Markets Stay On The Sidelines As Voting Begins

Election fever has gripped the country. The distraction of general elections has brought volatility into the equity market as many investors are waiting on the sidelines for India’s biggest political event to end and usher in a new government at the Centre. Reflecting the lack of investor interest, the benchmark indices BSE Sensex and Nifty slipped marginally to register a dip of 0.14 per cent and 0.09 per cent, respectively, during the fortnight.
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Even as the March quarter earnings trickle in to create enthusiasm in the market for respective stocks, much of the investor community seemed lost in the slugfest of political stalwarts who are fighting it out on the political battlefield for their respective parties and their personal ambitions. In broader market terms, mid-cap and small-cap stocks bled during this fortnight. The BSE Mid-cap and Small-cap indices were down 1.62 per cent and 1.22 per cent, respectively, during the fortnight.

Despite all the up and downs, the auto stocks remained upbeat. The BSE Auto and FMCG were the only sectoral indices that registered gains in the two-week period up by 3.21 per cent and 1.63 per cent, respectively. The Realty index lost the most during the period with a drop of 2.15 per cent. The stocks that dragged the benchmark indices the most were banking and metals stocks, which was reflected in the Bankex and Metal indices, which were down by 1.16 per cent and 1.87 per cent, respectively, during the fortnight. 

In the international markets, major indices remained subdued with concerns around the rising crude oil prices and the US wanting to continue its tariffs on Chinese goods. The American indices Dow Jones Industrial, S&P 500, Nasdaq gained 0.65 per cent, 0.42 per cent and 0.77 per cent, respectively, during the fortnight. The European indices breathed a sigh of relief after the European Union extended the Brexit deadline to October 31. The UK’s FTSE 100 was up 0.11, Germany’s DAX was up 2.16 per cent, while the French CAC 40 was up 1.98 per cent. Among the major Asian indices, Hang Seng was up by 0.38 per cent and the Shanghai Composite was up by 0.92 per cent, while the Japanese Nikkei was up by 2.10 per cent during the fortnight.

The institutional trading data for the fortnight showed that the foreign institutional investors (FIIs) were net buyers, while the domestic institutional investor (DIIs) were net sellers. FIIs were net buye rs to the tune of Rs. 7,407.24 crore, while DIIs were net sellers with an outflow of Rs. 670.91 crore, during the fortnight.

Crude oil is expected to play spoilsport for the markets in the near term. Brent crude was trading near the US$74 per barrel mark, a six-month high, as the US government pulled back waivers given to countries like India for import of crude oil from Iran, despite a US sanction on trade with the country. Although this is expected to be a short-term disruption as the Saudis would eventually increase production to balance the supplies that are short due to sanction on the Iranian oil.

Earlier, the crude oil producing cartel Organization of Petroleum Exporting Countries (OPEC) and the allies had reduced output to spike up oil prices. But a reduction in Venezuela’s oil production, a crisis in Libya and disruption in supply from Nigeria are pushing prices higher.

It is going to be an interesting time ahead for the markets with investors keenly watching what is in store for Jet Airways, Q4 earnings of major companies and F&O expiry, besides the election campaign gossip.