A Positive Road Ahead, Post Independence Day

We celebrated 70th Independence Day of India, with Prime Minister Narendra Modi addressing the nation and putting forth the slogan of “reform perform and transform”. The PM highlighted various achievement of the government and talked about various schemes which will cover inclusive growth for the country. The country recently witnessed the passage tax reform-GST, which will give strength to economy in long term.

The inflation data is yet to be assuaged with monsoon as the wholesale price index (WPI) surged to 3.55 per cent in July 2016 vs 1.62 per cent in June 2016. Meanwhile, Consumer Price Index (CPI) spiked up at 6.07 per cent in July 2016 vs 5.77 per cent in June 2016. Overall annual retail inflation shot up beyond the official tolerance of 6 per cent owing to higher food prices like pulses and vegetables. Reserve Bank of India kept rates unchanged in its Aug 2016, Monetary Policy. Steady rates by RBI justified the WPI and CPI inflation numbers to decelerate them.

On global front- all the US stock indexes i.e. S&P 500, Dow Jones and NASDAQ hit all-time high on Monday, August 15, 2016 due to boost in commodity related stocks owing to weaker dollar. While Asian markets - Hang Seng, Nikkei and Shanghai in last fifteen days rose by 5.49 per cent, 2.92 per cent and 5.18 per cent supported by a jump in oil prices and easy monetary policy around the world. Meanwhile, Japan is stepping up its purchasing of exchange-traded funds.

In currencies, dollar slipped at 66.76 level as market is looking forward at Federal Reserve meeting on Wednesday, August 17, 2016. Although Fed officials have said a rate hike is possible by the end of the year, we see least possibility owing to fragile global economic outlook. In last fortnight, FII are seen continuously buying in Indian market. EuroPacific Growth Fund, Government of Singapore, Abu Dhabi Investment Authority, Aberdeen and Franklin Templeton Investment Funds led the buying spree. Net FII buy were Rs 5204 crore while DIIs adorned the shoes of sellers in last fifteen days and booked profit..

On sectoral front, metal sector performed well with upside of 5.71 per cent in last fortnight while other sectors were flattish to negative except banking (up by 2.05%). IT and FMCG sector experienced slippage by 1 to 2 per cent due to lower earnings of the companies.16 IPOs have hit the Dalal street in 2016. SP apparels which listed last fortnight received positive response. RBL Bank Ltd is next in queue to enter the market and will open from August19- August 23, 2016 for subscription in price band of Rs 224-225 per share. Do read our special coverage on IPOs in this issue on page 62.

Going forward market will take cue from oil prices, Fed Reserve meeting and political-economic events in the country and abroad. Market is expected to be range bound in short term as mixed earnings left the market confused and without any trigger. We expect the markets to slowly move toward the 30k mark by early next year.