Markets Back To Business After Holidays

With the appetite for Diwali sweets, snacks and crackers satisfied, market participants headed back to business, moving the BSE Sensex and Nifty higher by more than 2 per cent during the fortnight. The bulls returned to the market following the good corporate results season. The uptrend was widespread with the broader indices as well as sectoral indices posting gains. The BSE Mid-cap and Small-cap indices were up by 1.5 and 1.3 per cent, respectively. 

Among sectoral indices, BSE Auto and Bankex led the rally, both posting 3.2 per cent gains, followed by FMCG with 2.1 per cent gain. BSE Metal and Realty registered marginal gains, up by 0.7 and 0.4 per cent, respectively, while IT and Power indices dipped during the fortnight, down by 2.3 per cent and 0.7 per cent, respectively. 

The global markets were a happening place this fortnight. With the Democrats improving their performance in the mid-term US polls, Donald Trump is under pressure to sort out the Sino-US tariff tensions and improve the business environment. Also, his stance on higher interest rate is increasing the cost of debt in the US. Major US-based indices reflected these concerns. The Dow Jones Industrial was down by 1.2 per cent, S&P 500 was down 1.4 per cent, while the tech-heavy NASDAQ index was down 4.0 per cent during the fortnight. 

On the other hand in Europe, the Brexit chaos has dampened the markets there with UK’s FTSE 100 losing 1 per cent, followed by the German DAX, which was down by half a per cent and the French CAC40, down by 0.3 per cent in the period. Reacting to the major global cues, the Asian markets were mixed, with Shanghai Composite index posting one per cent gain, followed by Nikkei, which was up by 0.7 per cent, while the Hang Seng index was down by 1.4 per cent in the fortnight. Market makers are now looking forward to the G-20 Summit, Argentina, where the world leaders are expected to resolve their trade differences. 

The major commodity Brent crude was trading at around US$67 per barrel in the fortnight as the Saudis persuaded oil producers cartel OPEC to cut production by around 1 million barrels per day. This move aims to tackle the surge in supplies from the US and a slowdown in demand, which brought down oil prices from their October highs. Picking up a positive cue from the drop in oil prices, the Indian rupee was trading near Rs72 per US dollar during the fortnight.

In the domestic market, FIIs and DIIs switched roles, reversing the institutional trading trend during the fortnight. FIIs have returned to the Indian equity market post-Diwali. The FII inflow was positive with the FIIs being the net buyers, albeit for a small amount of Rs838 crore, and for a change, the DIIs were net sellers with net outflow of Rs1,507 crore.

Indian banking sector woes seem to be unending. On the one hand, Yes Bank Chairman Ashok Chawla was named in the Aircel-Maxis charge sheet wherein the CBI wants to probe him for corruption, which also raises questions on the bank’s audit proceeds. On the other hand, the RBI and government face-off continues. Although it is expected that the tensions will ease with a trade-off, wherein the government leaves RBI’s autonomy intact in return for easier PCA norms to tackle liquidity concerns of banks. All-in-all, the market is poised for an action-packed expiry week.