Mar­kets await earn­ings sea­son

Money Times - - Stock Buzz Market Review - By Deven­dra Singh

The Sen­sex de­clined 381.62 points to set­tle at 35695.10 while the Nifty closed at 10727.35 los­ing 132.55 points for the week that ended on Fri­day, 4 Jan­uary 2019.

The IHS Markit Nikkei Man­u­fac­tur­ing Pur­chas­ing Man­agers’ In­dex (PMI) plunged to 53.2 in De­cem­ber 2018 from 54 in Novem­ber. Pollyanna De Lima, Prin­ci­pal Econ­o­mist at IHS Markit, said “Out­put con­tin­ued to rise strongly in line with a ro­bust up­swing in sales. Com­pa­nies ben­e­fited from ris­ing in­ter­na­tional de­mand for goods as ex­port or­ders ex­panded for

the four­teenth straight month. Although new or­ders and out­put ex­panded at a slower rate last month, both have re­mained well into the ex­pan­sion ter­ri­tory for more than a year sup­ported by weaker in­fla­tion­ary pres­sures.” The IHS Markit Ser­vices PMI fell to 53.2 in De­cem­ber 2018 from 53.7 in Novem­ber. “In­dia’s ser­vice sec­tor con­tin­ued to en­joy pos­i­tive lev­els of ac­tiv­ity in De­cem­ber with new busi­ness and em­ploy­ment re­main­ing on an up­ward path,” De Lima said. Ac­cord­ing to a CRISIL re­port, the share of pri­vate sec­tor in­vest­ments in In­dia’s in­fra­struc­ture sec­tor hit a decadal low in FY18 with gaps in pol­icy, project struc­tures, in­sti­tu­tional ca­pac­ity and con­tracts lead­ing to a spike in stalled projects and debt lev­els and a dip in the in­vest­ment mo­men­tum. New project in­vest­ments have been the low­est in 12 quar­ters at about

Rs.1 lakh crore for Q3FY19, in­di­cat­ing a slow­down in the

In­dian econ­omy.

While the pace of or­der­ing had im­proved in the last two quar­ters, cap­i­tal goods and heavy en­gi­neer­ing ma­jors find the op­er­a­tional en­vi­ron­ment in In­dia to be chal­leng­ing. The RBI’s de­ci­sion to al­low a one-time re­struc­tur­ing of some loans to small busi­nesses is bound to fos­ter in­dis­ci­pline among bor­row­ers. K. Gupta, As­so­ciate Di­rec­tor at In­dia Rat­ings, said “This dis­pen­sa­tion may en­cour­age some of the MSME bor­row­ers which are oth­er­wise op­er­at­ing sat­is­fac­to­rily to opt for the scheme and im­pair the credit dis­ci­pline”.

The re­lief to small busi­nesses was Shak­tikanta Das’s first big pol­icy move as a RBI Gover­nor and sur­pris­ingly came a day af­ter the RBI’s fi­nan­cial sta­bil­ity re­port which warned that the sec­tor was con­tribut­ing to an out­sized growth in soured loans among state-run banks. The move has been roundly crit­i­cized by most an­a­lysts. “The in­her­ent weak­ness in op­er­a­tions of SMEs may still play out and man­i­fest af­ter the pe­riod of re­prieve is over. Such re­lief of­fered in the past has not led to any ma­te­rial im­prove­ment in as­set qual­ity for the sec­tor as these com­pa­nies’ cash flows re­main un­der pres­sure,” Gupta added.

On China’s eco­nomic sce­nario, the Caixin/Markit Man­u­fac­tur­ing PMI tum­bled to 49.7 in De­cem­ber 2018 from 50.2 in Novem­ber, mark­ing the first con­trac­tion since May 2017 as do­mes­tic and ex­port or­ders con­tin­ued to weaken. China’s

of­fi­cial man­u­fac­tur­ing PMI fell to 49.4 in De­cem­ber 2018 from 50 in Novem­ber whereas China’s of­fi­cial non­man­u­fac­tur­ing PMI rose marginally to 53.8 in De­cem­ber 2018 from 53.4 in Novem­ber. The US Fed­eral Re­serve (US Fed) raised its bench­mark in­ter­est rate by a quar­ter-point to 2.5% from 2.25%. It said that the cen­tral bank will con­tinue trim­ming its bal­ance sheet by $50 bil­lion each month leav­ing open the pos­si­bil­ity that con­tin­ued strong data could force it to raise rates to the point where they start to brake the econ­omy’s mo­men­tum. Key in­dex edged lower on Mon­day, 31 De­cem­ber 2018, on neg­a­tive cues. The Sen­sex closed 8.39 points lower at 36068.33.

Key in­dex ad­vanced on Tues­day, 1 Jan­uary 2019, on fresh buy­ing by for­eign funds. The Sen­sex closed 186.24 points higher at 36254.57.

Key in­dex tum­bled on Wed­nes­day, 2 Jan­uary 2019. The Sen­sex closed 363.05 points lower at 35891.52. Key in­dex plunged on Thurs­day, 3 Jan­uary 2019, on US-China trade war cues. The Sen­sex closed 377.81 points lower at 35513.71.

Key in­dex set­tled higher on Fri­day, 4 Jan­uary 2019, on buy­ing of stocks. The Sen­sex closed 181.39 points higher at 35695.1.

Na­tional and global macro-eco­nomic fig­ures will dic­tate the move­ment of the mar­kets and in­flu­ence in­vestor sen­ti­ment in the near fu­ture. On the Ru­pee sce­nario, mar­ket par­tic­i­pants will closely watch the In­dian ru­pee trend against the US Dol­lar. The gov­ern­ment will re­lease data based on WPI and CPI for ur­ban and ru­ral In­dia for De­cem­ber 2018 by midJan­uary 2019. The RBI’s next mon­e­tary pol­icy re­view meet is sched­uled on 5 Fe­bru­ary 2019.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.