RBI policy to dictate trend
The Sensex plunged 614.46 points to settle at 36227.14 while the Nifty closed 212.65 points lower at 10930.45 for the week that ended on Friday, 28 September 2018.
The government reported a fiscal deficit of Rs.5.9 lakh crore ($81.4 billion) for April-August 2018 or 94.7% of the budgeted target for FY19 compared to 96.1% in FY18. Net tax receipts in the first five months of FY19 were Rs.3.66 lakh crore. The government expects to trim the deficit to 3.3% of GDP this fiscal year after meeting an upwardly revised fiscal deficit target of 3.5% of GDP in FY18.
World Trade Organization (WTO) expects world trade growth to be slower than previously thought in 2018 and 2019 although the direct economic effects of a trade war that has blown up this year have been modest so far. The WTO forecasts world trade in goods to grow 3.9% this year.
The WTO said in its statement that some of the downside risks it had warned of in April had now materialized. The direct economic effects of these measures have been modest to date but the uncertainty they generate may already be having an impact through reduced investment spending. “While trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners,” WTO Director-General Roberto Azevedo said.
Since the WTO’s previous forecast, US President Donald Trump has launched a trade war by imposing tariffs on hundreds of billions of dollars of imports from China which has hit back with tariffs of its own as well as taxing aluminum and steel imports from around the world to protect US jobs. Mr. Trump has also threatened to slap tariffs on virtually all Chinese goods if China does not back off.
The Federal Open Market Committee (FOMC) raised the overnight funds rate by a quarter points to a range of 2-2.25% in view of realized and expected labor market conditions and inflation. Members of the rate-setting committee kept their year 2018 median forecast for interest rates unchanged at 2.4% suggesting that a December rate hike remained in play, which would take the total rate hikes in 2018 to four. The outlook on rates for both 2019 and 2020 were also maintained at 3.1% and 3.4% respectively.
In a sign of confidence in the USA economy, members of the rate-setting committee raised their economic growth projection for this year forecasting USA economic growth of 3.1% in FY18. The growth outlook for 2019 was hiked by 10 bps to 2.5% but remained unchanged for 2020. The US Federal left its outlook on inflation unchanged forecasting corePCE inflation outlook for 2018 at 2%.
Key indices corrected on Monday, 24 September 2018, on a huge sell-off by the FIIs. The Sensex slumped 536.58 points to close at 36305.02 while the Nifty was down 175.7 points to close at 10967.4.
Key indices advanced on Tuesday, 25 September 2018, on fresh buying by market participants on account of positive cues. The Sensex surged 347.04 points to close at 36652.06 while the Nifty gained 100.05 points to close at 11067.45. Key indices ended lower on Wednesday, 26 September 2018, on account of rising crude oil prices which are hovering near $82/barrel. The Sensex fell 109.79 points to close at 36542.27 while the Nifty was down 13.65 points to close at 11053.8.
Key indices extended selling-off equities on Thursday, 27 September 2018, as financial crisis in the NBFC sector weakened the market sentiment. The Sensex tumbled
218.10 points to close at 36324.17 while the
Nifty was down 76.25 points to close at 10977.55.
Key indices settled lower on Friday, 28 September 2018, as the markets witnessed a downtrend over the NBFC crisis. The Sensex fell 97.03 points to close at 36227.14 while the Nifty was down 47.1 points to close at 10930.45.
The Indian stock market will remain closed on Tuesday, 2 October 2018, on account of Mahatma Gandhi Jayanti 2018.
National and global macro-economic figures and events will dictate the movement of the markets and influence investor sentiment in the near future. Market participants will closely watch the fluctuations in global crude oil prices along with developments in
Iran and Turkey and their impact in the forex market, where the INR breached the
73 mark against the USD.
The RBI monetary policy review meet will be held on 5 October 2018. The HSBC Manufacturing Purchasing Managers’ Index
(PMI) and the HSBC Services PMI for September 2018 are scheduled for release in the first week of October 2018.
The government is scheduled to release data based on wholesale price index (WPI) and the combined consumer price indices (CPI) for urban and rural India for September 2018 by mid-October 2018.
On the global front, USA and other Euro-nations macro-economic data for September 2018 is scheduled for release in the first week of October 2018. China’s macro-economic data for September 2018 is also due for release in the next few weeks.