINR 4,265 4,275 (0.2) 3,920 2,663 47.2 3,109 3,982
USDINR 164,072 167,933 (2.3) 174,424 152,718 14.2 171,331 193,709
USDJPY 3 3 15.7 3 11 (75.3) 9 5
Currency options
EURINR 0.02 0.04 (37.5) 0.02 0.03 (30.4) 0.06 0.11
EURUSD 0.00 0.00 NA 0.00 0.00 NA 0.00 0.00
GBPINR 0.07 0.01 757.7 0.03 0.10 (69.7) 0.25 0.34
GBPUSD 0.01 0.00 NA 0.00 0.00 NA 0.01 0.02
JPYINR 0.00 0.00 NA 0.00 0.04 (99.5) 0.02 0.00
USDINR 501.98 517.72 (3.0) 543.50 452.91 20.0 548.49 623.61
USDJPY 0.00 0.00 NA 0.00 0.00 NA 0.00 0.00

Source: NSE. *premium turnover for options
Liquidity of Interest rate derivatives remains concentrated to merely one derivative:

In the Interest rate derivatives segment, 645GS2029 is the most traded instrument in
both futures and options segments with Rs7.3bn and Rs0.3m average daily turnover
respectively over the month.
Among others, 757GS2033, 579GS2030 and 795GS2032 gained momentum marginally

over the month in the futures segment, while there is no other product gained interest
over the month.
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Market Pulse
Figure 146: Average daily turnover in Interest rate futures (Rsm)

Product May-20 Apr-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Interest rate futures (Rsm)
579GS2030 52 0 14,158 20 0 NA 8,617 10
645GS2029 7,290 6,572 11 6,508 0 NA 8,617 9,376
726GS2029 24 31 (22) 36 2,855 (99) 7,903 778
795GS2032 51 0 NA 20 363 (95) 229 37
757GS2033 112 0 NA 61 0 NA 44 55
Interest rate options (Rsm)
645GS2029 0.3 0.9 (70) 0.7 NA NA 1.2 2.8
726GS2029 0.0 0.0 NA 0.0 NA NA 0.1 0.1

Source: NSE. *Data for only those contracts which were traded in the month of June have been reported in the above table.
94/123
Market Pulse
Turnover of top traded symbols over the month

Figure 147: Top 10 symbols based on total turnover of Cash market (Rs m)
Symbol Jun-20 May-20 %Change
BAJFINANCE 824,069 414,161 99.0
RELIANCE 655,602 682,382 (3.9)
HDFCBANK 474,109 343,595 38.0
AXISBANK 406,332 315,064 29.0
INDUSINDBK 396,987 190,811 108.1
ICICIBANK 354,966 335,903 5.7
SBIN 332,417 203,234 63.6
BHARTIARTL 271,142 299,800 (9.6)
HDFC 263,990 245,822 7.4
IDEA 225,958 53,434 322.9
Source: NSE
Figure 148: Top 10 symbols based on total turnover of Stock futures (Rs m)
RELIANCE 965,729 886,447 8.9
BAJFINANCE 748,609 418,522 78.9
BHARTIARTL 560,414 583,696 (4.0)
ICICIBANK 521,370 422,716 23.3
SBIN 508,765 327,244 55.5
HDFCBANK 506,116 392,569 28.9
AXISBANK 459,645 332,097 38.4
HDFC 341,911 274,437 24.6
KOTAKBANK 310,333 236,514 31.2
INFY 289,444 222,490 30.1
Source: NSE
Figure 149: Top 10 symbols based on total turnover of Stock options (Rs m)
RELIANCE 42,952 33,919 26.6
BAJFINANCE 25,318 14,382 76.0
SBIN 24,625 12,224 101.4
BHARTIARTL 15,619 13,525 15.5
ICICIBANK 15,515 12,708 22.1
AXISBANK 13,866 9,748 42.2
INDUSINDBK 11,714 4,616 153.8
HDFCBANK 10,389 6,756 53.8
TATAMOTORS 9,767 3,133 211.8
MARUTI 8,372 7,271 15.1
Source: NSE
95/123
Market Pulse
Client category-wise participation in total turnover

FIIs and corporates lost their share in the Cash market: Over the last six (fiscal) years,
merely 12% in FY21 till June end. Similar trend was seen for corporates who lost their
share from 10% to 5% over the same time period. These were offset by Others including
individual investors, HUFs, trusts, NRIs, etc. with a share of 53% in FY21 as compared
to only 37% in FY16, while the share of DIIs and proprietary traders remain stable over
the period. In FY21, proprietary traders contribute 23% to total turnover in the cash
market, and DIIs contributed 8% over the current fiscal till June end.
FIIs gained momentum in the Equity derivatives segment: There is a significant change
in composition of total turnover in equity derivatives across client categories. FIIs share
of total turnover in the segment jumped up from 16% in FY16 to 26% in FY21 till June
end, while prop
same time period. Corporates have also lost their share from 15% to merely 8% over the
period, which was primarily offset by Others with a rise in market share from 31% to 37%.
However,
Trend is somewhat similar for Index futures,

gradually declined in terms of total turnover from 31% in Fy16 to 26% in FY21 till June
end, followed by corporates whose share declined from 14% to 8% over the same period.
This overall fall in their shares has been offset by an increase in total trade by FIIs and
in FY16)
whereas FIIs share rose from 14% to 18% over the same period. However, the share of
DIIs remains marginal during this period, which can be attributed to the regulatory
restrictions on their trading activities in the derivatives segment.
DIIs contribution is marginally higher in the Stock futures, with 6% market share in
FY21 till June which is comparatively higher than Fy16 (3%). Among other categories,
Proprietary traders, Corporates and Others lost their share in the market, which were
mainly compensated by FIIs and DIIs. In FY21, Others traded 31% of total contracts in
stock futures while proprietary traders and FIIs contributed 23% and 32% of total
turnover. Remaining 9% traded by corporates in the segment.
DIIs investment remains negligible in Options throughout the period due to regulatory
restrictions on derivative activity. Among others, share of proprietary traders declined in
Index options from 53% in FY16 to merely 34% in FY21 which was partially offset by
Others whose share rose from 25% to 39% over the period. Among other clients, share of
in FY21 which was offset by proprietary traders and Others. Out of total contracts traded
in Index options, around 46% were traded by proprietary traders and 43% by Others in
FY21 till June end.
DIIs¬ excluding banks do not have much presence in the currency segment as well.
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 over this period,
and FIIs capture a significant share in Currency futures since FY19.
96/123
Market Pulse
Distributional pattern of Interest rate futures changed radically in FY21 till June end
as compared to the previous fiscal years. The share of proprietary traders excluding
banks declined from 52% in FY19 to 32% in FY21, which was mainly offset by banks,
Corporates and Others.
Figure 150: Share of client participation in Cash Figure 151: Share of client participation in Equity
market at NSE (%) derivatives at NSE (%)
Corporates DII FII PRO Others Corporates DII FII PRO Others
100% 100%
27 26 26
31 35
80% 37 41 80% 37
45 46 47
53
60% 60%
35
21 38 38 25
17 35 25
18
22 23
40% 40%
23
23 21
16 22 25
15 16 19 17 26
15
20% 12 20%
10 10 2 2 4 4
9 4
10 10 3
8 15 13 14
10 12 11 13 11 8
6 5 5
0% 0%
FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21
Figure 152: Share of client participation in Index Figure 153: Share of client participation in Index
futures at NSE (%) options* at NSE (%)
Corporates DII FII Others PRO Corporates DII FII Others PRO
100% 100%
29 30 26 27 26
31 33 34
80% 80% 38
44 44
53
60% 60%
41 41
39 40 41 47
37
39
36
40% 40% 32 33
25
14 16 14 17 18
20% 20%
18 15 21
1 1 1 2 2 11 15 14 20
14 14 14 13 1
13
8 11 10 9 11 9
0% 7
0%
97/123
Market Pulse
Figure 154: Share of client participation in Stock Figure 155: Share of client participation in Stock
Corporates DII FII Others PRO Corporates DII FII Others PRO
100% 100%
26 25 25 23 23
30
80% 80% 42 40 40 43 44 46
60% 32 31 60%
38 33
37
34
40% 40% 37 36
37 35
40
28 32 43
18 24
17 21
20% 20%
3 4 5 13 13 12
3 6 11
6 8
16 13 15 13 5
10 9 10 10 12 10 9
0% 6
0%
Figure 156: Share of client participation in Currency Figure 157: Share of client participation in Currency
Corporates FII Banks Corporates FII Banks
DII ex-banks PRO ex-banks Others DII ex-banks PRO ex-banks Others
100% 100%
10 12 13
15 15 15 16 18
20 23 25
27
80% 80%
60% 49 49 52 47 60%
43
40
80 76 75 64
62
40% 63
40%
14 12 10 8
16
17
20% 1 4 20%
15 16 17
3 2
2 2
19 18 1 2
2 2 3 3
12 10 10 8 1 2 13 2
0% 8 9 8 10 7
0%
FY16 FY17 FY18 FY19 FY20 FY21
FY16 FY17 FY18 FY19 FY20 FY21
98/123
Market Pulse
Figure 158: Share of client participation in Currency Figure 159: Share of client participation in Interest
derivatives at NSE (%) rate futures at NSE (%)
Corporates FII Banks Corporates FII Banks
DII ex-banks PRO ex-banks Others DII ex-banks PRO ex-banks Others
100% 100%
4 3 5
8 9 11
15 15 15 16
20
27
80% 80%
40 48 32
51 52
51
60% 49 49 52 47 60%
43
40 5
3
3
2
40% 40% 1 4
18 26
20
16 19
14 12 10 8 20
16 2
17 2 1
0 3
20% 1 4 20% 1
14 16 17
3 27 25
23 20 24
19 18 18
12 10 10 8
0% 0%
Source: NSE.
Note: DII: Domestic Institutional Investors, FII: Foreign Institutional Investors, PRO: Proprietary Traders, Others: includes individual investors, HUFs, trusts, NRIs, etc.
*We have considered premium turnover for options contracts.
Figure 160: Share of client participation in Cash market of NSE (%)**

Client
Jun-20 May-20 Change FY21TD FY20TD Change FY20 CY20TD
category
Cash market
Corporates 5.8 4.6 1.2 5.1 5.1 (0.0) 5.3 5.4
DII 7.0 8.0 (1.0) 7.6 9.7 (2.1) 10.2 9.1
FII 9.3 13.4 (4.1) 11.7 15.7 (4.0) 15.2 13.3
PRO 23.2 21.6 1.6 22.6 22.8 (0.2) 22.7 22.6
Others 54.7 52.3 2.4 53.0 46.7 6.3 46.5 49.6
Source: NSE. **DII Domestic Institutional Investors, FII Foreign Institutional Investors, PRO Proprietary Traders, Others includes individual investors, HUFs, trusts,
NRIs, etc.
99/123
Market Pulse
Figure 161: Share of client participation in Equity derivatives of NSE (%)**

Client
category
Index Futures
Corporates 7.9 7.8 0.1 8.2 14.0 (5.8) 12.5 10.0
DII 0.7 0.8 (0.1) 0.7 2.4 (1.6) 1.8 1.0
FII 17.0 18.9 (1.9) 18.3 18.4 (0.1) 18.2 18.7
PRO 26.2 25.6 0.6 25.7 25.4 0.3 26.6 26.1
Others 48.3 47.0 1.3 47.1 39.8 7.2 40.9 44.2
Stock Futures
Corporates 8.5 9.0 (0.5) 8.8 12.0 (3.2) 10.5 9.0
DII 5.0 6.0 (1.1) 5.5 5.3 0.2 5.9 5.8
FII 31.4 31.8 (0.5) 31.8 27.2 4.6 28.0 30.7
PRO 24.1 22.2 1.9 22.8 23.9 (1.1) 23.2 22.5
Others 31.1 31.0 0.1 31.1 31.6 (0.5) 32.3 32.0
Index Options
Corporates 6.5 7.4 (0.9) 7.2 9.7 (2.5) 8.7 7.7
DII 0.0 0.0 (0.0) 0.0 0.0 (0.0) 0.1 0.1
FII 20.9 19.0 1.9 19.5 21.1 (1.6) 21.1 19.9
PRO 34.0 34.7 (0.8) 33.9 32.9 1.0 32.7 33.1
Others 38.7 38.9 (0.2) 39.3 36.3 3.1 37.5 39.2
Stock Options
Corporates 6.4 5.7 0.7 6.2 10.8 (4.6) 8.7 6.9
DII 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
FII 4.9 5.5 (0.5) 5.0 10.0 (5.0) 7.7 5.6
PRO 47.8 45.3 2.5 46.0 40.9 5.1 43.8 45.7
Others 40.8 43.5 (2.7) 42.7 38.2 4.5 39.8 41.9
Equity Derivatives
Corporates 8.1 8.4 (0.3) 8.4 12.4 (4.0) 11.0 9.2
DII 3.1 3.8 (0.7) 3.4 4.3 (0.9) 4.4 3.7
FII 25.3 26.2 (1.0) 26.0 24.5 1.5 24.6 25.8
PRO 25.9 24.5 1.4 24.9 24.8 0.1 24.9 24.7
Others 37.6 37.0 0.6 37.3 34.1 3.2 35.2 36.6
NRIs, etc. We have considered premium turnover for option contracts.
100/123
Market Pulse
Figure 162: Share of client participation in Currency derivatives of NSE (%)**

Client
category
Currency Futures
Corporates 7.7 8.2 (0.5) 8.4 8.7 (0.3) 10.1 9.8
FII 15.7 17.2 (1.5) 16.9 16.2 0.7 15.6 16.2
Banks 7.9 6.8 1.1 7.6 11.8 (4.2) 10.4 8.6
DII ex-banks 0.2 0.2 (0.0) 0.2 0.2 (0.0) 0.2 0.1
PRO ex-banks 43.0 38.9 4.1 39.8 43.1 (3.3) 43.3 41.3
Others 25.6 28.7 (3.1) 27.1 20.0 7.2 20.4 24.0
Currency Options
Corporates 6.5 7.3 (0.8) 6.9 12.5 (5.6) 10.1 7.1
FII 2.2 1.9 0.3 2.2 2.2 0.1 2.9 3.2
Banks 2.1 2.5 (0.4) 2.7 2.0 0.7 2.2 2.6
DII ex-banks 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PRO ex-banks 62.4 62.9 (0.5) 63.0 62.5 0.6 61.7 63.2
Others 26.8 25.4 1.4 25.2 20.9 4.3 23.1 24.0
Currency Derivates
Corporates 7.7 8.2 (0.5) 8.4 8.7 (0.4) 10.1 9.8
FII 15.6 17.2 (1.5) 16.8 16.2 0.7 15.5 16.2
Banks 7.9 6.8 1.1 7.6 11.8 (4.2) 10.4 8.6
DII ex-banks 0.2 0.2 (0.0) 0.2 0.2 (0.0) 0.2 0.1
PRO ex-banks 43.1 39.0 4.1 39.9 43.1 (3.3) 43.4 41.3
Others 25.6 28.7 (3.1) 27.1 20.0 7.2 20.4 24.0
Source: NSE. **DII Domestic Institutional Investors, FII Foreign Institutional Investors, PRO Proprietary Taders, Others includes individual investors, HUFs, trusts,
Figure 163: Share of client participation in Interest rate futures of NSE (%)**
Client
May-20 Apr-20 Change FY21TD FY20TD Change FY20 CY20TD
category
Interest rate futures
Corporates 20.2 30.2 (10.0) 25.1 19.5 5.6 18.1 20.9
FII 0.8 0.3 0.5 0.7 1.3 (0.6) 1.2 0.9
Banks 30.3 21.9 8.4 25.7 19.8 5.9 19.7 21.0
DII ex-banks 6.3 3.0 3.3 4.6 5.1 (0.5) 4.3 3.2
PRO ex-banks 31.2 32.4 (1.2) 32.5 49.2 (16.7) 51.6 46.1
Others 11.3 12.3 (1.0) 11.5 5.1 6.4 5.1 7.8
Interest rate options
Corporates 67.0 34.9 32.1 41.8 NA NA 22.4 24.4
FII 0.0 0.0 0.0 0.0 NA NA 0.0 0.0
Banks 0.0 18.8 (18.8) 19.1 NA NA 3.4 4.1
DII ex-banks 0.0 0.0 0.0 0.0 NA NA 0.0 0.0
PRO ex-banks 26.3 39.8 (13.6) 32.9 NA NA 58.9 56.7
Others 6.8 6.5 0.3 6.3 NA NA 15.3 14.8
Interest rate derivatives
Corporates 20.2 30.2 (10.0) 25.1 19.5 5.6 18.1 20.9
FII 0.8 0.3 0.5 0.7 1.3 (0.6) 1.2 0.9
Banks 30.3 21.9 8.4 25.7 19.8 5.9 19.7 21.0
DII ex-banks 6.3 3.0 3.3 4.6 5.1 (0.5) 4.3 3.2
PRO ex-banks 31.2 32.4 (1.2) 32.5 49.2 (16.7) 51.6 46.1
Others 11.3 12.3 (1.0) 11.5 5.1 6.4 5.1 7.8
101/123
Market Pulse
Asset category-wise open interest (average daily volume)

Figure 164: Average daily volume of open interest in Equity derivatives (million contracts)
Equity Derivatives
Stock Futures 3,114 3,111 0.1 3,031 4,664 (35.0) 4,294 3,641
Stock Options 1,720 1,179 45.9 1,301 1,389 (6.3) 1,490 1,462
Equity Derivatives - Index Futures
Bank Nifty 1.7 1.5 10.8 1.5 2.0 (23.3) 1.7 1.4
Nifty 12.0 9.6 25.7 11.1 20.0 (44.6) 17.9 13.4
Nifty IT 0.0 0.0 (40.6) 0.0 0.0 (91.6) 0.0 0.0
Equity Derivatives - Index Options
Bank Nifty 16.1 12.6 27.7 12.9 14.5 (11.1) 14.7 13.9
Nifty 121.3 93.5 29.8 102.5 100.4 2.1 104.2 106.2
Nifty IT 0.0 - NA 0.0 0.0 (95.8) 0.0 0.0
Source: NSE
Figure 165: Average daily volume of open interest in Currency derivatives (no of contracts)
Category May-20 Apr-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Futures
EURINR 187,827 90,610 107.3 125,741 64,213 95.8 74,622 111,188
EURUSD 5,665 1,740 225.6 3,081 48,168 (93.6) 34,538 4,575
GBPINR 77,892 40,977 90.1 57,256 50,241 14.0 74,553 73,397
GBPUSD 4,623 1,718 169.1 2,643 4,946 (46.6) 4,877 3,128
JPYINR 34,328 36,991 (7.2) 36,059 43,005 (16.2) 49,206 40,839
USDINR 2,453,324 2,839,572 (13.6) 3,231,829 2,510,641 28.7 3,123,879 3,677,344
USDJPY 91 51 79.9 68 354 (80.8) 297 161
Options
EURINR 235 206 14.4 158 816 (80.7) 807 962
EURUSD 0 0 NA 0 0 NA 0 0
GBPINR 476 42 1038.9 197 989 (80.1) 1,770 2,629
GBPUSD 2 0 NA 1 0 NA 3 5
JPYINR 4 2 175.8 3 139 (98.2) 170 69
USDINR 2,735,961 2,406,997 13.7 2,495,711 2,459,706 1.5 2,932,818 2,949,668
Source: NSE
Figure 166: Average daily volume of open interest in Interest rate derivatives II (no of contracts)
Category May-20 Apr-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Interest rate futures
579GS2030 189 6 3072.6 75 0 NA NA 36
645GS2029 51,816 64,610 (19.8) 58,031 0 NA 67,979 82,806
726GS2029 2,626 3,738 (29.7) 3,166 41,046 (92.3) 89,711 19,274
795GS2032 8,500 8,500 0.0 8,500 27,094 (68.6) 24,646 10,763
757GS2033 8,500 8,500 0.0 8,500 - NA 4,525 6,602
Interest rate options
645GS2029 8,414 5,344 57.4 6,923 NA NA 6,093 17830
726GS2029 0 0 NA 0 NA NA 975 1476
Source: NSE
102/123
Market Pulse
Internet-based trading
Internet based trading jumped up significantly in Cash and Equity derivatives:
Internet based trading gained momentum in recent months, particularly since the
nationwide lockdown as investors and traders started utilising this platform to trade from
their home. Notably, daily turnover through internet-based trading rose by 25% in Cash
while average turnover of
Equity derivatives rose by 16% over the month to Rs 309.5bn daily.
The situation is quite different for Currency and Interest rate derivatives: After a
significant rise in May, Currency and interest rate derivatives segments has, however,
recorded a sharp fall in internet-based trading by 19% and 9% respectively over the
Figure 167: Average daily turnover of internet-based trading (Rs m)

Segment Jun-20 May-20 % Change FY21TD FY20TD % Change FY20 CY20TD
Cash Market 161,172 128,994 24.9 139,969 103,905 34.7 90,639 107,852
Equity Derivatives* 309,522 266,812 16.0 277,110 232,080 19.4 217,432 240,252
Index Futures 149,871 126,723 18.3 134,710 79,425 69.6 82,859 109,256
Stock Futures 133,264 118,625 12.3 119,607 140,829 (15.1) 121,620 112,378
Index Options 22,446 18,504 21.3 19,546 9,659 102.4 10,875 15,997
Stock Options 3,941 2,960 33.1 3,247 2,168 49.8 2,078 2,621
Currency Derivatives* 36,296 44,726 (18.8) 40,737 34,311 18.7 31,717 37,545
Currency Futures 36,186 44,620 (18.9) 40,628 34,214 18.7 31,610 37,428
Currency Options 111 105 5.3 109 97 13.1 108 117
Interest Rate Derivatives* 1,663 1,821 (8.7) 1,534 1,948 (21.2) 1,495 1,270
Interest Rate Futures 1,663 1,821 (8.7) 1,534 1,948 (21.3) 1,494 1,269
Interest Rate Options 0.1 0.3 (74.9) 0.3 0.0 NA 0.2 0.5
Source: NSE.
Note: Average trading volume is calculated as the average of gross traded value i.e., buy side turnover + sell side turnover.
*Premium turnover is considered in case of options contracts.
103/123
Market Pulse
Record statistics
NSE hits a record turnover in Stock options segment on June 5th:
premium turnover reached at its all-time high of Rs25bn on June 5th, 2020, while NSE hits
a record turnover in the cash market on May 29 th, 2020 to reach Rs835bn per day partly
due to a rise in uncertainty over the outbreak of Covid-19 and its plausible implications
on the economy. The rise in market uncertainty also resulted an overall spike in market
volatility since March, which may have partially caused a sharp rise in total trading across
other major segments at NSE, particularly in Index derivatives segment. Index options
recorded its highest ever premium turnover on March 19th, 2020 to reach at Rs146bn per
day.
Though other major segments have recorded a significant growth in their average
turnover, they did not cross their previous record levels. Notably, Index futures recorded
their highest turnover of Rs860bn on September 20th, 2019 after the Finance Minister
slashed the corporate tax rate from 30% to 22%.
Figure 168: Segment-wise record turnover till June 30th, 2020

Segment Turnover (Rsbn) Trading Date
Cash market 835 29-May-20
Index futures 860 20-Sep-19
Stock futures 1,954 25-Jan-18
Index options (premium) 146 19-Mar-20
Stock options (premium) 25 05-Jun-20

Source: NSE
104/123
Market Pulse
Spatial distribution of trading activities

Region-wise distribution of new investors registered
Despite of having a slow economic recovery amid a continuous rise in total number of
Covid-19 cases, total registration jumped up in June across all regions in the country. Over
the month, total registration rose by 37% to 186 thousand registrations in Western part
of the country compared to 136 thousand over the previous month. Among others, South
India and East India recorded 36% and 35% growth over the month, while North India
registered 27% growth. This, in turn, increased total registration by 33% to reach 564
thousand compared to 423 thousand over the previous month.
Share of total registration across regions remains somewhat similar over the two months.
Out
contributed around 31% and 33% respectively, followed by southern region with 27%
registration, while only 9% of total investors registered from East India.
Figure 169: Region-wise distribution of new investors registered

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
600 564
500
419
400
'000
300
174 186
200
154 146
140
96
100
37 50
0
East India North India South India West India Total
Source: NSE.
Note: East India is Mizoram, Odisha, West Bengal, Assam, Manipur, Arunachal Pradesh, Tripura, Nagaland, Meghalaya, Sikkim, Chhattisgarh; West India Is Maharashtra,
Gujarat, Madhya Pradesh, Daman & Diu, Goa, Dadra & Nagar Haveli; North India Is Bihar, Jharkhand, Uttar Pradesh, Uttarakhand, Haryana, Delhi, Punjab, Jammu & Kashmir,
Himachal Pradesh, Chandigarh And Rajasthan; South India Is Telengana, Kerala, Andhra Pradesh, Tamil Nadu, Karnataka, Pondicherry, Lakshadweep And Andaman &
Nicobar.
Data further shows, total registration remains concentrated in few districts. Over the
month of June, around 6.8% of all investors are from Delhi region, which is marginally
higher than Mumbai (~6.7%). Among others, 3.4% of all registration over the month
happened in Pune, followed by Bangalore and Surat with 2.7% and 1.9% of total
registration respectively. Besides, a significant number of investors are registered in
Ahmedabad, Hyderabad and Jaipur over the last month.
105/123
Market Pulse
Figure 170: Number of new investors registered in top 10 districts
Feb-20 Mar-20 Apr-20 May-20 Jun-20

50
45
40 38.5 37.6
35
'000
28.1 28.6
30
25
19.3
20
15.1
15
9.8 10.9 10.6
9.7 8.6
10 7.8 8 7.4 7.4 7.1
5.3 4.7 5.8
5 3.1
0
Delhi-NCR Mumbai Pune Bangalore Surat Ahmedabad Hyderabad Nashik K. V. Jaipur
(MH/TN/RG) Rangareddy
Source: NSE
106/123
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 36.1% of total turnover by retail investors and 39.8% of
30.0% of retail turnover and 28.9% of retail volume, followed by the Southern and Eastern
India.
Figure 171: Region-wise distribution of individual Figure 172: Region-wise distribution of individual
100% 100%
90%
80% 38.9 39.6 39.3 36.0 36.2 36.1 80% 39.3 39.8 39.8
41.7 41.6 43.9
70%
60% 60%
23.6 25.5 25.6 25.9 50%

23.7 24.0 22.6 22.6 22.6
22.0 21.9 20.4
40% 40%
30%
28.9 28.1 28.4 30.2 30.3 30.0 27.1 27.2 29.3 29.1 28.9
20% 20% 27.5
10%
8.6 8.7 8.3 8.4 8.0 8.0 9.2 9.2 8.2 8.8 8.6 8.7
0% 0%
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
East India North India South India West India East India North India South India West India
Source: NSE.
Besides, the distributional pattern of total turnover and trade volume across major
districts over the last five months has shown that top 10 districts contributed ~41.5% to
total retail turnover and 38.9% to Amongst them, Mumbai
and Delhi have contributed around 21.8% to total turnover over the month, which is
somewhat similar over the last three months, while Bangalore and Ahmedabad
contributed 4.3% and 3.5% respectively, followed by Pune (3.2%) over the month.
107/123
Market Pulse
Figure 173: Top 10 districts based on Cash turnover of individual investors
16 Feb-20 Mar-20 Apr-20 May-20 Jun-20
13.9
14
% of Cash turnover of individual investors
11.8
12
10.0
10 9.3
6
4.4 4.3 4.3
4 3.5
3.1 3.2
2.4 2.5
2.0
2 1.6 1.7 1.6 1.6 1.5 1.5 1.5
0
Mumbai Delhi - NCR Bangalore Ahmedabad Pune Hyderabad Kolkata Chennai Jaipur Surat
(MH/TN/RG)
Source: NSE.
ta.
Figure 174: Top 10 districts based on individual investors traded
14.0 13.2
Feb-20 Mar-20 Apr-20 May-20 Jun-20
% of traded volume of individual investors in cash
12.0 11.5
10.0
8.5 8.4
8.0
market
6.0
4.8
3.8 3.6 3.6 3.8
4.0 3.5
1.9 2.0 2.1

1.7 1.7 1.6 1.5 1.5 1.5
2.0 1.3
-
Mumbai Delhi - NCR Ahmedabad Pune Bangalore Surat Hyderabad Kolkata Jaipur Chennai
(MH/TN/RG)
Source: NSE
ta
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Market Pulse
Investment through mutual funds in India

Average asset under management (AAUM) of mutual funds (MFs) recovered partially:
After a significant fall during Mar-
mutual funds started recovering over the last two months to partially offset the overall
the period partly due to weak macroeconomic outlook. The overall recovery in AAUM
tallied with market performance and partial recovery of global indices after prompt and
substantial policy responses from monetary regulators and governments across
countries.
In India, RBI and government have announced several policy actions to provide adequate
and cheap liquidity in the system. These may have given a temporary breather to the
market and helped it to recover at a faster pace. However, the growth scenario remains
gloomy due to slow recovery of the real economy post a nationwide lockdown for more
than 60 days as total number of Covid-19 cases and fatalities continue to rise
exponentially across the country.
Figure 175: Monthly trend of total MF schemes and average AUM

AAUM for the month (Rstrn) - RHS No. of Schemes
2,000 30
1,950 25
1,900 20
1,850 15
1,800 10
1,750 5
1,700 0
Source: AMFI. *AAUM-Average Asset under Management.
Net investment of MFs declined amid weak Data further

reveals that there were several ups and downs in net investments of mutual funds over
utlook weakened
globally due to COVID-19 pandemic. Later, net investment of MFs continued to rise over
the next two months to reach Rs708bn over the month of May as securities market
recovered partially across major economies, before declining again in June to merely
Rs73bn net investment as coronavirus cases continue to rise over the month and growth
scenario deteriorate further in India.
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Figure 176: 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.
Fund mobilisation through new schemes remains low in June: Monthly trend of total
investment remains quite volatile through new MF schemes as well. Amid an
unprecedented coronavirus pandemic, rise in market uncertainty and an impending
global recession, only five new schemes were launched in April and funds worth Rs2bn
got mobilised through these new schemes. This has further declined in May, with only one
scheme getting launched, mobilising just Rs0.2bn. In June, three new schemes were
launched that mobilised merely Rs1.95bn over the month as economic scenario remains
gloomy over the coming months.
Figure 177: 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
Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Source: AMFI.
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Policy developments
India
Policy measures by the SEBI during the month
June 4th, 2020 Relaxation in compliance with requirements pertaining to AIFs and VCFs.
In view of the COVID-19 situation, SEBI, vide circular dated March 30th, 2020, had extended the
due date for regulatory filings for AIFs and VCFs for the period ending March 31st, 2020 and April
30th, 2020 by two months, over and above the timelines according to the SEBI AIF Regulations.
The above due date has been extended further. AIFs and VCFs shall now submit the regulatory
filings for the periods March, April, May and June on or before August 7th, 2020.
June 5th, 2020 Framework for Regulatory Sandbox
SEBI vide circular dated May 20th, 2019 had stipulated a framework for an industry-wide
Innovation Sandbox, whereby FinTech start-ups and entities not regulated by SEBI were
permitted to use the Innovation Sandbox for offline testing of their proposed solution. SEBI has
now decided to introduce a framework for Regulatory Sandbox, whereby entities regulated by
SEBI shall be granted certain facilities and flexibilities to experiment with the Fintech solutions
in live environment and on limited set of real customers for a limited time frame, with necessary
safeguards for investor protection and risk mitigation.
June 5th, 2020 Participation of mutual funds in commodity derivatives markets in India.
As per the provision in SEBI circular dated May 21 st, 2019, mutual funds are permitted to
participate in Exchange-traded commodity derivative (ETCDs) in India, except in commodity
vide SEBI circular no.
SEBI/HO/CDMRD/DMP/CIR/P/2017/84 dated July 25, 2017. As per the modified provision, no
mutual fund schemes shall invest in physical goods except in gold through Gold ETFs. However,
mutual fund schemes participating in ETCDs may hold the underlying goods in case of physical
settlement of contracts. In such case mutual funds shall dispose of such goods from the books
of the scheme, at the earliest, not exceeding the prescribed timelines for various commodities in
the modified provision.
June 8th, 2020 Relaxation from compliance with certain provisions of the SEBI (Issue and Listing of Debt
Securities) Regulations, 2008 and SEBI (Non-Convertible Redeemable Preference Shares)
Regulations, 2013 and certain SEBI Circulars due to the COVID -19 virus pandemic.
SEBI has decided to extend the relaxation provided in the circular for issuers who intend/propose
to list their Non-Convertible Debentures (NCDs) /Non-Convertible Redeemable Preference Share
(NCRPS) /Commercial Papers (CPs) for disclosure of financial results for another one month.
June 9th, 2020 Relaxations from certain provisions of the SEBI (Issue of Capital and Disclosure
Requirements) Regulations, 2018 in respect of Further Public Offer.
In continuation to temporary relaxation in eligibility conditions related to Fast Track Rights Issue
announced on April 21st, 2020 in the wake of the COVID-19 outbreak, SEBI has decided to
provide similar relaxations in the eligibility conditions related to Fast Track Further Public Offer
(FPO).
June 12th, 2020 Investment by the sponsor or asset management company in the scheme.
As per the SEBI Mutual Funds Regulations, the sponsor or asset management company is
required to invest not less than one percent of the amount which would be raised in the new fund
offer or fifty lakh rupees, whichever is less in such option of the scheme, as may be specified by
the Board. SEBI has decided that the aforementioned investment shall be made in growth option
of the scheme. For schemes where growth option is not available the investment shall be made
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Market Pulse
in the dividend reinvestment option of the scheme. Further schemes where growth option as
well as dividend reinvestment option are not available the investment shall be made in the
dividend option of the scheme.
June 19th, 2020 Relaxation in timelines for compliance with regulatory requirements
Due to the COVID-19 pandemic SEBI had earlier provided relaxations in timelines for compliance
with various regulatory requirements by the trading members, clearing members and depository
participants. SEBI has decided to further extend the timelines for compliance with the regulatory
requirements with respect to client funding reporting, Artificial Intelligence and Machine
Learning applications reporting, compliance certificate for margin trading in CM segment, risk-
based supervision, networth certificate for all member for half-year ended March 2020 etc. till
July 31st, 2020.
June 22nd, 2020 Conducting meeting of unitholders of InvITs and REITs through video-conferencing (VC)
through other audio-visual means (OAVM).
SEBI Infrastructure Investment Trusts Regulations and SEBI Real Estate Investment Trusts
Regulations provide for holding of annual meeting of all unitholders not less than once a year.
Meeting of unitholders are also required for matters which require approval of the unitholders.
SEBI has clarified that InvITs/REITs can conduct meeting of unitholders through VC or OVAM.
For meeting other than annual meeting of unitholders, meeting through VC and OVAM shall be
available up to September 30th, 2020. Detailed procedures of VC and OVAM are specified in the
circular
June 22nd, 2020 Transaction in Corporate Bonds/Commercial Papers through RFQ platform
With a view to enhance the transparency and disclosures pertaining to debt schemes and
investments by mutual funds, SEBI has issued certain guidelines based on the recommendations
by the Mutual Fund Advisory Committee. Some of the key guidelines include:
1. Mutual Funds shall undertake on a monthly basis at least 10% of their average secondary
market trades by value (excluding Inter Scheme Transfer trades) in the Corporate Bonds
in the immediately preceding three months by placing/seeking quotes through one-to-
many mode on the Request for Quote (RFQ) platform of stock exchanges.
2. All transactions in Corporate Bonds and Commercial Papers wherein Mutual Fund is on
both sides of the trade shall be executed through RFQ platform of stock exchanges in
one-to-one mode.
3. Any transaction entered by mutual fund in Corporate Bonds in one-to-many mode and
gets executed with another mutual fund shall also be counted for the aforesaid 10%
requirement.
4. In partial modification to SEBI circular dated September 13 th, 2020, such disclosure
shall be done on fortnightly basis within five days of every fortnight for debt schemes.
June 23rd, 2020 Temporary relaxation in processing of documents pertaining to FPIs due to COVID-19.
In view of the COVID-19 pandemic, SEBI vide circular dated March 30 th, 2020 had prescribed
temporary relaxation in processing documents pertaining to FPIs. SEBI has decided to further
extend the timelines for compliance with the regulatory requirements. All other conditions in the
March 30th circular shall remain unchanged.
June 24th, 2020 Further extension of time for submission of financial results for the quarter/half
year/financial year ending March 31st, 2020 due to the continuing impact of the CoVID-19
pandemic.
SEBI vide circular dated March 19th, 2020 had extended the deadline for submission of financial
results under LODR requirements for the quarter and the year ending31stMarch 2020 till June
30th, 2020 due to the COVID-19 pandemic. Taking into representations from listed companies,
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Chartered Accountant firms and industry bodies, SEBI has decided to extend the above timeline
further till July 31st, 2020.
June 24th, 2020 Guidelines for Order-to-trade ratio (OTR) for Algorithmic Trading.
On the basis of the requests received from stock exchanges, the following modifications shall be
made to the existing OTR framework under algorithmic trading mechanism:
1. Stock exchanges may be permitted to introduce additional slabs up to OTR of 2000 (from
existing OTR of 500), and for OTR more than 2000. The slabs can be introduced with
deterrent incremental penalty decided jointly by stock exchanges.
2. On the third instance of the OTR being 2000 or more in last 30 days (rolling basis), the
concerned trading member shall not be permitted to place any orders for the first 15
minutes on the next trading day as a cooling-off action.
June 25th, 2020 Further extension of timeline for submission of Annual Secretarial Compliance report by
listed entities due to the continuing impact of the CoVID-19 pandemic.
SEBI vide circular dated March 19th, 2020 had extended the timeline for submission of the Annual
Secretarial Compliance report for listed entities for the FY2019-20 from May31st, 2020 to June
30th, 2020. Taking into considerations the representations received from the Institute of
Company Secretaries of India (ICSI), industry bodies and listed entities, the above deadline has
been extended till July 31st, 2020.
June 26th, 2020 Relaxation of time-gap between two Board/Audit Committee meetings of listed entities
owing to COVID-19 pandemic.
SEBI vide circular dated March 19th, 2020 had relaxed the maximum stipulated time gap of 120
days between two meetings of the Board and Audit Committees of the listed entities
held/proposed to be held between the period December 1st, 2019 and June 30th, 2020. The
above relaxation is further extended till July 31st, 2020.
June 29th, 2020 Guidelines for Portfolio Managers Extension of implementation timeline
SEBI vide circular dated March 30 , 2020 had extended the timeline for applicability of February
th
13th circular Guidelines for Portfolio Managers effective from July 1st, 2020. The timeline
stands extended. The circular will now come in to force from October 1 st, 2020.
June 30th, 2020 Relaxation in timelines for compliance with regulatory requirements for depository
participants, Registrar to an issue and share transfer agents.
SEBI, in its previous circulars had extended the timelines for various regulatory requirements by
depository participants, Registrar to an issue and share transfer agents. The timeline is further
extended till July 31st, 2020. All other conditions specified in the previous circulars shall
continue to remain applicable.
June 30th, 2020 Collection of stamp duty on issue, transfer and sale of units of AIFs.
The Government of India vide Gazette notification dated January 8th, 2020 had notified the
registered under the Securities
and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations,
Stamp Act, 1899 and the Rules made thereunder, only in case of instruments of transaction
otherwise than through a recognised stock exchange or depository. In this regard, the above
entities shall comply with the applicable provisions of the Indian Stamp Act, 1899 and the Rules
made thereunder regarding collection of stamp duty on sale, transfer and issue of units of AIFs
w.e.f. July 1st, 2020. AIFs, where the RTAs have not been appointed thus far, shall appoint the
RTA, at the earliest but not later than July 15th, 2020 to enable collection of applicable stamp
duty. Till such time the RTAs are appointed, the AIFs shall keep the applicable stamp duty in a
designated bank account. The AIFs shall transfer the said amount to the RTA upon appointment
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Market Pulse
for onward remittance to States/ Union Territories. With regard to transactions (issue, transfer
and sale) of units of AIFs in demat mode through recognized Stock Exchange or Depository, the
respective Stock Exchange/authorized Clearing Corporation or a Depository is empowered
to collect stamp duty as per the amended Indian Stamp Act.
Global
ESMA renews its decision requiring net short position holders to report positions of
0.1% and above of the issued share capital (ESMA. June 11 th, 2020)16
The European Securities and Markets Authority (ESMA) has renewed its decision to
temporarily require the holders of net short positions in shares traded in a European Union
(EU) regulated market to notify the relevant national competent authority (NCA) if the
position exceeds 0.1% of the issued share capital. According to ESMA, this measure will
maintain the ability of NCAs to deal with any threats to market integrity, orderly
functioning of markets and financial stability at an early stage, allowing them and ESMA
to timely address such threats in case of signs of market stress. The measure will
applicable for a period of three months from June 17 th, 2020.
Financial Regulators modify Volcker Rule (SEC, CFTC, FDIC, OCC, Federal Reserve
Board. June 25th, 2020)17
on banking entities investing in or sponsoring hedge funds or private equity funds known
as covered funds. Five federal regulatory agencies today finalized a rule modifying the
private equity funds known as covered funds. The modifications are in three areas: a)
Streamlining the covered funds portion of rule, b) Addressing the extraterritorial
treatment of certain foreign funds, and c) Permitting banking entities to offer financial
services and engage in other activities that do not raise concerns that the Volcker rule
was intended to address. The rule will be applicable from October 1 st, 2020.
The Climate Financial Risk Forum (CFRF) publishes its guide to help the financial
industry address climate-related financial risks (FCA. June 29th, 2020)18
The CFRF was jointly established in March 2019 by the Prudential Regulation Authority
(PRA) and the Financial Conduct Authority (FCA), to build capacity and share best practice
risks from climate change. The objective of the guide is to help firms understand the risks
that arise from climate change, and to provide support on how to integrate these risks
into their strategy and decision-making processes. The key areas covered under the guide
are: a) Risk Management, b) Scenario analysis, c) Disclosures, d) Innovation.
16
https://www.esma.europa.eu/sites/default/files/library/esma71-99-1342_decision_ss_reporting_renewal_statement.pdf
17
https://www.sec.gov/news/press-release/2020-143
18
https://www.fca.org.uk/news/press-releases/climate-financial-risk-forum-publishes-guide-financial-industry-address-climate-related
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Market Pulse
Comparison of trading activities across major exchanges globally

The study has analysed the trading pattern in the securities market in different segments across exchanges globally.
-
96 exchanges; where 55 from the EMEA region, 25 from Asia-Pacific and the rest from the Americas region. The analysis
has h
its trading activity in the cash/spot markets and different derivatives markets Equity, Index derivatives and Currency
segments. Key takeaways of the analysis are:
 domestic market capitalisation

(DMC): NSE became the 11 th
largest exchange in the world based on market
capitalisation
albeit significantly higher than the previous month as securities market recovered
globally. Among other stock exchanges in India Indian, BSE held 14th position with
The NYSE remains the top exchange globally with
US$21trn market capitalisation, followed by Nasdaq-US and Japan Stock
Exchange. Shanghai, Euronext, Hong Kong and Euronext are others leading
exchanges worldwide.
Recently, Saudi Stock Exchange (Tadawul) became one of the largest exchanges
with US$2.2trn DMC as of May vs. US$537bn in the previous year) post the
listing of the oil company Saudi Aramco valued at US$1.7trn as the w biggest
IPO.
Many top exchanges recorded a sharp fall in DMC on an YoY basis amid ongoing
global slowdown owing to the Covid-19 outbreak. The NYSE recorded a 8% YoY fall
in DMC in
contrast, Nasdaq US, Shanghai, Shenzhen, Hong Kong and Japan stock exchanges
registered a significant growth in their market cap.
 In the Cash market, NSE held second position globally in terms of number of
trades: NSE retained its second position globally in terms of number of
trades in the Cash market, while Shanghai Stock Exchange (SSE) slipped further to
sixth position over the month. However, Shenzhen Stock Exchange (SZSE) still
maintains its top position globally with 430mn trades over the month, even as it
recorded 18% fall in the number of trades on MoM basis. All major exchanges
recorded a sharp decline in their trading volumes. Data also reveals the volatility of
total trades has increased significantly across all exchanges particularly over the
last year particularly for large exchanges.
 NSE retained its top position in equity index options with ~77% of trade share
in May :
increase from 70% in Apr 7% in May
the market over the last two years in terms of total number of contracts traded in
the segment. Other exchanges contributes a minor portion in the market globally
over the last two years, while Korea Stock Exchange and CBOE Global hold second
and third positions with merely 6% and 5% market share respectively, followed by
Deutsche Boerse AG.
 NSE became fifth largest exchange globally 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
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Market Pulse
months in 2018, even as its marke

vs. 61% market in the previous month. Among others, CME group holds second
position with 21% market share, followed by Deutsche Boerse (8%) and Japan
stock exchange (6 improved to 3% in May vs. 2% in April.
 NSE remains the third largest exchange in the Stock futures segment:
Distibution of total trade volume is quite diverse across exchnages for Stock options
vs. Stock futures. Korea Stock Exchange topped in the stock futures segment over
the last two years in terms of total number of contracts traded, followed by Borsa
Istanbul Exchange, NSE, B3 - Brasil Bolsa Balcão and Moscow Stock Excnange. NSE
became third largest exchnage globally in terms of total number of contracts trades
in stock futures where 22.6m contracts were traded over the month of May
19.5m contracts traded in Apr
 In Currency segment, NSE is the largest exchange globally in the options

market: NSE ranked first in the Currency options with 63% contracts traded in May;
however, the exchange has lost its top position in Futures to B3 - Brasil Bolsa
Balcão over the month. Among other exchanges in India, BSE also contributed
significant share in the global market. It retained second position in Currency
options and fourth position in Currency futures with 26% and 9% market shares
respectively over the month of May.
 NSE holds fifth position in stock options: In stock options, Nasdaq-US holds top
position in May 4m contracts traded, followed by CBOE Global where
98m contracts were treaded over the month. B3 - Brasil Bolsa Balcão maintained
its third position with 75m contracts traded over the month, while NSE ranked fifth
with 17m contract traded over the month.
Figure 178: Domestic market cap of top ranked Figure 179: Number of trades in Cash market of top
exchanges* ranked exchanges*
(mn)
NYSE 800
SZSE NSE KRX
Nasdaq - US
CBOE Global Nasdaq - US SSE
JPX 700
SSE
HKEX 600
Euronext
SZSE 500
May'20
LSE Group
May'19
Tadawul 400
TMX Group May'18
NSE 300
DBAG
SIX Swiss
200
BSE
0 5,000 10,000 15,000 20,000 25,000 100

(US$bn) May-18 Nov-18 May-19 Nov-19 May-20
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Market Pulse
Figure 180: Number of contracts traded in Stock Figure 181: Number of contracts traded in Stock options
futures of top-ranked exchanges* of top-ranked exchanges*
(mn) KRX BIST Nasdaq - US CBOE Global
(mn)
NSE B3 - Brasil Bolsa Balcão B3 - Brasil Bolsa Balcão MIAX
160 NSE DBAG
MOEX
120 HKEX
140
120
90
100
80
60
60
40 30
20
0 0
May-18 Nov-18 May-19 Nov-19 May-20 May-18 Nov-18 May-19 Nov-19 May-20
Figure 182: Number of trades in Index futures of top Figure 183: Number of trades in Index options of top
ranked exchanges* ranked exchanges*
(mn) B3 - Brasil Bolsa Balcão CME Group (mn) NSE KRX CBOE Global
DBAG JPX DBAG TFE CME Group
NSE SGX
450 525
400
450
350
375
300
300
250
200 225
150
150
100
75
50
0 0
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Market Pulse
Figure 184: Number of trades in Currency futures of top Figure 185: Number of trades in Currency options of top
ranked exchanges* ranked exchanges*
B3 - Brasil Bolsa Balcão NSE (mn) NSE BSE MOEX
(mn)
MOEX BSE TASE JSE
CME Group 80
100
80
60
60
40
40
20
20
0 0
Source: WFE monthly statistics.

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

Reuters Prior
Date Country Indicator Name Period Unit
Poll Period
3 Aug 2020 China (Mainland) Caixin Mfg PMI Final Jul 51.2 Index (diffusion)
3 Aug 2020 India IHS Markit Mfg PMI Jul 47.2 Index (diffusion)
3 Aug 2020 Russia Markit Mfg PMI Jul 49.4 Index (diffusion)
3 Aug 2020 Euro Zone Markit Mfg Final PMI Jul 47.4 Index (diffusion)
3 Aug 2020 United Kingdom Markit/CIPS Mfg PMI Final Jul 50.1 Index (diffusion)
3 Aug 2020 United States Markit Mfg PMI Final Jul 49.8 Index (diffusion)
3 Aug 2020 United States ISM Manufacturing PMI Jun 52.6 Index
4 Aug 2020 Japan CPI, Overall Tokyo Jul 0.3 %
4 Aug 2020 United States Factory Orders MM Jun 8.0 %
4 Aug 2020 Brazil Industrial Output YY Jun -21.9 %
5 Aug 2020 Japan Services PMI Jul 45.0 Index (diffusion)
5 Aug 2020 China (Mainland) Caixin Services PMI Jul 58.4 Index (diffusion)
5 Aug 2020 India IHS Markit Svcs PMI Jul 33.7 Index (diffusion)
5 Aug 2020 Euro Zone Markit Serv Final PMI Jul 48.3 Index (diffusion)
5 Aug 2020 United States Markit Svcs PMI Final Jul 47.9 Index (diffusion)
6 Aug 2020 Brazil Selic Interest Rate 5 Aug 2.25 %
6 Aug 2020 United Kingdom BoE Bank Rate Jul 0.1 0.1 %
7 Aug 2020 United States Non-Farm Payrolls Jul 4,800k Person
7 Aug 2020 United States Unemployment Rate Jul 11.1 %
7 Aug 2020 India Repo Rate 7 Aug 4.0 %
7 Aug 2020 India Reverse Repo Rate 7 Aug 3.35 %
11 Aug 2020 United Kingdom ILP Unemployment Rate Jun 3.9 %
11 Aug 2020 India Industrial Output Jun -18.3 %
11 Aug 2020 Russia GDP YY Quarterly Prelim Q2 1.6 %
12 Aug 2020 United Kingdom GDP Prelim YY Q2 -1.7 %
12 Aug 2020 United States CPI MM, SA Jul 0.6 %
14 Aug 2020 China (Mainland) Industrial Output YY Jul 4.8 %
14 Aug 2020 India WPI Inflation YY Jul -1.8 %
14 Aug 2020 Euro Zone GDP Flash Estimate YY Q2 -3.3 %
14 Aug 2020 United States Industrial Production MM Jul 5.4 %
17 Aug 2020 India Trade Deficit Govt.-USD Jul -0.79B USD
17 Aug 2020 India Imports Jul 21.11B USD
17 Aug 2020 India Exports Jul 21.91B USD
17 Aug 2020 Japan GDP QQ Annualised Q2 -2.2 %
17 Aug 2020 Russia Industrial Output Jul -9.4 %
19 Aug 2020 United Kingdom CPI YY Jul 0.6 %
19 Aug 2020 Euro Zone HICP Final YY Jul 0.3 %
19 Aug 2020 South Africa CPI YY Jul %
20 Aug 2020 Russia Unemployment Rate Jul 6.2 %
21 Aug 2020 Japan CPI, Overall Nationwide Jul 0.1 %
25 Aug 2020 United States Consumer Confidence Aug Index
27 Aug 2020 United States GDP 2 Estimate
nd
Q2 %
28 Aug 2020 Euro Zone Consumer Confid. Final Aug Net balance
31 Aug 2020 India GDP Quarterly YY Q2 3.1 %
31 Aug 2020 India Infrastructure Output YY Jul %
Source: Refinitiv Datastream
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Market Pulse
Annual Macro Snapshot

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
National income
GDP (Current) (Rs trn) 76.3 87.4 99.4 112.3 124.7 137.7 153.9 171.0 189.7 203.4
GDP (Current) Growth (%) 19.9 14.4 13.8 13.0 11.0 10.5 11.8 11.1 11.0 7.2
GDP (Constant) Growth (%) 8.5 5.2 5.5 6.4 7.4 8.0 8.3 7.0 6.1 4.2
GVA (Constant) Growth (%) 8.0 5.2 5.4 6.1 7.2 8.0 8.0 6.6 6.0 3.9
Agriculture growth (%) 8.8 6.4 1.5 5.6 -0.2 0.6 6.8 5.9 2.4 4.0
Industry growth (%) 7.9 3.6 3.3 3.8 7.0 9.6 7.7 6.3 4.9 0.9
Services growth (%) 7.8 5.9 8.3 7.7 9.8 9.4 8.5 6.9 7.7 5.5
Per Capita GDP (Curr) (Rs) 64,372 71,609 80,518 89,796 98,405 1,07,341 1,18,489 1,30,124 1,42,963 1,51,677
Prices
CPI Inflation (%) 10.1 9.3 5.9 4.9 4.5 3.6 3.4 4.8
CPI Rural (%) 10.7 9.6 6.1 5.5 5.0 3.6 3.0 4.2
CPI Urban (%) 9.5 9.1 5.4 4.1 4.0 3.6 3.9 5.4
WPI Inflation (%) 9.5 8.9 6.9 5.2 1.2 -3.7 1.7 3.0 4.3 1.7
Primary articles (%) 17.9 9.8 11.4 9.9 2.2 -0.4 3.5 1.3 2.8 6.8
Fuel & power (%) 12.3 13.9 7.1 7.1 -6.1 -19.7 -0.2 8.1 11.6 -1.8
Manuf. prods (%) 5.7 7.3 5.3 3.0 2.5 -1.8 1.4 2.8 3.6 0.3
Money, banking & interest rates
Money supply (M3) growth (%) 16.1 13.5 13.6 13.4 10.9 10.1 10.1 9.2 10.5 8.9
Aggregate deposit growth (%) 15.9 13.5 14.2 14.1 10.7 9.3 15.3 6.2 10.0 7.9
Bank credit growth (%) 21.5 17.0 14.1 13.9 9.0 10.9 8.2 10.0 13.3 6.1
Non-food credit growth (%) 21.3 16.8 14.0 14.2 9.3 10.9 9.0 10.2 13.4 6.1
Cash Reserve Ratio (%, eop) 6.0 4.8 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
Bank Rate (%, eop) 6.00 9.50 8.50 9.00 8.50 7.75 6.75 6.25 6.50 4.65
Public Finance*
GOI rev. receipts growth (%) 37.6 -4.7 17.0 15.4 8.5 8.5 15.0 4.4 8.2 19.1
Tax receipts growth (%) 27.0 12.1 16.5 9.9 9.3 16.9 17.9 11.8 8.4 4.0
GOI Expenditure growth (%) 16.9 8.9 8.1 10.6 6.7 7.6 10.3 8.4 8.1 16.6
Subsidies growth (%) 22.7 25.7 18.0 -1.0 1.4 2.3 -11.1 -4.4 -0.7 18.2
Interest expense growth (%) 9.8 16.7 14.7 19.5 7.5 9.7 8.8 10.0 10.2 7.3
External transactions
Exports growth (%) 40.7 21.9 -1.8 4.9 -1.5 -15.5 5.1 10.1 8.8 -5.2
POL exports growth (%) 47.8 34.9 8.7 4.3 -10.7 -46.1 3.4 18.8 24.5 -11.8
Non-POL exports (%) 39.3 19.3 -4.2 5.1 0.8 -8.6 5.4 9.0 6.6 -4.1
Imports growth (%) 28.5 32.4 0.2 -8.4 -0.3 -15.0 1.0 21.2 10.5 -8.0
POL exports growth (%) 21.9 46.4 5.7 0.7 -16.4 -40.1 5.3 25.0 29.9 -7.5
Non-POL exports growth (%) 31.3 26.8 -2.3 -13.0 9.1 -3.8 -0.2 20.1 4.5 -8.1
Net FDI (US$bn) 11.3 21.9 19.8 21.6 31.3 36.0 35.6 30.3 30.7 43.0
Net FII (US$bn) 30.3 17.2 26.9 4.8 42.2 -4.1 7.6 22.1 -0.6 -1.4
Trade Balance RBI (US$bn) -189.7 -195.7 -147.6 -144.9 -130.1 -112.4 -160.0 -180.3 -157.5
Current Acc. Balance (US$bn) -78.2 -87.8 -32.4 -26.7 -22.1 -15.2 -48.7 -57.2 -24.6
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
Source: CMIE Economic Outlook, NSE
120/123
Market Pulse
Our reports on the economy and markets in 2020 thus far
Sr. No. Date Report

1 24-Jul-20 Q4FY20 Corporate Performance Review
2 15-Jul-20 Macro Review: India monthly trade
3 13-Jul-20 Macro Review: IIP and Inflation
4 01-Jul-20 Macro Review: Q4FY20 Balance of Payments
5 26-Jun-20 Market Pulse June 2020: A monthly review of Indian economy and markets
6 16-Jun-20 Macro Review: India monthly trade
7 15-Jun-20 Macro Review: IIP and Inflation

8 04-Jun-20 Impact of COVID-19 on Agriculture: NSE webinar key takeaways
9 01-Jun-20 Macro Review: Q4FY20 GDP
10 31-May-20 Market Pulse May 2020: A monthly review of Indian economy and markets
11 29-May-20 India Ownership Tracker March 2020
12 22-May-20 Macro: Review: RBI Monetary Policy

13 17-May-20 Macro Review: India COVID-19 Stimulus Package (Fifth Tranche)
14 16-May-20 Macro Review: India COVID-19 Stimulus Package (Fourth Tranche)
15 15-May-20 Macro Review: India COVID-19 Stimulus Package (Third Tranche)
16 14-May-20 Macro Review: India COVID-19 Stimulus Package (Second Tranche)

17 13-May-20 Macro Review: India COVID-19 Stimulus Package (First Tranche)
18 13-May-20 Macro Review: IIP and Inflation
19 30-Apr-20 Market Pulse April 2020: A monthly review of Indian economy and markets
20 27-Apr-20 COVID-19: India Macro and Market Outlook
21 17-Apr-20 RBI response to COVID-19

22 16-Apr-20 Macro Review: India monthly trade
23 14-Apr-20 Macro Review: IIP and Inflation
24 14-Apr-20 Key takeaways from RBI Monetary Policy Report

25 27-Mar-20 India policy response to COVID-19
26 20-Mar-20 Market Pulse March 2020: A monthly review of Indian economy and markets
27 16-Mar-20 Macro Review: Q3FY20 Balance of Payments
28 11-Mar-20 A deep dive into Investment in India

29 09-Mar-20 India Ownership Tracker December 2019
30 02-Mar-20 Macro Review: Q3FY20 GDP
31 29-Feb-20 Quarterly Briefing: Takeover and Corporate Governance in India
32 20-Feb-20 Market Pulse February 2020: A monthly review of Indian economy and markets
121/123
Market Pulse
33 06-Feb-20 Macro Review: RBI Monetary Policy

34 01-Feb-20 Decoding the Union Budget FY2020-21
35 20-Jan-20 Market Pulse January 2020: A monthly review of Indian economy and markets
36 08-Jan-20 Macro Review: FY20 GDP Advance Estimates
37 01-Jan-20 Macro Review: Q2FY20 Balance of Payments
122/123
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
Marketing
Rajesh Jaiswal rjaiswal@nse.co.in +91-22-26598380
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July 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 .............................................................................................................................. 103

Dr. Tirthankar Patnaik

Story of the month

EBITDA growth in Communication Services (55.3%/58.2% YoY) and Utilities

 PAT growth plunged on weak consumption and commodity prices: Aggregate

Nifty 50 Q4FY20 results

Top-line contracted sharply on weak consumption demand and lower commodity

Figure 1: Net sales growth of Nifty 50 companies in Q4FY20

Sector Mar-19 Dec-19 Mar-20 Mar-19 Dec-19 Mar-20

Source: CMIE Prowess, Refinitiv Datastream, NSE

Figure 2: Sector-wise net sales growth of Nifty 50 companies in Q4FY20

-30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20%

Figure 3: Net sales YoY growth trend of Nifty 50 companies

Figure 4: EBITDA growth of Nifty 50 companies in Q4FY20

Figure 5: EBITDA margin of Nifty 50 companies in Q4FY20

Figure 8: EBITDA growth trend of Nifty 50 companies

Figure 9: EBITDA margin trend of Nifty 50 companies

Figure 10: PAT growth of Nifty 50 companies in Q4FY20

Sector Mar-19 Dec-19 Mar-20 Mar-19 Dec-19 Mar-20

Figure 11: PAT margin of Nifty 50 companies in Q4FY20

Source: CMIE Prowess, Refinitiv Datastream, NSE.

Nifty 50 ex-Fin (51.3%) Nifty 50 ex-Fin 4.4%

Nifty 50 (42.1%) Nifty 50 5.3%

Nifty 50 ex-energy ex-Fin (26.6%) Nifty 50 ex-energy ex-Fin 7.8%

Figure 14: PAT growth trend of Nifty 50 companies

Figure 15: PAT margin trend of Nifty 50 companies

Nifty 500 Q4FY20 results

(33%) (28%) (23%) (18%) (13%) (8%) (3%) 2% 7% 12%

Figure 19: EBITDA growth of Nifty 500 companies in Q4FY20

Figure 20: EBITDA margin of Nifty 500 companies in Q4FY20

Energy (69.7%) Energy 4.6%

(75%) (55%) (35%) (15%) 5% 25% 0.0% 15.0% 30.0% 45.0%

Source: CMIE Prowess, Refinitiv Datastream, NSE.

Figure 23: EBITDA growth trend of Nifty 500 companies

Figure 24: EBITDA margin trend of Nifty 500 companies

Figure 25: PAT growth of Nifty 500 companies in Q4Y20

Figure 26: PAT margin of Nifty 500 companies in Q4FY20

Figure 29: PAT growth trend of Nifty 500 companies

Figure 30: PAT margin trend of Nifty 500 companies

Earnings revision analysis

-10% -40% -36.2%

to the path-breaking GST reform in 2017 delayed a broad-based recovery.

Figure 33: Yearly trend of NIFTY 50 Consensus EPS estimates

Source: Refinitiv Datastream, NSE.

demand disruptions caused by mass-scale COVID-19-induced lockdowns worldwide. In

Figure 34: Nifty 50 Earnings Revision Indicator (since January 2019)

Source: Refinitiv Datastream, NSE

Figure 35: Nifty 50 Earnings Revision Indicator (10-year trend)

Source: Refinitiv Datastream, NSE.

Source: Refinitiv Datastream, NSE.

Source: Refinitiv Datastream, NSE.

Chart of the month

Sector contribution to index movement has typically been directly proportional to

Figure 40: Sector-wise break- -

Source: CMIE Prowess, Refinitiv Datastream, NSE

Figure 41: Sector-wise break- -

Source: CMIE Prowess, Refinitiv Datastream, NSE

Source: CMIE Prowess, Refintiiv Datastream, NSE

IT, 12.07 IT, 8.18