Markets To Remain Stable Ahead Of State Election Results

On the sidelines of the G20 Summit in Argentina, US President Donald Trump and Chinese President Xi Jinping managed to enter into a temporary 90-day truce and suspended the newly proposed tariff hikes.

The equity markets were in a happy-go-lucky mood and registered a six-day winning streak during the fortnight. The market sentiments were supported by weakness in crude oil prices and the resultant gain in the rupee, while the weak auto sales numbers created resistance for any major upmove. 

The benchmark indices BSE Sensex and Nifty50 were up one per cent each during the fortnight. The gain was also supported by the positive global cues emanating from the G20 Summit. However, the broader indices traded mixed, with BSE Mid-cap index gaining 0.32 per cent, while the BSE Small-Cap dipped 0.17 per cent during the period. Following a tepid festive season, the auto sales figures for the month of November were less impressive, due to which auto majors Maruti, M&M, Tata and Ashok Leyland all registered declines.

Sectorally, the BSE Metal index lost the most and was down by 4.68 per cent and the BSE Power index was down by 1.20 per cent, while rest of the sectoral indices closed positive. The BSE Realty and IT index gained the most with 4.19 per cent and 3.70 per cent gains, respectively, followed by FMCG, Bankex and Auto, up by 1. 39 per cent, 1.00 per cent and 0.24 per cent, respectively. 

On the sidelines of the G20 Summit in Argentina, US President Donald Trump and Chinese President Xi Jinping managed to enter into a temporary 90-day truce and suspended the newly proposed tariff hikes. All global indices posted positive gains, except for the Shanghai Composite index, which was down by 1.80 per cent. The index that gained the most was Nasdaq, which was up 7.7 per cent. The US-based indices Dow Jones Industrial and S&P 500 as well as the Asian indices Hang Seng and Nikkei posted about 3 per cent gains each. Among the European indices, the German DAX was up by about 2 per cent, while UK’s FTSE100 and French CAC40 indices were up by 0.88 per cent and 1.37 per cent, respectively, during the fortnight. 

With the Sino-US trade war cooling-off and an impending supply cut by the OPEC countries, the crude oil prices remained volatile during the fortnight. Also at the G20 Summit, Russia and Saudi Arabia managed to seal a deal to cut oil output. But with the growing political differences between Riyadh and Doha, Qatar walked out of the OPEC, further weakening its power. This scenario brings to fore a new era for the crude oil market, where Russia will play a major role in the global oil trade, despite staying out of the oil cartel. Brent crude oil futures were trading at US$61 per barrel in the international market. 

The equity markets saw a healthy flow of funds from the FIIs and DIIs. During the fortnight, both FIIs and DIIs were net buyers in the Indian equity market. The trading data shows that FIIs were net buyers to the tune of Rs 8310.82 crore, while the DIIs were net buyers with an inflow of Rs 930.56 crore. 

Another major event, the bi-monthly monetary policy review ended with the Reserve Bank of India taking a dovish stance. With the inflation staying below MPC’s target of 4 per cent, the Reserve Bank of India has left the interest rates unchanged in its December review. Going ahead, more defaults from the IL&FS subsidiaries and state election results are expected to keep the market participants on their toes for the nearterm. On the other hand, India’s services sector activity surveyed by Nikkei India increased impressively in November, indicating favourable business conditions and sales growth.