New lockdowns

Weekly update — 22 September 2020

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Government debt is now INR 100 trillion.

Several European countries are witnessing a second-surge in virus spread — they are now considering new lockdown measures. On Monday, global markets were down ~1–2%, over fears of possible lockdowns — the market is pricing a fall in business activity, a jump in stimulus requirement, and a long(er) road to recovery.

Even the NIFTY was down 2.21% on Monday.

The Monday sell-off also negated the NIFTY Midcap’s last week run-up (up 3%). But, given that the uncertainty is now priced-in, we may not see significant down-moves further. Also, the Fed announced that it would keep rates low at least until 2023 — on expected lines.

Another week of job cuts

Dell and Citigroup announced more cuts to their workforce this week — adding to this, several European banks are considering cuts as well

India lost ~6.6 mn white-collar jobs (engineers, analysts, physicians, teachers, accountants and other professionals) between May and August — however, the Refinitiv Ipsos Employment Confidence index was up 1.4% in September thus far

Individuals between the age of 35 and 45 are considering retiring later in view of a drop in savings, according to a survey by BankBazaar

Consumer sentiment moved up (a bit)

The Refinitiv Ipsos Primary Consumer Sentiment Index was up 1.1% in September — continuing from last week, there is a modest pickup in sentiment

ICRA expects a 40–60% drop in real estate sales across inventory — certain categories of real estate are witnessing a sales increase, but the broad industry is likely to suffer

No changes in business outlook

Total tax collections are down (including advanced tax collections for the current quarter) 22.5% compared to last year

40% of CEOs see social unrest as a key concern, according to a Mint-Bain survey of 105 professionals

The government reported a debt of INR 101 trillion (as of June), marking a jump of INR 6 trillion since March — however, this is still ~44% of GDP compared to over 100% for the US

MSMEs are calling for an interest-waiver on loans under moratorium — if passed, this could be a major negative for banks

Allocation changes

This week, we may allocate during down-moves across global markets. Apart from this, no changes to broad allocations.

 

 

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