Market Confident At New Highs

With a generous helping from blue-chip companies, BSE Sensex has outclassed its Asia peers this year. The benchmarks gained significantly during the fortnight. Also ushering the broader market’s comeback, the BSE Mid-Cap index surged 2.11 per cent, followed by BSE Small-Cap, which was up by 0.48 per cent. 

August has proved to be a great month for the Indian equity market. After a successful round of Q1 corporate earnings, the market is upbeat, factoring in good Q2 numbers. The BSE Sensex registered a gain of 1.01 per cent in two weeks and topped it by starting the last week of the month with the best single-day gain of 1.16 per cent. One of the positive global cues was the reassurance from the US Federal Reserve Chief that the Fed will gradually hike interest rates to protect economic growth.

Globally, the US markets outshined their peers with positive inputs from the US Fed and an imminent trade agreement between the US and Mexico. During the fortnight, Dow Jones, S&P 500 and Nasdaq gained 1.88, 1.45 and 1.35 per cent, respectively. However, the European and Asian markets fell, except for the French CAC 40 and Japan’s Nikkei. The UK’s FTSE 100 and the German DAX fell 1.17 and 0.24 per cent, respectively, while the CAC 40 was up by 0.33 per cent. Asian indices Hang Seng and Shanghai Composite were down by 2.45 and 2.36 per cent, respectively, while Nikkei was up by 1.36 per cent, during the fortnight.

With a generous helping from blue-chip companies, BSE Sensex has outclassed its Asia peers this year. The benchmarks gained significantly during the fortnight, BSE Sensex and Nifty 50 gained by 1.01 and 1.12 per cent, respectively. Ushering the broader market’s comeback into the rally, the BSE Mid-Cap index surged 2.11 per cent, followed by BSE Small-Cap, which was up by 0.48 per cent. Among sectoral indices, FMCG sector was the chartbuster, registering a gain of 3.01 per cent, followed by Power and IT sector with 2.68 and 2.52 per cent gains, respectively. Metal, Realty and Auto indices were up by 1.44, 1.10 and 0.96 per cent, respectively, while the only sector that dipped in the fortnight was BSE Bankex, down 0.96 per cent.

The DIIs were the market movers this fortnight with a net inflow of Rs3,189.1 crore, while FIIs turned net seller with a net outflow of Rs2,410.49 crore.

Brent crude breached the US$75 per barrel level due a fall in the number of active oil rigs in the United States. The sanctions on Iran oil exports and a continued dip in production output from Venezuela are likely to fuel the uptrend in crude prices. Even though the gold prices were subdued in the international market, the upcoming festive season is keeping the gold price higher in India. Gold breached the level of Rs31,000 per 10 gram in the domestic market.

The macroeconomic data for the June quarter and infrastructure output for July are expected to be positive and will help ease pressure on the rupee. On the other hand, the process of resolution of power sector NPAs and the action of RBI on bad loans will keep the banking stocks in focus and give direction to the market.