Do­mes­tic Liq­uid­ity, GST, Push In­dian Bench­marks To Record Highs

Dalal Street Investment Journal - - MARKET WATCH -

Even though liq­uid­ity-driven rally shows no signs of let up, there are some vis­i­ble signs of fa­tigue in the mar­ket, with di­ver­gence in cer­tain sec­tion of mar­kets. The per­for­mance of newly listed stocks such as CDSL, AU Small Fi­nance Bank and HUDCO was the high­light of the mar­ket in past cou­ple of weeks. Mar­ket will be look­ing for­ward to the HDFC Life In­sur­ance and SBI Life In­sur­ance IPOS. Go­ing by the re­cent IPO per­for­mances, in­vestors will be ex­pect­ing a bumper list­ing for the said up­com­ing IPOS.

The past cou­ple of weeks saw mar­kets gain ground, push­ing the bench­mark indices to record highs. Nifty Bank in­dex is trad­ing at record highs. The pre­vi­ous week saw Supreme Court give respite to restau­rants and bars serv­ing liquors by per­mit­ting state govern­ments to de­no­tify high­ways within city lim­its. This move has given re­lief to ap­prox­i­mately 70 per cent of the bars in India, which is good news for the IMFL stocks.

Earn­ings sea­son started pre­vi­ous week, with TCS re­port­ing a drop in quar­terly prof­its by 5.9 per cent, while In­fosys re­ported a 1.36 per cent in­crease in prof­its. The FIIS re­mained net sell­ers in In­dian mar­kets with an out­flow of ₹360.24 crore, whereas the DIIS were seen buy­ing into eq­ui­ties and have lapped up eq­ui­ties worth ₹2,957.07 crore, as there is a pos­i­tive un­der­tone in the do­mes­tic mar­ket with the roll out of GST.

Tech­nol­ogy stocks saw an up­surge in the mar­kets, re­flected in Nas­daq be­ing the best per­form­ing in­dex in the global mar­kets, with a growth of 3.34 per cent for the pe­riod of the last two weeks. The In­dian bench­mark in­dex Nifty 50 be­came the world beat­ing in­dex, along with Nas­daq, with a re­turn of 3.13 per cent for the last two weeks. They were fol­lowed by Hong Kong’s Hang Seng in­dex, which was up by 2.66 per cent dur­ing the cor­re­spond­ing pe­riod. S&P 500 was up by 1.24 per cent in the past 15 days. Dow Jones In­dus­trial Av­er­age (DJIA) was marginally up by 0.7 per cent.

S&P BSE Re­alty was the top gain­ing in­dex among the do­mes­tic indices, up by 4.44 per cent. Re­alty in­dex was closely fol­lowed by S&P BSE Metal in­dex, up by 4.26 per cent. Flus­tered with the un­cer­tainty brought by GST, S&P BSE FMCG in­dex un­der­per­formed over past two weeks. FMCG in­dex was down by 1.27 per cent.

The US dol­lar is seen fall­ing to its 11-month low even as in­vestors re­main cagey on the eco­nomic re­vi­tal­i­sa­tion in the US. The gold prices are seen steady­ing in the past cou­ple of weeks even as the pre­cious metal hit its two-week high on July 18. Lo­cally, the In­dian eq­ui­ties will be tak­ing cues from the earn­ings sea­son and the de­vel­op­ments on the ground on the GST front. The rich val­u­a­tions and de­riv­a­tives data sug­gest mar­ket may turn volatile.

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