And you thought the glut of liquidity was doing the magic in stock markets, which in no way tell you the world has been going through an once-in-a-hundred years crisis! A McKinsey partner offers a more logical explanation as to how equity markets have managed to stay so detached from the economic distress. Industries that have borne the biggest brunt of this crisis and seen highest job losses actually are not material to the performance of the S&P500 index. US has lost 4 million jobs in hotels and restaurant sector, which makes up a mere 1.2% of the S&P by market value. Retail, another hard-hit segment, accounts for 6.2%. IT, the S&P's biggest sector with 23% weightage, has seen minimal job loss and is least impacted! A similar dynamics is playing out elsewhere too.
MARKET CUES: Where do we stand >>>  | Nifty futures on Singapore Exchange traded 45 points lower at 7 am (IST) signalling a likely weak start ahead for Dalal Street. |
| On Monday, Nifty50 saw profit booking at the 200-day simple moving average hurdle, as it cut substantial intraday gains to end half-a-per cent higher. The index formed a bearish candle on the daily chart, as the bulls failed to hold the momentum at higher levels. |
| Asian stocks slipped on Tuesday, following their US peers amid fresh Sino-American tensions. Shares in Tokyo, Sydney and Seoul saw modest declines. |
| The S&P 500 and Nasdaq ended lower on Monday, pulled down by Amazon, Microsoft and other recent big-name leaders of Wall Street's recent rally. The Dow rose 0.04% to end at 26,085.8 points, while the S&P500 lost 0.94% to 3,155. The Nasdaq hit another record before finishing in the red at 10,390, down 2.13%. |
| The rupee settled on a flat note at 75.19 against the US dollar on Monday amid high volatility in the domestic equity market. |
| The dollar edged slightly higher as investors looked to US corporate earnings. The yen was little changed as was the offshore yuan. The euro rose half a per cent, maintaining its uptrend since late last month. |
| Oil prices slipped about 1% on Monday after global coronavirus cases rose by a record daily amount, fanning fears of renewed government lockdowns. Brent futures fell 52 cents, or 1.2%, to $42.72 a barrel, while WTI crude lost 45 cents, or 1.1%, to $40.10. |
| Gold prices jumped to Rs 49,050 per 10 gm, while silver climbed to Rs 52,210 per kg. On MCX, August gold futures climbed 0.58 per cent to Rs 49,148 while silver September futures rose to Rs 53,048 a kg. In global markets, gold prices firmed above the key $1,800 an ounce mark, supported by uncertainty over the impact of surging coronavirus cases and a subdued dollar. |
| LOOK WHO'S |  |
RIL spike makes Ambani world's 8th richest... The RIL stock took 40 years to reach Rs 6 lakh crore in market capitalisation on November 1, 2017, but added the next Rs 6 lakh crore in less than four years. Not transformed into a consumer company from a materials and energy producer, the stock on Monday crossed the Rs 12 lakh crore mark in market-cap, which more than double that of the country's all telecom, retail and refinery stocks put together. With Monday's 3% jump, promoter Mukesh Ambani's wealth rose by $2.36 billion to $72.5 billion, making him the world's eighth richest person — overtaking Alphabet co-founder Sergey Brin.
Read More LIC gains market share amid Covid disruption… LIC legacy corporate tie-ups and extensive distribution network have helped it extend dominance through the coronavirus pandemic, with its market share in the new business premium rising to 74% in June from 69% in March. The consolidation in market share is despite the insurance behemoth's NBP declining by 18% in the first quarter of the fiscal year against the same period last year, IRDAI data showed.
Read More Bharat Bond offers good deal to high earners… Retail investors falling under the lower income-tax brackets could give the upcoming Bharat Bond Exchange Traded Fund's follow-up offering a miss. Investment advisors said the product is better suited for rich individuals who are looking for liquidity and better taxefficient returns. The offering of this debt fund — the only bond ETF in the country — will open on July 14 for three days. The bond would work well for those in the higher tax brackets and whose annual income exceeds Rs 10 lakh a year as gives both liquidity and tax-efficient returns, they said.
Read More India Inc set for record fund raise… Indian companies are set to raise a record $30-35 billion in share sales this year, an internal estimate by Wall Street bank JP Morgan showed, with local lenders and businesses tapping into global liquidity through qualified institutional placements, rights issues, follow-on public offers and block deals. Although businesses have been disrupted from Tokyo to Toronto since early February due to the protracted lockdowns, Indian companies have already raised about $22 billion so far this year.
Read More | AND WHO'S |  |
Sensex historically delinked from economy… Indian stock market returns have little bearing on the underlying economy if one were to go by statistical correlation and historical examples. For instance, the Sensex delivered 224% return in FY1992, while real GDP stood at a measly 1.12%. When real GDP growth was 8.5% in FY2011, the highest in the last decade, Sensex return that year was 6.6%. In last five financial years, Sensex's average annual return has been 2.9% compared with average real GDP growth of 6.7%. The BSE500's correlation was a little stronger in last two decades, but Sensex's was extremely weak over a 40-year time frame.
Read More Millennial rush spells trouble... The millennial rush into Indian equities in the past three months has created its own set of unique problems for different people. While mutual funds are worried whether it will draw funds out of the industry after equity schemes reported a 95% drop in inflows in June, stock brokerages are facing a problem of plenty, and the prospect of a regulatory glare. Many brokerages are offering innovative products to clients, especially the millennial clients, while some are offering basket services, where a clutch of stocks are available for purchase by the investor. Legal experts say brokerages cannot offer such products without a PMS licence.
Read More Banks fund-raise rush raises worry… The rush by Indian banks to raise capital signals an anticipated surge in defaults that will erode capital and crimp growth, according to some analysts, who see bad loans rising by the year end as the coronavirus pandemic and the lockdown effect play out. The banks, which have announced fund-raising plans of more than Rs 1 lakh crore, say it's just prudence, in line with recent central bank advice. State-run lenders are yet to firm up capital-raising plans in the expectation that the federal government will address this sooner rather than later.
Read More FPIs pricing in slower rebound… Foreign investors have begun to price in a slower rebound for Indian stocks this year on concerns that the relatively meagre stimulus the government has delivered for businesses and consumers will leave the economy trailing its main rivals. Despite pouring about $1.98 billion into Indian stocks since late March, foreign investors are still net sellers this year with outflows of $2.75 billion. In March alone, they pulled out $8.35 billion, according to stock exchange data.
Read More Meanwhile... US-China ties sour further… Relations between the US and China were further strained with Washington rejecting Beijing's claims in the South China Sea. That reversed a previous policy of not taking sides in territorial disputes in the region and escalated tensions on yet another front. Beijing criticised the move as inciting tensions in the region, which highlighted an increasingly testy relationship. US Secretary of State Mike Pompeo said China has offered no coherent legal basis for its ambitions in the South China Sea and for years has been using intimidation against other coastal states.
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