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Stock markets in India and across the globe traded on a fairly volatile note at the prospect of heightened tensions between the United Sates (US) and Iran. However, the trend sharply reversed towards the end of the week as global stock markets advanced as the United States and Iran backed away from the brink of conflict in the Middle East while investors reversed their safety plays.

Macro-economic developments

India's services sector activity gained momentum and touched a five-month high in December 2019, supported by an uptick in new business orders that boosted output as well as employment. The Information Handling Services (IHS) Markit India Services Business Activity Index improved from 52.7 in November 2019 to 53.3 in December 2019, underscoring the second strongest rate of increase in output in over a year, after July 2019. However, growth expectations continue to be tepid. The government has pegged India’s economic growth rate for FY20 at 5% revising it down from an initial estimate of 7.4%. Additionally, this is markedly slower than the FY19 growth rate of 6.8%. According to the first advanced estimates published by the Central Statistics Office (CSO), the gross value added (GVA) is expected to grow at 4.9% in FY20.

Activity was also seen in the commodities market. Gold prices in India jumped over 2% to record levels during the week as investors rushed to invest in safe-haven assets globally. Local gold futures hit an all-time high of Rs. 41,096 ($570.05) per 10 grams during the week, taking their gains to more than 5% in 2020 after rallying nearly 25% in 2019.

Global Developments

Iran fired a number of missiles at two Iraqi bases housing US troops in retaliation for the American strike that killed a top Iranian general last week. Oil prices spike briefly but subsequently fell back towards the $69/bbl mark after it became apparent that the two countries might prefer to avoid an all-out war.

Institutional Activity

Foreign portfolio investors (FPIs) have adopted a risk-off sentiment in response to the geo-political risks brewing globally. FPIs have net sold Indian equities worth INR 1733 crore in the time period 6th Jan-20 to 9th Jan-20. While domestic institutional investors (DIIs) have been net buyers, their buying activity has been tepid. In the same time period, DIIs have net bought Indian equities worth INR 1455 crore.

Source: 
www.nseindia.com 
Bloomberg.com 


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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