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Greenback Exerting Pressure From All Quarters
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Greenback Exerting Pressure From All Quarters

GREENBACK EXERTING PRESSURE FROM ALL QUARTERS

Stock markets in India started the week on a strong clip as key benchmark indices continued to scale record highs and trade with strength. Positive global developments coupled with stability in both the currency as well as crude oil prices at the beginning of the week gave investors enough reasons to participate in the equity markets. However, as the US-Sino trade war concerns continue to loom over the markets, investors decided to take some money off the table and book profits towards the

end of the week. Additionally, weakness in the INR further dampened investor sentiment and renewed inflation and trade deficit concerns.

Global Developments

Global sentiment got a boost after US Federal Reserve Chairman Jerome Powell said that gradual rate hikes are now expected and China's central bank decided to lift its official yuan midpoint by more than what the street expected. Investors also turned positive after the United States and Mexico reached a trade agreement. Notwithstanding these developments, the uncertainty over trade-war implications capped gains and held investor sentiment in check. Additionally, media reports

towards the end of the week indicating that US President Trump has stepped up his trade talks made investors wary and put pressure on stocks.

Currency Update

Towards the end of the week, the Indian Rupee fell against the US dollar to trade at a lifetime low of 71. The weakness in the rupee can largely be attributed to month-end dollar demand from importers. A sharp rise in the crude oil prices in the international market and weakness in the emerging markets currencies also pressurized the rupee. Oil prices inched higher towards the end of the week on a fall in U.S. crude inventories and expected disruptions to supply from Iran and Venezuela. Besides the robust month-end demand for the American currency from oil importers, expectations of rising interest rates amid lingering Sino-US trade tensions also weighed on the Indian Rupee.

Institutional Activity

Institutional activity during the week has been fairly divergent. Foreign institutional investors (FIIs) started the week on a tepid note, showing no clear bias. However, selling pressure from FIIs intensified towards the end of the week. Domestic institutional investors, on the other hand, have been strong buyers of Indian equities, this past week. FIIs have net sold Indian equities worth INR 366.39 crore, since 27th August, 2018. DII have net bought Indian equities worth INR 433.65 crore, in the same time period. For the month of August 2018, FIIs have net sold Indian equities worth INR 2015.72 crore while DIIs have net bought Indian equities worth INR 2650.80 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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