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Tit-for-tat trade games playing with investor sentiment
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Tit-for-tat trade games playing with investor sentiment

TIT-FOR-TAT TRADE GAMES PLAYING WITH INVESTOR SENTIMENT

It has been a buoyant week on the bourses with key benchmark indices scaling fresh record highs, during the week. Positive global stocks, optimism over a trade resolution between the USA and China and strong institutional activity at home fuelled investor sentiment and pushed the bourses to trade with sharp gains. Domestic sentiment got a fillip after data released by the exchange showed that both domestic and foreign funds have been net buyers of Indian equities, during the week. However, market sentiment dipped towards the end of the week as it became clear that there would be no major progress with respect to the ongoing trade war conflict between China and the US.

Developments during the week

Despite starting the week on an optimistic note, domestic investors became cautious towards the end of the week in the wake of Beijing implementing new retaliatory tariffs against the United States. Investors digested the latest trade news after China officially retaliated against fresh duties, worth $16 billion, on goods from the United States. The closely watched trade talks between the US and China wrapped up on Thursday (August 23, 2018) with no major progress. The conclusion of the talks came just hours after Beijing and Washington rolled out their latest round of tariffs. The $16 billion in imports hit by each side took the total value of goods covered as a result of President Donald Trump's trade war with China to $100 billion.

Monetary Policy and Interest Rates

The Fed minutes released during the week indicated that there is broad-based support for another interest-rate hike in September 2018, with many officials stating that as long as economic data remains strong, it would likely soon be appropriate to take another step in removing policy accommodation. However, they also suggested that any tightening will have to pause if the US trade tensions with partners continue to escalate.

Institutional Activity

The week gone by was truncated by a holiday and consequently, market activity was tepid as well. Select stocks on the index saw high buying activity which lent support to the benchmark. Foreign institutional investors (FIIs) have net bought Indian equities worth INR 204.42 crore since August 20, 2018. In the same time period, domestic institutional investors net bought Indian equities worth INR 933.09 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.

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