Markets last week
While the NIFTY was flat last week, reports of a Russian vaccine moved Gold down by 5.8%.
Apart from this, our foreign exchange reserves were up again (to record highs) last week — with fewer imports, our reserves are now 3.4 times what they were in March. Bigger reserves will keep our exchange rates stable for a while.
Prolonged uncertainty around jobs
According to CMIE, nearly 5 million salaried jobs were lost in July, after two months of gains — overall, 18.9 million salaried jobs were lost since April
Last week, several banks including Nomura, SBI and Societe Generale pointed to an uneven economic recovery with unplanned lockdowns and higher infection rates — a quick jobs recovery seems less likely
Hiring sentiment is still 15% down compared to last year, according to LinkedIn — an improvement from 50% down, in April
Small improvements in consumer sentiment
~44% consumers think that their income will be lower in the next six months, compared to pre-crisis levels — this compares against ~57% of all consumers in May, according to BCG
In Bangalore, ~50% of home buyers are planning to reduce their budget preferences by 10–30%, according to Magicbricks — they also reported a pickup in searches, from April lows
Demand for cars and bikes could plunge by 20% in FY21, according to Fitch
Bad loan concerns continue
Despite efforts of a RBI loan recast, 2–4% of all loans could become NPAs, according to Jefferies — however, they don’t expect any system-wide crisis as banks have made provisions in expectation
Allocation changes
No changes to allocations this week.
Many launches last week, from multi-asset funds to RBI bonds — we will share a note on these soon.
