Markets in Consolidation Mode

Hang Seng was the worst performing Asian index, slipping by 3.63 per cent. The European markets traded in the negative with FTSE slipping by 2.86 per cent, DAX down by 0.75 per cent and CAC 40 losing 0.69 per cent. Shanghai was down by 2.04 per cent. The mid-capsand small-caps underperformed the key benchmark indices

After a sharp rally in equity prices month-on-month since June, the markets have shown signs of a breather in September. The Sensex slipped by 1.12 per cent in the past two weeks.  Nifty tumbled 1.30 per cent, thus outperforming the global markets. The Dow Jones Industrial Average was down by 2.85 per cent in the similar period while S & P 500 slipped by 2.90 per cent. Nasdaq was the worst performing global index, slipping by 4.68 per cent. Nikkei was the best performing index, globally gaining by 1.26 per cent in the past 15 days.

Hang Seng was the worst performing Asian index, slipping by 3.63 per cent. The European markets traded in the negative with FTSE slipping by 2.86 per cent, DAX down by 0.75 per cent and CAC 40 losing 0.69 per cent. Shanghai was down by 2.04 per cent. The mid-caps and small-caps underperformed the key benchmark indices. The mid-cap index slipped by 3.57 per cent while the small-cap index was down by 2.81 per cent. The metal index stood amongst the worst performing sectoral indices, inching down by 5.51 per cent.

The power index was down by 4.25 per cent while the healthcare index cooled off by 3.85 per cent, thus underperforming the markets. The realty index was down by 3.50 per cent while FMCG was down by 3.05 per cent. IT was the best performing sectoral index, up by 1.53 per cent. The banking index was down by 0.27 per cent while the automotive index was down by 0.59 per cent. FIIs were net buyers to the tune of Rs 3,334.96 crore while DIIs were net sellers to the tune of Rs 4,960.51 crore. The previous two weeks also saw crude oil tumbling below USD 40 per barrel even as gold prices remained under pressure.

The markets were flooded with the GDP data and development on the geopolitical front. Indian markets remained under pressure owing to the Indo-China border issue even as the alarming data on the GDP front kept investors on tenterhook. Goldman Sachs and several other agencies have estimated a GDP contraction of more than 10 per cent for FY21. Previously it was estimated that the contraction in GDP may not be more than 5 per cent. Dalal Street was also busy factoring the results this season. There were a few positive surprises but mostly the earnings remained subdued for the recent quarter. 

Going forward the markets will take cues from global markets, the Indo-China border issue, earnings declared in Q1FY21 and government announcements. Investors will be closely tracking what sector the government decides to incentivise. The past two weeks saw resurgence of UT stocks with the likes of TCS, Wipro, Mindtree, HCL Technologies trading close to their respective 52-week highs. In the coming weeks, the markets can be expected to consolidate further even as the broader markets are expected to underperform considering their outperformance in 2020 so far.