Finsight (25thMay to 29th May 2020)

Nifty and Sensex corrected by 1.1% and 1.4% respectively for the week.

Weekly Capsule

– MPC comes out bearing gifts

RBI governor on Friday announced a 40 BPS cut in the repo rate and a 65 BPS cut in the reverse repo rate; this has resulted in an effective 115 BPS rate-cut since the start of nation-wide lockdown which currently is in the 3rd extension. The RBI also announced a further extension on moratorium given to loans of 3 months, taking the tally to 6 months. There has been a hike to the group exposure limit to banks from 25% to 30%, in an aid to crippling businesses.

– Moderna pharma’s data shows vaccine might be coming sooner than the street expectation.

Moderna pharma, a US-based clinical stage biotechnology company published its interim phase-I data for the vaccine candidate against COVID-19. The data includes blood samples of adults between the age 18-55 with a rigorous 43-day screening, the study showed a similar level of antibody generation in these adults as those seen in the people who has recovered from COVID19.

– US tightens the screw against China.

The United States resumed their trade war with China, this time taking solid steps and not just restricting to words. The move included blacklisting of 33 Chinese manufacturing companies which are source of majority of the government revenue from foreign lands being used as a military budget for the country. The move comes in mainly against the companies involved in data mining by the use of AI and facial recognition.

Nifty at glance

Mutual Fund News:

Aditya Birla SL AMC Suspends fresh inflows in 2 of its debt funds: Aditya Birla Sun Life Mutual Fund has temporarily suspended fresh subscriptions and switch-in applications in Aditya Birla Sun Life Medium Term Plan and Aditya Birla Sun Life Credit Risk Fund. The move comes in to as a precautionary measure to safeguard the probable gains which existing investors will receive in the coming months, mainly from written-off papers of IL&FS which will be repaid partially in the coming months.

Outlook:

The markets have factored in the merits and demerits of fiscal and monetary stimulus announced by government and the RBI. The focus will be more upon the reopening of economy in India and rest of the world. Higher capacity utilisation and normalcy in general public behaviour will add comfort to the market. The tightening of geopolitical tensions between the USA and China would also be among the key developments to watch out along with spread of Covid-19.

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