Indian Markets move above Trade War
Indian Markets Move Above Trade War
Stock markets in India traded the week on a positive note as domestic as well as Asian developments gave a fillip to investor sentiment. Both the benchmark Sensex and the Nifty scaled record highs during the week and despite giving up some gains, traded at elevated levels. However, profit booking trickled in at higher levels and dragged the indices marginally lower, on the last trading session of the week. Investors also adopted a note of caution ahead of the June, 2018 IIP (Index of Industrial Production) data, to be announced later today.
During the week, the International Monetary Fund (IMF) cautioned about the inflation and rate regime in the country. The IMF reportedly said that India's central bank will need to gradually tighten monetary policy further due to rising inflation, driven mainly by higher oil prices and a falling rupee. The IMF expects that the average inflation is likely to rise to 5.2% in 2018-2019 from a 17-year low of 3.6% in the previous fiscal year. It said that inflationary pressures were also exerted by a pick-up in domestic demand and recent hike in procurement prices of major crops by the government, as it seeks to win support from farmers ahead of national elections next year.
Global shares traded on a cautious note as the ongoing trade war tensions between the United States and China weighed on investor sentiment. In the latest round of tariff clashes, the Chinese Ministry of Commerce announced a 25% tariff on $16 billion worth of American goods. The 333 goods being targeted by China include vehicles such as large passenger cars and motorcycles. The announcement came after the US Trade Representative's office released a finalised list of $16 billion worth of Chinese goods that will be hit with tariffs, taking effect on 23 August 2018. The latest US list brings the total amount of Chinese goods facing a 25% tariff to $50 billion.
Markets have traded the week on a firm clip with positive institutional activity. Foreign institutional investors (FIIs) have net bought Indian equities worth INR 1502.84 crore since 6th August, 2018. Domestic institutional investors, on the other hand, were near the flat line and net sold Indian equities worth INR 156.37 crore, in the same time period.
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