Global markets upbeat, Indian markets stagnant
After the previous week's massive slowdown in the markets across the globe, major global indices showed recovery during this week. However Indian markets remained muted as they were dragged down by major banks
In the US, Dow Jones gained almost 4.17 per cent during the week after plummeting 7 per cent from Feb 1 in the previous week. Nasdaq also gained as much as 5.6 per cent during the week till now after falling 6.9 per cent from Feb 1 till last week. S&P 500 also gained 4.26 per cent during the week after falling 7 per cent in the previous week.
European markets were also upbeat as Germany’s DAX, UK’s FTSE and France CAC 40 gained 2.5 per cent ,2.6 per cent and 3.6 per cent, respectively, during the week. Also, other Asian markets are in the recovery mode with Japan’s Nikkei, Korea’s Kospi and Hong Kong’s Hang Seng have shown significant gains across the board. The Hang Seng index gained the most at 5.45 per cent during the week, followed by Nikkei, Kospi, Topix and China’s Shanghai Composite indices gained by 1.4 per cent to 2.6 per cent.
However, Indian markets continued to remain muted across the board. The Nifty 50 index lost as much as 5 per cent from Feb 1 to Feb 9, while it lost another 0.8 per cent during this week. BSE Sensex, which touched the high of 36,443 in the previous month, lost almost 7 per cent after hitting the low of 33,849. In the past one week, the performance of the index was muted.
Markets were dragged down by negative sentiment in banking stocks during this week due to various reasons. Firstly, the fraud in PNB to the tune of Rs.11,600 crore turned the sentiments negative for PSU banks. Also, PNB also holds 10 per cent weightage in Nifty PSU index, followed by BoB, Canara Bank, Union Bank of India, etc. Secondly, the recent changes in RBI’s rules in assessment of NPA’s are tighter and stricter. The new rules may lead to banks to report high NPAs and they may make higher provisions for the NPAs.