Weekly Commentary – 12th July 2019

Nifty50 continued to slide last week (down 2.2%). Weakness was evident across capitalisation – midcap (down 2.2%) and smallcap (down 2.0%) following the broader market trend. Amongst sector indices, Bank, Auto, FMCG, IT each slid by over 2%. Only Pharma had a good run (up 2.7%)

Market Updates:

• Housing affordability worsens: Reserve Bank of India (RBI) in its latest survey has found that housing affordability worsened over the past 4 years as the house price-to-income (HPTI) ratio increased from 56.1 in March 2015 to 61.5 in March 2019. As per the survey report, Mumbai remains the least affordable city in India, while Bhubaneswar remains the most affordable city.
• Hospital sector likely to do see better days: According to ICRA, performance of the players in hospital sector has likely bottomed out, after struggling for more than two years. Nonetheless, the regulatory environment continues to be the overarching challenge for the hospital sector.
• Capital infusion in PSBs positive for Banking sector: According to S&P, government’s decision of Rs 70,000 crore capital infusion into public sector banks (PSBs), as announced in the Budget, is likely to be credit positive for the banking sector and the economy. Capital infusion will help PSBs make necessary haircuts on their weak corporate loans and shore up their capital adequacy.