Go India Advisors Weekly Newsletter Market Masala… The flavors that influenced the market this week Week 16/CY20: 11th -17th April 1 Headlines this week Reopening economies, positive new drug trials, more stimulus Go India Advisors Newsletter All hardest hit countries plan reopening of economies, USA, Germany, and most EU countries, have taken steps to partially open the economies. India has also announced partial relaxation of lockdown from 20th April. While social distancing norms and lockdown of hotspots will continue in distant future, but market is seeing light at the end of the tunnel. Gilead’s experimental anti-viral drug remdesivir in initial trails yield positive results. It is reported that the drug was given to high risk, critical Covid 19 patients and most recovered with 4-5days. While it is early days, but market seems to be clinging to every sign of optimism. Our own Dr Reddy is already seems to be working on generic version of “remdesivir”. World is moving fast here. Countries hit with Covid 19 have lined up fiscal (amounting to between 1-20% of GDP) and monetary stimulus (whatever it takes) to support the economy. RBI on Friday announced round 2.0 of monetary stimulus and reiterated it's whatever it takes stance buoying the market. Market is keenly expecting 2nd round of fiscal stimulus in India, the number doing the rounds in excess 5% of GDP. 18-04-2020 2 And GlobalMarkets pull out of bear market Returns % Name One Week One Month One Year YTD (11/04/2020-17/04/2020) (18/03/2020-17/04/2020) (18/04/2019-17/04/2020) (01/01/2020- 17/04/2020) Hang Seng 0.33 12.30 -18.63 -13.51 Dow 30 2.21 20.69 -8.72 -15.05 NASDAQ 6.09 20.97 8.15 -3.59 S&P 500 3.04 19.31 -1.05 -11.03 KOSPI 2.89 31.34 -13.61 -12.88 FTSE 100 -0.95 12.33 -22.43 -23.27 Nikkei 225 2.05 20.20 -10.37 -15.89 Nifty 50 1.70 12.14 -21.15 -23.85 S&P BSE SENSEX 1.38 11.67 -19.29 -23.43 18-04-2020 3 Revival of Infra – key theme this week th Indian Markets for Week Ending 17 April 2020 Go India Advisors Newsletter 18-04-2020 For more information: Click on the image. 4 V – shaped economic recovery expected Go India Advisors Newsletter • As opposed to say the financial crisis of 2009, the current downturn wasn’t caused by something fundamentally wrong with the financial system or the overall economy, but by the measures necessary to contain a public health crisis. • The IMF revised its GDP growth forecast for the global economy from 3.3 percent to -3.0 percent for this year but expects a return to growth in 2021. That’s assuming “that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound.” • However, “the risks for even more severe outcomes are substantial,” the IMF notes. “Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health.” • What’s arguably the biggest question in terms of long-term economic effects of the ongoing pandemic is how well debt- ridden countries such as Italy, Spain and the United States for that matter can stomach the hundreds of billions in additional debt necessary to safeguard acutely affected sectors and people during the lockdown period. 18-04-2020 5 Macros this week Go India Advisors Market looking for signs beyond GDP downgrades Newsletter o "China's auto component demand back to pre- Covid19 levels." said Mr Laksh Vaaman Sehgal, Vice Chairman, Motherson Group. This corroborates the earlier news about sharp jump in car sales in Wuhan, the epicentre of Coronavirus. Clearly a shift towards personal vehicles is starting to happen. o It's not just car, China is seeing spurt in demand for cosmetics, apparel, outdoor gear, and domestic travel apart from daily essentials. o Hermes post re-opening it's flagship store in Gaungzhou saw a record breaking single day sale of US$2.6mn. 18-04-2020 6 Voices that matter Getting a bit more confident Go India Advisors Newsletter “Markets past the point of “We could have seen the bottom….” “To soon to call an all clear maximum panic”.. If the disease curve in the developed world for markets….” We will start to see impact on continues to decline [and] at the same time To us there does not appear to corporate earnings; there is still we see the curve from governmental support be a gilded cornucopia of some blue to come...We are yet for monetary policy and fiscal policy shining bargains. hit peak pessimism. worldwide increases, we could have seen the bottom. Keith Skeoch, CEO Larry Fink, Co founder and Paul Singer, Co founder & Standard Life Aberdeen Chief – Blackrock C0-CEO: Elliott Mgmt 18-04-2020 7 What Market Said after RBI Stimulus 2.0 Go India Advisors Newsletter The market should consider this RBI has provided supplementary favorably at this will ease liquidity measures to address financial and credit classifications market liquidity, NPA recognition and issues: Rajosik Banerjee, Partner operational concerns and Head - Financial Risk Sahil Kapoor – Chief Market Management, KPMG in India Strategist, Edelweiss Broking NBFCs are clear beneficiaries of Of course this provides much these measures. For investors in needed liquidity and positive Banks the provision of higher message for NBFC especially liquidity and relaxation in and a much elaborated provisioning norms are welcome stimulus package is awaited Dhiraj Relli - MD & CEO, HDFC Abhishek Goenka- Founder & Securities CEO, IFA Global Tech Check – Pullback has steam left Go India Advisors Newsletter NIFTY 50 1. Short covering led pullback has gathered pace. 9600-10000 levels possible. 2. Risk on trade is on driven by ample liquidity globally. 3. Investors trying to overlook the near term economic impact as they expect "V" shaped recovery. 4. However world has changed, and recovery seems to be happening too soon. 18-04-2020 9 FIIs sell off– abating Go India Advisors FII Flows in Indian Equities over the Years (INR Cr) Newsletter 1,33,047 1,29,319 1,12,538 97,054 1,00,150 52,615 18,356 18,783 (3,417) (34,163) (49,866) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note : all above years are CY and not FY Weekly FII Flows in Indian Equities in CY20 (INR Cr) 13,147 8,164 5,119 4,985 512 2,307 (162) (2,744) (6,152) (5,388) (9,137) (9,675) (13,112) (19,039) (21,442) Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 This Week Note : Week 1 starts from January 6th , 2020 18-04-2020 10 FIIs sell off – same trend in Debt Markets Go India Advisors FII Flows in Indian Debt Market over the Years (INR Cr) Newsletter 1,59,882 1,47,825 46,478 40,770 46,921 36,164 24,058 (51,171) (44,297) (46,525) (79,317) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note : all above years are CY and not FY Weekly FII Flows in Indian Debt Market in CY20 (INR Cr) 8,035 6,059 919 (904) (1,764) (1,392) (4,090) (4,490) (4,483) (5,904) (5,845) (4,498) (9,669) (16,498) (32,143) Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 This Week Note : Week 1 starts from January 6th , 2020 18-04-2020 11 Others 12 Sovereign Utilities Go India Advisors India Go Newsletter Transportation Textiles, Apparels & Accessories Telecommunications Equipment Telecom Services Software & Services Retailing Realty Real Estate Investment Pharmaceuticals & Biotechnology Oil & Gas Metals & Mining Media Insurance Household & Personal Products Net Investment (March 16-31) Hotels, Restaurants & Tourism Healthcare Services Healthcare Equipment & Supplies Hardware Technology &… General Industrials Forest Materials Food, Beverages & Tobacco Net Investment (March 01-15) Food & Drugs Retailing Diversified Consumer Services Diversified Consumer Durables Construction Materials Commercial Services & Supplies wise FPI / FII Investment wise FPIMarch in FII INR Cr) / ( Investment - Coal Chemicals & Petrochemicals Capital Goods 2020 Total Financial Services - 04 - Automobiles & Auto Components 18 Every Insurance sector sold except FIIs equity sell off March'20 in 0 Fortnightly Sector -5,000 -20,000 -15,000 -10,000 FIIs – sold through FY20 (except new IPOs) Go India Advisors Newsletter Sector-wise FPI / FII Investment in FY20 ( INR Cr) 27,514 6,627 3,037 3,605 1,900 320 1,504 1,293 23 1,607 -221 -44 -2,325 -1,396 -2,503 -950 -1,558 -4,093 -4,748 -4,017 -5,050 -7,730 -9,770 -11,162 -14,055 -21,238 Metals & Mining Metals Automobiles & Auto TotalFinancialServices Capital Goods Chemicals Petrochemicals & Coal Commercial Services Supplies & Construction Materials Consumer Durables Food, Beverages & Tobacco Healthcare Equipment & Healthcare Services Hotels, Restaurants Tourism & HouseholdPersonal &Products Insurance Media Oil & Gas Pharmaceuticals & Realty Retailing Software & Services Telecom Services Telecommunications Equipment Textiles, Apparels & Accessories Transportation Utilities Biotechnology Components Supplies 18-04-2020 13 DIIs continue to be positive Go India Advisors DII Net Flows in Equities (INR Cr) Newsletter 1,09,646 90,835 65,872 72,414 37,125 42,229 27,814 (21,354) (30,329) (56,263) (73,833) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note : all above years are CY and not FY.