FIIs/FPIs have bought Indian equity shares worth Rs. 18 billion in February 2020 and sold shares worth Rs. 495 billion in March 2020 (till 20th March).
The Nifty Index futures witnessed fall in open interest by 7% for the March series and 164% for the April series. Implied volatility (IV) rose for call option and for put option in the last week. Rise in IV for call option and for put option shows unsteady support for Nifty at present levels.
Emerging market assets have been hammered, with currencies plunging to fresh record lows, bonds plunging and stocks down nearly 10% last week. Several factors have contributed – the strong dollar, a darkening economic outlook, tumbling oil prices as well as rising borrowing cost.
Industrial production in the US increased by 0.6% from a month earlier in February 2020, recovering from a revised 0.5% drop in the January and beating market consensus of a 0.4% growth.
The US current account deficit narrowed by USD 15.6 billion to USD 109.8 billion in the fourth quarter of 2019, compared to market expectations of USD 109 billion
The ECB launched a new Euro 750 billion asset purchase programme after holding an emergency call on Wednesday, to counter the serious risks posed by the outbreak and escalating diffusion of the Covid-19. The bank will be buying government debt and private securities until the end of the year.
The Eurozone trade surplus widened to Euro 1.3 billion in January 2020 from Euro 0.6 billion in the same month of the previous year, but below market expectations of Euro 3.9 billion.
The Eurozone current account surplus stood at EUR 8.7 billion in January 2020, unchanged from the previous year.
Japan’s consumer price inflation unexpectedly fell to 0.4% (Y-o-Y) in February 2020 from 0.7% in the previous month, below market consensus of 0.8%.
The People’s Bank of China (PBoC) held its benchmark interest rates steady on 20th March 2020 defying market forecasts that pointed to a reduction in borrowing costs amid widespread disruptions to businesses and activity from the Covid-19 crisis.
The Bank of England lowered the key interest rate to 0.1% at a special policy-meeting on 19th March 2020. It follows a 50bps cut last week, bringing borrowing costs to a fresh record low.
The number of Americans filling for unemployment benefits increased by 70,000 to 281,000 in the week ended 14th March 2020 from the previous week’s unrevised level of 211,000 and well above market expectations of 220,000. This was the highest level for initial claims since 2nd September 2017 when it was 299,000.
Stocks of crude oil in the US increased by 1.954 million barrels in the week ended 13th March 2020, following a 7.664 million gain in the previous week and compared with market expectations of a 3.256 million gain, according to EIA Petroleum Status Report.
Wall Street sold off on Friday, as fiscal stimulus uncertainty and a rapidly spreading virus weighed on sentiment and stocks suffered their worst week since 2008. During the week, Dow Jones tumbled by 17%, Nasdaq declined by 13% and S&P 500 fell by 8%.
European stock markets closed in green on Friday, recovering from the biggest decline on record, after the EU responded to the coronavirus pandemic with a EUR 37 billion stimulus rescue package and relaxed European Union’s budget rules. Also, Germany pledged unlimited cash to businesses hurt by the virus. During the week, FTSE plummeted by 17% and DAX tumbled by 20%.
Oil prices reversed early gains to fall more than 20% on Friday, as markets remain highly volatile on persistent worries about the spread of COVID-19 and its impact on global fuel consumption. During the week, Brent Crude Oil declined by 21%.
S&P BSE Sensex & Nifty declined by 12.30% & 12.15% respectively during last week.
SEBI had come up with new rules in order reduce the speculation and volatility in Indian equity markets through limiting short positions in index derivatives of any entity, including foreign portfolio investors (FPIs), proprietary traders, mutual funds and clients (retail and high net worth individuals) not more than their stock holdings value. The regulator has also increased margins on both derivatives and cash. These new rules will come in force after March series expiry and would be applicable for only April 2020 series.
Sectoral Indices Trends:
The sectoral indices closed on a negative note during last week. The S&P BSE Bankex, Oil & Gas, Auto, IT and PSU had declined by -19.47%, -5.84%, -12.84%, -7.17% and -8.72% respectively.
ICICI Bank witnessed rise in turnover in Stock Derivatives
ICICI Bank witnessed in open interest, share price of ICICI declined by 16% during last week SBI also witnessed rise in open interest, the share price of SBI declined by 10% during last week. Last week, SBI announced to pick up to 49% at not less than Rs 10 per share in YES Bank. To hold at least 26% stake in YES Bank for at least three years. RBI has authorised 24 billion shares of YES Bank for face value of Rs 2 each, which brings the authorized capital to 48 billion. SBI would be infusing Rs. 24.5 billion at Rs 10 per share for 49% stake.
Prior to last week, SBI gained momentum after the government had created a telecom fund in order to save Vodafone Idea from bankruptcy. SBI management reported 41% (Y-o-Y) rise in net profit as the asset quality showed good improvement. Gross bad loan declined to 6.9% from 7.53% a year ago. Net Interest income increased by 22% (Y-o-Y). Net NPAs stood at 2.65% compared with 3.95% during last year.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown a rise in the open interest across Stock Options, Index Futures, Index Options, and Index Option on a week on week basis. Stock Futures witnessed fall in open interest during last week.
Indian rupee appreciated by 2.099% against USD, USD/INR pair closed at Rs. 75.39 in the last week. INR crossed Rs. 75 per US dollar for the first time on 19th March 2020 as demand for the world’s reserve currency continued to rise amid concerns about the negative impact of the Covid-19 on the economy. Click here to read our analysis on “Why USD shortage is causing huge currency market volatility”.