Cabinet rejig to dictate market terms
Shrugging away the sluggish economic growth numbers; and fuelled by excess liquidity, strong auto sales numbers and positive global cues market extended its winning streak to third consecutive week.
Sensex and Nifty closed 296 points and 117 points higher at 31,892 and 9,974 respectively. Bank Nifty also ended 160 points higher at 24,434. Outperforming the benchmark indices, both the BSE midcap and smallcap indices closed higher by 2.9 per cent and 3.1 per cent respectively.
It is pertinent to observe that in the month of August, FIIs were net sellers to `15,995.63 crores, while DIIs were net buyers of `16,205.22 crores.
The GDP growth slowed down from 6.1 per cent in the preceding quarter to 5.7 per cent in the first quarter reflecting an economy desperately trying to recover from the impact of demonetisation.
Raghuram Rajan’s comments on demonetisation that “Although there may be long-term benefits, I felt the likely short-term economic costs would outweigh them, and felt there were potentially better alternatives to achieve the main goals” made the debate on demonetisation getting more divisive last week as a slew of data showed that demonetisation contributed to a growth slump without meeting its targets.
Observers indicate that post the rollout of GST, manufacturing PMI numbers would give true picture on the state of economy. Near-term trend will be dictated by the reaction to weekend Cabinet rejig, fresh news flow on Infosys saga, progress of monsoon, investment pattern of FIIs and international crude oil prices.