China, US vow to avert trade war

Washington/Beijing: Averting a trade war, China and the US on Sunday struck a deal under which Beijing will “significantly increase” its purchases of American goods and services to reduce the whopping $375 billion trade deficit with Washington. After lengthy second round of talks, the two sides issued a joint statement vowing not to launch a trade war against each other.

Spooked by Karnataka developments, rising crude oil prices, weak rupee and rising US China trade war tensions, the markets closed on a weak note during the week ended.

The Sensex shed 680 points or 1.9 per cent to close at 34,848 and the Nifty ended lower by 210 points or 1.9 per cent to settle at 10,596.

Underperforming the benchmark indices, the BSE Mid-Cap index fell 2.7 per cent closing at 15,896 and the BSE Small-Cap index fell 2.8 per cent to end at 17,327. The breadth of the market continued to remain weak amidst high volumes. Clouding the picture was a combination of political and economic developments.

Loss of face for BJP in Karnataka may trigger political uncertainty in the run up to 2019 polls.

Spiking crude oil price is the major concern at the current juncture, oil touching $80 per barrel for the first time since November 2014, this has the potential to upset India’s fiscal balance.

India’s crude oil bill was estimated at $105 billion for 2018-19, but this could now shoot up to $150 billion. Despite DEA displaying bravado, analysts feel that there will be upward revision of fiscal deficit. The weakening in the currency has also triggered a sharp outflow from overseas investors. It is pertinent to observe that FPIs have pulled out `2,000 crores in four sessions.

The near-term trend will be dictated by macro data, investment by FIIs and DIIs, the movement of rupee, crude oil price movement and global cues.

For the week ahead, chartists predict trading range of 34,250-35,300 and 10,400-10,775 for the indices.