Market participants book profits
The Sensex tumbled 371 points to settle at 33314.56 while the Nifty closed at 10321.75 falling 130.75 points for the week ending Friday, 10 November 2017.
On the macro-economic data, India’s service sector's recovery following the implementation of the GST gathered pace as the sector observed a faster rise in activity. Nikkei India Services Purchasing Managers’ Index (PMI) showed marginal growth of the sector. The headline figure gained from 50.7 in September 2017 to 51.7 in October 2017. The Nikkei Composite Output Index was up from 51.1 in September 2017 to 51.3 in October 2017. Aashna Dodhia, an economist at IHS Markit, said that the recovery from the implementation of the GST in July was sustained in the private sector in October, mainly radiating from service providers as growth in manufacturing was relatively subdued. Moreover, the service sector reported the fastest rise in new business since June. These key growth indicators remained relatively muted.
She also said, “Although the degree of business confidence fell to the weakest since June 2017, service providers retained an optimistic outlook regarding business activity over the coming 12 months whilst the labour market was further reinforced as firms raised their payroll numbers over the month”.
On the price front, the service sector experienced further upward cost pressures as the rate of inflation quickened to the joint-fastest since April 2016. The composite PMI was at the highest since June 2017, supporting the IHS
Markit forecast that the country’s GDP is on track to expand at 6.8% in FY18, the report added.
The Nikkei India Manufacturing PMI fell from
51.2 in September 2017 to 50.3 in October 2017, which indicates a broad stagnation in the health of the manufacturing sector during October. At the sectoral level, improvements in consumer goods negated deteriorations in investment and intermediate goods. The downward movement in the headline index was partly driven by stagnation in new business. Meanwhile, new export orders for Indian goods reduced in October 2017. The rate of contraction was the fastest since September 2013.
The 10-year benchmark G-Sec yield rose sharply to 6.88% as on 31 October 2017, from the low of 6.41% as on 24 July 2017, driven by various factors such as increasing likelihood of a rate hike by the US Federal in December 2017, a slowing GDP growth in India that led to speculation regarding a fiscal stimulus package and a potential slippage relative to the GoI's fiscal deficit target for FY18. The rise in oil prices since Q2FY18, which may widen the current account deficit and weaken the INR, coupled with the announcement of Public Sector Banks recapitalisation programme, also added to the hardening of yields. Moreover, the provisional figures of Direct Tax collections rose in October 2017. Net collections are at Rs.4.39 lakh crore, 15.2% higher than the net collections in the previous corresponding period. Net Direct Tax collections represent 44.8% of the total Budget Estimates of Direct Taxes for FY18 (Rs.9.8 lakh crore). Gross collections (before adjusting for refunds) have grown 10.7% to Rs.5.28 lakh crore during April-October 2017. Refunds amounting to Rs.89,507 crore were issued during April 2017 - October 2017.
World Bank President, Jim Yong Kim said, “India's economic growth is going through an aberration caused by temporary disruptions in preparation for the GST and will get corrected in the near future”. He added that the GST will have a positive impact on the economy.
“There has been a deceleration in the first quarter, but we think that is mostly due to temporary disruptions in preparation for the GST, which by the way is going to have a hugely positive impact on the economy.
We think that the recent slowdown is an aberration which will correct in the coming months, and the GDP growth will stabilise during the year. We have been watching carefully, as PM
Modi has really worked on improving the business environment and so we think all of those efforts will pay off as well”, Kim added.
Key indices ended flat on
Monday, 6 November 2017.
The Sensex gained 45.63 points (+0.14%) to close at 33731.19 (a historic record closing high) while the Nifty was down 0.7 points (0.01%) to close at 10451.80.
Key indices corrected on
Tuesday, 7 November 2017, on profit-booking by FIIs on global cues. The Sensex tumbled 360.43 points (1.07%) to close at 33370.76 while the Nifty fell 101.65 points (-0.97%) to close at 10350.15.
Key indices plunged on Wednesday, 8 November 2017, on extended selling of equities by foreign funds. The Sensex tanked 151.95 points (-0.46%) to settle at 33218.81 and the Nifty was down 47.00 points (-0.45%) to close at 10303.15.
Key indices ended flat on Thursday, 9 November 2017, on modest buying of equities. The Sensex edged higher by 32.12 points (+0.10%) to close at 33250.93 while the Nifty was up 5.80 points (+0.06%) to close at 10308.95. Key indices settled higher on Friday, 10 November 2017, on positive buying by traders. The Sensex was up 63.63 points (+0.19%) to settle at 33314.56 while the Nifty was up 12.80 points (+0.12%) to close at 10321.75. Events like national and global macro-economic figures as well as the earnings season will dictate the movement of the markets and influence investor sentiment in the near future.
On the inflation data, the government is scheduled to release data based on WPI and CPI for urban and rural India for October 2017 by mid-November 2017.
The government will release other macro-economic figures for September 2017 this week. The Chinese government is scheduled to unveil the industrial production data for October 2017 on Tuesday, 14 November 2017.