DSIJ Mindshare

There is not at all Sell In May And Go Away

Indian markets are taking domestic cues and reacting on stock specific actions as results season is going on. There is almost 50 per cent companies have declared Q4FY17 results which were remained on an average after the lower base of demonetisation impacted Q3FY17. Furthermore, there were not any substantial surprise from the numbers point of view.

In last two weeks, BSE Sensex and Nifty surged almost one per cent. Small-cap and Mid-cap hovering all-time high in the last couple of weeks. Mid-cap increased 1.34 per cent and small-cap also rose 1.66 per cent.

On the sectoral front, all sectoral indices remained positive except Metal. Bankex remained top performer for the period with a gain of 4.38 per cent. Banking stocks surged owing to measures taken by the government to curb bad loans andgiven more rights to the Reserve Bank of India (RBI) to look after banks’ nonperforming loans closely. Realty and Auto indices rose 3.84 per cent and 2.16 per cent respectively. IT also increased 2.04 per cent in the last couple of weeks. Power increased 0.53 per cent in last two weeks. However, Metals eroded 1.95 per cent.

On the global front, all world indices witnessed positive sentiments following the victory of centrist Emmanuel Macron, a pro-European Union candidate, in the French presidential runoff on Sunday. The benchmark Nikkei average surged to hit a 17-month closing high on the Tokyo Stock Exchange. Nikkei increased 5.12 per cent in the last couple of weeks. Hang Seng rose 3.11 per cent. DAX and CAC 40 increased 2.36 per cent and 2.45 per cent in last two weeks. FTSE rose 1.07 per cent. Dow Jones Industrial Average was up by 1.02 per cent; whereas, NASDAQ rose by 2.29 per cent, which tracks the global IT stocks’ performance.

After pumping massive money by FIIs in Indian capital markets, have started netting off positions from last one month. FIIs have sold Rs 1917 crore in the last couple of weeks. The Domestic Institutional Investors bought Rs 6469 crore equities in last two weeks.

Middle East countries are struggling on falling crude oil prices with an intense oil battle with the US. In the last couple of months, prices have remained in the range of USD 47 and USD 54 a barrel, due to consistent pressure from US shale oil production. Moreover, production cuts have also failed to reduce global inventories, significantly, even after four months of the deal. Now all eyes are on the May 25 meeting of OPEC and allied crude producers, where an extension of oil production cuts is expected to be announced.

IMD has forecasted monsoon likely to be normal in 2017-18. The prospects of the monsoon have brightened because of the reduction in the likelihood of El-Nino. Though, FIIs have sold in the Indian markets the pumping money from DIIs into the markets lifting benchmark indices. Markets will remain higher levels in rest of May.

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