Market Outlook - Consolidation amid stock specific action...

The Digital Communications Commission, highest decision-making body of the Department of Telecommunications (DoT), has approved the nearly Rs. 12,200 crore production linked incentive (PLI) scheme guidelines for equipment manufacturing. As per media reports, DoT will seek a final approval from the Union Cabinet in coming weeks, followed by invitation of applications from companies, which could start from January 2021.

The government has informed the Supreme Court that if it were to consider waiving interest on all loans and advances to all categories of borrowers for the six-month moratorium period announced by the RBI in view of Covid19 pandemic, then the amount foregone would be more than Rs. 6 lakh crore. Also, if banks were to bear this burden then it could wipe out a substantial part of their net worth. Hence, this was not considered.

As per FADA, aggregate automobile retail sales domestically in the 42-day festive period for 2020 was at 25.2 lakh unit, down ~5% YoY. It comprises tractors and PV, which were in the positive territory growing healthily by ~49% & ~14%, respectively, YoY while 2- W, CV, 3-W witnessed a decline to the tune of ~6%, 22%, 60%, respectively.

Equity mutual funds witnessed highest ever outflows (fifth consecutive month of outflow) at Rs. 12917 crore in November 2020. Total outflow in the last five months is at Rs. 23000 crore. November was the first month that saw a decline in gross inflows (Rs. 14196 crore in November vs. Rs. 17514 crore in October) since March while gross outflows increased significantly (Rs. 27000 crore in November vs. Rs. 20000 crore in October). Last month also saw the first sharp monthly decline in SIP inflows at Rs. 7302 crore compared to Rs. 7800 crore in October 2020. All-time high SIP number was Rs. 8641 crore in March 2020.

Riding on the back of stamp duty cuts and the festive season, the residential sector in Mumbai has recorded the highest-ever registrations in November over the last nine years. A total of 9,301 units were registered in the metropolis last month. This strong growth of 17% MoM in November 2020 comes after a robust 42% MoM growth during October 2020 and massive 112% MoM growth during September 2020.

Bank credit grew 5.82% to Rs. 104.34 lakh crore while deposits rose 10.89% to Rs. 143.71 lakh crore in the fortnight ended November 20, RBI data showed. In the previous fortnight ended November 6, advances grew 5.67% and deposits by 10.63%

As per AIOCD data, domestic pharma market growth has reduced to 1% in November (after growing 9.6% in October) due to 6.9% volume de-growth while price growth came in at 4.7% and new introductions grew 3.2%. Cardiac segment grew 8.7% (vs. 19.5% in October) whereas anti-diabetic grew 1.9% (vs. 9.7% in October). Vitamins segment also slowed down to growth of 6.6% vs. 22.6% in October. Anti-infectives remained flattish and registered 0.2% growth vs. 6.6% in October. Respiratory segment de-grew 6.9% vs. 6.6% de-growth in October. Some notable company wise growth rates were: Glenmark 14.5%, Ajanta 13.2%, Cipla 12.6%. On MAT basis, pharma market grew 3% to Rs. 144305 crore in November 2020.

As per media sources, the Maharashtra government has enabled ~1500 liquor shops to reopen after they were forced to close some years ago after a 2016 Supreme Court ruling that disallowed sale of alcohol within 500 metre of highways.

According to media sources, white goods manufacturers are mulling taking a price hike by up to ~20% to offset rising input prices.

Developments on the 5G spectrum auction are expected to gain pace as the Department of Telecommunications (DoT) will soon announce 5G spectrum bands vital for rolling out 5G services. We note that earlier DoT had indicated at conducting spectrum auctions in January-March but was unclear whether airwaves for the 5G wireless service will be sold immediately.

RBI may allow SFBs to lend to smaller micro finance institutions with loan assets below Rs. 500 crore as per media sources. Earlier, it had turned down a similar proposal but is now considering the same so that funding requirement in the sector is me.

Brent Crude prices was higher at US$ 50.3/barrel as compared to previous week's closing price of US$ 48.9/barrel. Gold prices ended higher at $ 1845/ounce as compared to previous week's closing price of $ 1836/ounce. Bond yields ended higher at 5.91% as compared to previous week's closing price of 5.89%.

International Markets:

US Markets: The US markets ended flat as investors continued to hope for further stimulus amid rising coronavirus cases and deteriorating US-China relations. 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 0.9 million for the week ended Dec 05, 2020 vs 0.7 million claims in the prior week. As per report released by the Labor department, the US consumer price index rose by 0.2% in November as compared to unchanged status in October and matched economist estimates.

European Markets: The European markets remained flat to positive on optimism surrounding the coronavirus vaccine. Germany factory orders grew 2.9% in October vs 1.1% rise in the September month, while the economist forecast was a rise of 1.5%.

Source : Equity Bulls

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