In­dian Eq­uity Mar­kets To Take Cues From Global Mar­kets And Q2FY18

Dalal Street Investment Journal - - MARKET WATCH -

Global mar­kets are on a roll and the strong mo­men­tum is push­ing the eq­uity mar­kets to record highs. The two most vis­i­ble fac­tors that can be seen sup­port­ing the pos­i­tive sen­ti­ment in eq­uity mar­kets is the global eco­nomic re­cov­ery and the abun­dant liq­uid­ity in the sys­tem.

The past fif­teen days saw global mar­kets out­per­form­ing key In­dian bench­mark indices Sen­sex and Nifty. Some of the pos­i­tives for the econ­omy in the last 15 days were auto sales data and man­u­fac­tur­ing and ser­vices PMI data, which sug­gest op­ti­mism in the econ­omy.

The global mar­kets ral­lied in the past cou­ple of weeks, with NAS­DAQ prov­ing to be the best per­form­ing in­dex glob­ally, gain­ing 3.28 per cent. DJIA gained 2.09 per cent over the last cou­ple of weeks, while S&P 500 was up by 1.93 per cent. The Euro­pean mar­kets were ma­jor gainers over the past 15 days with both FTSE 100 and DAX gain­ing more than 3 per cent each. French in­dex CAC 40 was up by 1.87 per cent.

Asian mar­kets, in line with the global trend, gained im­pres­sively. Hang Seng was the best per­form­ing in­dex in Asia in the past 15 days. Nikkie was up by 1.44 per cent and Shang­hai was up by 0.98 per cent. In­dian bench­mark in­dex Sen­sex was up by 0.94 per cent in the past cou­ple of weeks. In­dia mar­kets have ac­tu­ally un­der­per­formed their global peers in last cou­ple of weeks. Nifty was up by 1.46 per cent dur­ing the same pe­riod. Metal in­dex was the best per­form­ing sec­toral in­dex dur­ing the fort­night, de­liv­er­ing gains of al­most 7.71 per cent. Realty stocks out­per­formed the broader mar­kets along with the metal stocks. Realty in­dex siz­zled by gain­ing 6.59 per cent over the past 15 days thus out­per­form­ing other sec­toral indices along with the metal in­dex. The small-cap stocks yet again proved to be prof­itable for in­vestors as the in­dex gained by 5.82 per cent. The mid-cap in­dex gained as much as 3.26 per cent, thus out­per­form­ing the bench­mark indices Sen­sex and Nifty. All of the sec­toral indices gained in the fort­night and this in­di­cates the pos­i­tive mo­men­tum in the mar­ket. FIIS turned out to be net sell­ers yet again. The FIIS sold to the tune of ₹13,144.32 crore in the mar­kets. At the same time, DIIS were net buy­ers in the mar­ket and bought stocks worth of ₹14,608.10 crore.

All eyes will be on the com­ing earn­ings sea­son and it will be in­ter­est­ing to see which com­pa­nies might sur­prise on the pos­i­tive side. On the global front, mar­kets seem to be poised for higher stock prices as there are no vis­i­ble signs of liq­uid­ity dry­ing up. IMF has in its re­cent study raised the global growth fore­cast for 2017 to 3.6 per cent.

The syn­chro­nous growth in both the de­vel­op­ing world and the de­vel­oped world is ex­pected to boost the de­mand in the world econ­omy, thus ben­e­fit­ting ex­port sec­tor in coun­tries like In­dia. With the world econ­omy in the right shape and flush with liq­uid­ity, the eq­uity mar­kets can inch up fur­ther from the cur­rent lev­els based on im­prov­ing fun­da­men­tals.

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