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A Mixed Bag | BNP Paribas Mutual Fund

A Mixed Bag

Stock markets in India traded the week on a fairly volatile note, scaling highs but eventually coming off towards the end of the week. While a thawing of relations between the US and China gave a boost to investor sentiment, a negative growth outlook for India by Moody's played spoilsport. While the Nifty did scale the psychologically important level of 12000 during the week, it finally settled closer to 11900 levels.

Macro-economic developments

On the macro-economic front, the IHS (Information Handling Service ) Markit India Services Business Activity Index rose to 49.2 in October 2019 from 48.7 in September 2019. The Composite PMI (Purchasing Managers Index) Output Index fell from 49.8 in September 2019 to 49.6 in October 2019. Despite showing an improvement, the index stays below the 50 mark that separates growth from contraction.

The credit rating agency Moody's lowered India’s outlook to negative from stable, while retaining the issuer rating at Baa2. The rating agency said that its decision to change the outlook to negative stems from increasing risks that economic growth in the country will remain materially lower than in the past, partly reflecting lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses, leading to a gradual rise in the debt burden from already high levels.

Global Developments

According to reports, there is a thawing of trade tensions between the U.S. and China. It has been reported that the two countries have agreed to roll back tariffs on each other's goods in phases as they work toward a deal between the two sides. October saw a small breakthrough in the ongoing US-China trade tussle with the announcement of what Trump has called “Phase One Trade Deal”. The deal calls for China to commit to substantially increase purchases of US agricultural products, further opening of its financial sector and keeping currency stable. However, a full-fledged resolution seems distant as President Xi doesn’t seem equally enthused about a quick-fix as Phase One pushes thorniest issues about punitive tariffs to Phase Two.

Additionally, the International Monetary Fund (IMF) has lowered its 2019 global growth forecast to a decade-low of 3% driven by growth downgrades across all major economies.

Institutional Activity

Indian equity markets continued to attract foreign investor flows. So far this month, foreign portfolio investors (FPIs) have been net buyers of Indian equities and have net bought equities worth INR 2806 crore. Domestic institutional investors, on the other hand, have been offloading Indian equities and have net sold equities worth INR 3983 crore, in the same time period.


Disclaimers: The material contained herein has been obtained from publicly available information, internally developed data and other sources believed to be reliable, but BNP Paribas Asset Management India Private Limited (BNPPAMIPL) makes no representation that it is accurate or complete. BNPPAMIPL has no obligation to tell the recipient when opinions or information given herein change. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Except for the historical information contained herein, statements in this publication, which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. BNPPAMIPL undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. The words like believe/belief are independent perception of the Fund Manager and do not construe as opinion or advise. This information is not intended to be an offer to sell or a solicitation for the purchase or sale of any financial product or instrument. The information should not be construed as an investment advice and investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Trustee, Asset Management Company, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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