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An unstoppable ascent | BNP Paribas Mutual Fund

An unstoppable ascent

Indian markets continued their ascent to scale key levels during the week. Investor sentiment remained buoyant following the government's decision to start a phased reopening of the economy. Further, strong global cues on the back of hopes of more stimulus, easing in social restrictions around the world, better than expected GDP numbers at home and Prime Minister Narendra Modi's comment that India's economy would get back on track supported by systematic reforms also supported buying.

Domestic Update

The Q4FY20 GDP number came in at 3.1%, better than the consensus estimates of 1.6%. However, it is important to understanding that this number may be misleading as the Central Statistical Organization (CSO) noted that data collection was a challenge on account of the lockdown, and revisions are to be expected. GDP growth numbers have been revised downwards for Q1FY20 from 5.6% to 5.2%, for Q2FY20 from 5.1% to 4.4% and Q3FY20 from 4.7% to 4.1%. Similarly, the Gross Value Added (GVA) growth numbers have been revised. For Q1FY20 they have been revised from 5.4% to 4.8%, for Q2FY20 from 4.8% to 4.3% and for Q3FY20 from 4.5% to 3.5%.

India’s manufacturing Purchasing Managers Index (PMI) contracted in May 2020 due to weak demand and challenges related to transport and logistics. It stood at 30.8 in May, marginally up from April's 27.4. The Services PMI stood at 12.6 in May 2020, indicating an extreme fall in services activity across India. Business activity across India’s service sector fell drastically during May 2020 compared to the year-ago period. Demand for services, both domestically and overseas, continued to plummet in May as most businesses remained closed. India’s fiscal deficit widened to 4.59% of GDP for the previous fiscal, overshooting the government’s revised target of 3.8%. The fiscal deficit for April 2020 reached 35.1% of the FY21 target of INR 7.96 lakh crore due to lower revenue, which was impacted due to a complete absence of economic activity. The government’s net tax revenue stood at INR 21,412 crore in April compared to INR 71,637 crores in April last year.

Institutional Activity

The month of a June has started on a positive note as institutional activity continues to be robust with both foreign portfolio investors (FPIs) turning net buyers of Indian equities. In the week gone by, FPIs have net bought Indian equities worth INR 13,830 crore. In the same time period, domestic institutional investors have net sold Indian equities worth INR 1647 crore.

www.nseindia.com  | bloomberg.com

Disclaimers: The material contained herein has been obtained from publicly available information, internally developed data and other sources believed to be reliable, but BNP Paribas Asset Management India Private Limited (BNPPAMIPL) makes no representation that it is accurate or complete. BNPPAMIPL has no obligation to tell the recipient when opinions or information given herein change. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Except for the historical information contained herein, statements in this publication, which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. BNPPAMIPL undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. The words like believe/belief are independent perception of the Fund Manager and do not construe as opinion or advise. This information is not intended to be an offer to sell or a solicitation for the purchase or sale of any financial product or instrument. The information should not be construed as an investment advice and investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Trustee, Asset Management Company, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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