Domestic Liquidity, GST, Push Indian Benchmarks To Record Highs

Even though liquidity-driven rally shows no signs of let up, there are some visible signs of fatigue in the market, with divergence in certain section of markets. The performance of newly listed stocks such as CDSL, AU Small Finance Bank and HUDCO was the highlight of the market in past couple of weeks. Market will be looking forward to the HDFC Life Insurance and SBI Life Insurance IPOs. Going by the recent IPO performances, investors will be expecting a bumper listing for the said upcoming IPOs. 

The past couple of weeks saw markets gain ground, pushing the benchmark indices to record highs. Nifty Bank index is trading at record highs. The previous week saw Supreme Court give respite to restaurants and bars serving liquors by permitting state governments to denotify highways within city limits. This move has given relief to approximately 70 per cent of the bars in India, which is good news for the IMFL stocks.

Earnings season started previous week, with TCS reporting a drop in quarterly profits by 5.9 per cent, while Infosys reported a 1.36 per cent increase in profits. The FIIs remained net sellers in Indian markets with an outflow of `360.24 crore, whereas the DIIs were seen buying into equities and have lapped up equities worth `2,957.07 crore, as there is a positive undertone in the domestic market with the roll out of GST. 

Technology stocks saw an upsurge in the markets, reflected in Nasdaq being the best performing index in the global markets, with a growth of 3.34 per cent for the period of the last two weeks. The Indian benchmark index Nifty 50 became the world beating index, along with Nasdaq, with a return of 3.13 per cent for the last two weeks. They were followed by Hong Kong’s Hang Seng index, which was up by 2.66 per cent during the corresponding period. S&P 500 was up by 1.24 per cent in the past 15 days. Dow Jones Industrial Average (DJIA) was marginally up by 0.7 per cent. S&P BSE Realty was the top gaining index among the domestic indices, up by 4.44 per cent. Realty index was closely followed by S&P BSE Metal index, up by 4.26 per cent. Flustered with the uncertainty brought by GST, S&P BSE FMCG index underperformed over past two weeks. FMCG index was down by 1.27 per cent. 

The US dollar is seen falling to its 11-month low even as investors remain cagey on the economic revitalisation in the US. The gold prices are seen steadying in the past couple of weeks even as the precious metal hit its two-week high on July 18. Locally, the Indian equities will be taking cues from the earnings season and the developments on the ground on the GST front. The rich valuations and derivatives data suggest market may turn volatile