Markets Go Into Wait-And-Watch Mode

The contest between bulls and bears in the equity markets is getting tougher than the IPL cricket matches, all thanks to the election outcome uncertainty and the fluctuations in the international crude oil market. Much to the amusement of investors world over, the world economy is being tweetcontrolled by the US President Donald Trump. His tariff threat against China and the tightening of sanctions against Iranian crude oil are pushing the global economy into nervous mode. But as always, the Indian equity market has shown resilience and rode on the bulls and endured the grip of the bears during the fortnight. Despite all the ups and downs, the benchmark index BSE Sensex showed a marginal dip of 0.12 per cent for the fortnight and Nifty50 was almost flat, up by a miniscule 0.03 per cent. 

What has dragged the market the most were the concerns around the auto sector that has posted weak sales and revenues during the quarter. Auto majors corrected steeply along with frontline mid-cap stocks to pull down the BSE Auto, Mid-cap and Small-cap indices heavily by 6.02 per cent, 3.18 per cent and 2.57 per cent, respectively. Among other sectoral indices, the BSE Bankex dipped 0.73 per cent, FMCG and Power indices were down by 2.12 per cent and 2.54 per cent, while Realty and Metal indices were down by 1.69 per cent and 1.16 per cent, respectively. The global markets were mixed during the fortnight, with Asian markets being negative due to the US-China trade war stalemate. The US President Trump threatened that he would impose import tariff of 25 per cent on Chinese goods worth US$200 billion. For the fortnight, the US tech index Nasdaq was up by 1.35 per cent and S&P 500 was up by 0.84 per cent, while Dow Jones dipped by 0.27 per cent. In Europe, UK’s FTSE 100 was down 1.06 per cent, whereas the German index DAX posted a gain of 0.53 per cent and the French CAC40 dipped 1.74 per cent. During the fortnight, the Asian markets were stressed, led by Shanghai Composite which was down by 9.60 per cent, followed by Hang Seng decline of 2.51 per cent, while Nikkei was up by 0.18 per cent. 

Crude Oil that fuels the global economy saw huge volatility as the US government increased the presence of US warships in the Middle East region and pushed crude prices up. However, oil prices remained in check expecting a slowdown due to the ongoing trade war between the US and China. Brent crude prices were around the US$69.53 per barrel mark. As geopolitical tensions soar, gold prices ran up to around US$1285 per ounce in the international market. 

As it has been the trend since the announcement of general elections, FIIs were net buyers, whereas DIIs have been net sellers in the Indian stock markets during the fortnight. The FIIs have been net buyers to the tune of Rs 5,263 crore; whereas the DIIs have been net sellers to the extent of Rs 3,522 crore. 

If investors can avoid worrying about the daily movements of the indices and focus on the big picture of the strength of the Indian economy and its growth story, things are pretty much business as usual. A small wait will lead us to the new Prime Minister of India and the muchanticipated acche din for the markets.

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