Broader market outperformance to extend.. - Market Outlook - ICICI Securities

As per media sources, steady progress is being made on the Rs. 1 trillion Delhi-Mumbai Expressway project (1,261 km), with work having started on a 497 km stretch, likely to commence soon on another 162 km that has been awarded and a length of 569 km being under the bidding process. It is likely to be ready by 2023-24. The route would reduce the distance between the two cities by over 150 km and cut travel time to 13 hours from 24 hours now.

The Food Ministry has allocated 2.1 million tonnes for the domestic sugar sale quota, which is 50000 tonnes higher than July 2019 & 0.25 million tonnes higher than June 2020. UP based sugar mills have been allocated relatively higher quota given production & inventory levels for UP millers are higher than other states.

Output of eight core industries fell 23.4% in May 2020 (37% decline in April 2020) on account of Covid-19 related lockdown. Except for fertiliser production, which grew 7.5% YoY in May 2020, all other sectors - coal (14.0%), crude oil (7.1%), natural gas (16.8%), refinery products (21.3%), steel (48.4%), cement (22.2%) and electricity (15.6%) recorded a decline in production.

As per RBI data, gross bank credit decelerated to 7% YoY to Rs. 91.08 lakh crore in May 2020 led by slower loan growth to medium and large industries while micro and small segment loan growth was healthy. Retail credit contracted 2.9% to Rs. 27.78 lakh crore while housing loans declined 0.7% to Rs. 13.29 lakh crore. On account of lockdown, overall credit shrunk 1.7% in May 2020 against March 2020 levels.

According to media sources, the Government of India has begun clearing Chinese shipments that were stuck for the last 10 days at ports. The government assured no physical check if bills of entry were filed till June 30. However, clearances will continue for imports from US and South Korean companies even after June 30. We believe this would bring some relief to contract manufacturers, which are running short of inventories of components thereby creating hurdles in the manufacturing process.

Brent Crude prices closed higher at US$ 42.5/barrel as compared to previous week's closing price of US$ 40.9/barrel. Gold prices ended higher at $ 1786/ounce as compare to previous week's closing price of $ 1782/ounce. Bond yields ended lower at 5.84% as against previous week's closing price of 5.90%.

International Markets:

US Markets: The US markets ended higher amid renewed optimism surrounding the coronavirus vaccine and improving June payrolls. The number of US citizens filing new claims for unemployment benefits continued to remain near the record highs. Initial claims for state unemployment benefits came at a seasonally adjusted 1.4 million for the week ended June 27, 2020 vs 1.5 million cases in the prior week. However, the June jobs data came above expectations, as the labour department reported a 4.8 million jump in the June payrolls vs an estimate of 3 million. Also, the unemployment rate fell to 11.1% vs 12.4% estimate.

European Markets: The European markets ended higher as hopes for a global recovery from Covid-19 grows. As per Eurostat, the Eurozone unemployment has hit 7.4% in May vs economists estimate of 7.7%, indicating that some measures of the Government to protect jobs has worked.

Source : Equity Bulls

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