Global con­cerns hit mar­kets

Money Times - - Market Review - By Deven­dra A. Singh

The Sen­sex fell 476.14 points to set­tle at 34981.02 while the Nifty closed 155.45 points lower at 10526.75 for the week that ended on Thurs­day, 22 Novem­ber 2018. In­dia’s ex­ports rose 17.86% to $26.98 bil­lion in Oc­to­ber 2018 while im­ports rose 17.62% to $44.11 bil­lion lead­ing to widen­ing of trade deficit to $17.13 bil­lion on ac­count of higher oil im­ports bill. The trade deficit widened de­spite a steep de­cline of 42.9% in gold im­ports to $1.68 bil­lion. Dur­ing April-Oc­to­ber 2018, ex­ports rose 13.27% to $191 bil­lion while im­ports rose 16.37% to $302.47 bil­lion leav­ing a trade deficit of $111.46 bil­lion. Crude oil im­ports in Oc­to­ber 2018 rose 52.64% to $14.21 bil­lion. The non-oil im­ports were up 6% at $29.9 bil­lion in the same month. In­dia’s in­dus­trial out­put in Septem­ber 2018 grew 4.5% from a year ear­lier. Fitch rat­ings agency has re­tained its sov­er­eign rat­ing for In­dia at BBB-, the low­est in­vest­ment grade with a sta­ble out­look, stat­ing that a weak fis­cal po­si­tion con­tin­ues to con­strain the rat­ings and there were sig­nif­i­cant risks to the macroe­co­nomic out­look. Fitch had last up­graded In­dia’s sov­er­eign rat­ing from BB+ to

BBB- with a sta­ble out­look on 1 Au­gust 2006.

The Gov­ern­ment of In­dia (GoI) has made a strong pitch to Fitch for an up­grade after ri­val Moody’s In­vestors Ser­vice in Novem­ber 2017 gave In­dia its first sov­er­eign rat­ing up­grade since 2004. Fitch be­lieves that the In­dian econ­omy con­tin­ues to ex­hibit some struc­tural weak­nesses rel­a­tive to peers and is less de­vel­oped on a num­ber of met­rics. It has raised the real GDP growth in the cur­rent fi­nan­cial year to 7.8%, up from 6.7% in FY18.

“This fore­cast is how­ever sub­ject to down­side risks from tight­en­ing fi­nan­cial con­di­tions, weak fi­nan­cial-sec­tor bal­ance sheets and high in­ter­na­tional oil prices. We fore­cast growth to de­cel­er­ate to a still-strong 7.3% in both FY20 and FY21 for the same rea­sons,” Fitch said in its re­port.

Fitch ex­pects cur­rent ac­count deficit (CAD) to widen to 3% in FY19 and 3.1% in FY20 from 1.9% in FY18. On the US Fed­eral Re­serve front, the Fed­eral Open Mar­ket Com­mit­tee (FOMC) unan­i­mously ap­proved keep­ing the fed­eral funds rates un­changed in a range of 2-2.25%. There was no men­tion of the volatil­ity that has gripped the fi­nan­cial mar­kets since mid-Oc­to­ber 2018. The com­mit­tee noted that the unem­ploy­ment rate has de­clined since the Septem­ber meet­ing. The US Fed­eral’s state­ment also noted that the growth of busi­ness fixed in­vest­ment has mod­er­ated from its rapid pace ear­lier in the year.

Key in­dex ad­vanced on Mon­day, 19 Novem­ber 2018, on buy­ing of eq­ui­ties by the FIIs. The Sen­sex was up 317.72 points to close at 35774.88.

Key in­dex plunged on Tues­day, 20 Novem­ber 2018, on global cues. The Sen­sex was down 300.37 points to close at 35474.51.

Key in­dex fell on Wed­nes­day, 21 Novem­ber 2018, on profit-book­ing by mar­ket par­tic­i­pants. The Sen­sex was down 274.71 points to close at 35199.80.

Key in­dex cor­rected on Thurs­day, 22 Novem­ber 2018, on sell­ing-off eq­ui­ties. The Sen­sex was down 218.78 points to close at 34981.02.

The In­dian stock mar­kets re­mained closed on Fri­day, 23 Novem­ber 2018, on ac­count of Guru Nanak Jayanti. Na­tional and global macro-eco­nomic fig­ures, Brexit and other events will dic­tate the move­ment of the mar­kets and in­flu­ence in­vestor sen­ti­ment in the near fu­ture. Mar­ket par­tic­i­pants will closely watch the trend of the In­dian ru­pee against the US Dol­lar, which is cur­rently hov­er­ing around 71-72 lev­els.

On the global front, the Dan­ish Cen­tral Bank (DCB) will pub­lish its quar­terly fi­nan­cial sta­bil­ity re­port on Fri­day, 30 Novem­ber 2018. The Re­serve Bank of Aus­tralia (RBA) is sched­uled to hold its in­ter­est rate and fi­nan­cial sta­bil­ity meet next month on Wed­nes­day, 5 De­cem­ber 2018.

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