Equity market settles higher
The BSE Sensex advanced 311.09 points to settle at 31,524.68 and the NSE Nifty closed at 9,837.40 up 126.60 points for the week ending Friday, 18 August 2017.
On the macro-economic front, Consumer or retail inflation quickened to 2.36% in July 2017 compared with 1.46% in June as the decline in food prices slowed sharply. The July inflation number is higher than the market’s expectations. Data released showed wholesale price inflation accelerating, reversing the trend seen in the past four months with food prices back on the rise. The Wholesale Price Index rose 1.88% in July 2017 from a year earlier. Further, Wholesale Food Prices in July 2017 rose 2.12% on year compared with a 1.25% fall a month earlier. Easing price pressures gave the Reserve Bank of India (RBI) room to cut its main policy rate by 25 basis points to 6% earlier this month-the lowest since November 2010. It was the first rate cut by an Asian central bank this year. But the RBI retained its neutral stance and warned that inflation could pick up again. The RBI expects retail inflation could accelerate to 3.5% to 4.5% in October-December 2017.
In his mid-year Economic Survey, Chief Economic Adviser (CEA), Arvind Subramanian had said there were downside risks to the official growth forecast of 6.75-7.5% for the fiscal year to March 2018. Industrial output contracted 0.1% in June from a year earlier, data showed.
In his report, Dr. Subramanian said there was a considerable scope for monetary easing as the inflation was undergoing a structural shift.
India’s export growth slowed to eight-month low of 3.94% in July 2017 while the trade deficit widened to $11.44 billion on account of high gold imports, data showed.
Trade deficit, however, narrowed when compared to the previous month. In June, the gap stood at $12.96 billion. In July 2017 it was the lowest in five months.
The country’s overseas shipments aggregated at $22.54 billion in July 2017 against $21.68 billion in the same month of last year showing a growth rate of 3.94%. It is the lowest export growth since November 2016 when shipments had expanded by 2.29%. Thereafter, the growth rate had risen to 27.59% in March before it began to decelerate. A contraction in export of pharmaceuticals, gems & jewellery and ready-made garments hit the overall export growth in July 2017.
Imports rose by 15.42% to $34 billion in July 2017 from $29.45 billion in the year-ago month due to rise in inward shipments of crude oil and gold.
Gold imports increased by 95% to $2.10 billion in July 2017 against $1.07 billion in the same month last year. Oil import was valued at $7.84 billion in July 2017 an increase of 15% over the same month in 2016. Cumulative exports during April-July 2017-18 rose by 8.91% to $94.75 billion while import increased by 28.30% to $146.25 billion, leaving a trade deficit of $51.5 billion. Engineering goods, petroleum, chemicals, marine products were some of the sectors which contributed to the positive growth during the month. On the global front, Japan’s exports rose 13.4% in July 2017 from a year ago helped by exports of cars and automotive components. It was the eighth straight monthly gain in exports, data from Japan’s Ministry of Finance showed. Moreover, minutes from the
Federal Open Market Committee’s July 2017 meeting released on Wednesday, 16 August 2017, showed that while some Fed members said they were worried over the tightening labor market, others voiced concern over low inflation rates in USA. The minutes also showed the central bank was prepared to trim its massive balance sheet, although the announcement of a start date was left for an upcoming meeting. Key index climbed on Monday, 14 August 2017 on buying by traders. The Sensex surged 235.44 points (+0.75%) to settle at 31,449.03. Indian stock markets remained closed on Tuesday, 15 August 2017 on account of Independence Day. Key index gained on Wednesday, 16 August 2017 on further buying of stocks. The Sensex ended higher 321.86 points (+1.02%) to close at 31,770.89.
Key index edged up hitting all-time closing high on Thursday, 17 August 2017. The Sensex was up 24.57 points (+0.08%) to close at 31,795.46.
Key index tumbled on Friday, 18 August 2017 on a correction. The Sensex fell 270.78 points (-0.85%) to settle at 31,524.68.
For future events, national & global macro-economic figures will dictate global markets movements and influence investors’ sentiment in the near future.
Indian stock markets will remain close on Friday, 25 August 2017 on account of Ganesh Chaturthi. On the monsoon front, the progress of monsoon rains will be closely watched by investors. The rest of August’s & September’s southwest monsoon is critical for the country’s agriculture because a considerable part of nation’s farmland is dependent on monsoon for irrigation.