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Trends Still at bay
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Trends Still at bay

TRENDS STILL AT BAY

It was yet another week of intense selling in the equity markets as the ongoing negative sentiment continued to plague investors and influence their trading activity. A depreciating rupee, a sudden global rout, spiking bond yields in the US and an FII exodus from Indian equities pulled markets lower. At the beginning of the week, initial caution gave way to heavy selling after the monetary policy committee (MPC) in its policy meet decided to keep benchmark rates unchanged at current levels and cut inflation target to 4% for Q2FY19. Markets did get a bit of a respite for a day after the Reserve Bank of India (RBI) announced that it will inject liquidity into the system through the purchase of government bonds. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI decided to purchase Government securities under Open Market Operations for an aggregate amount of Rs 12000 crore towards the end of the week. In the foreign exchange market, the rupee depreciated further against the US dollar hitting a record low of 74.50.

Despite trading in the negative zone for most of the week, sharp gains on the last trading day of the week pulled markets higher to finally close near the flat line.

Global Markets

Towards the end of the week, global markets too traded on a tepid note. Wall Street suffered its worst drubbing in eight months. US stocks slumped to close sharply lower with the Dow Jones Industrial Average and the S&P 500 having its worst trading day in the week, since February 2018. Spooked by rising bond yields, investors took to selling equities. The surge in bond yields made stocks look less attractive compared to bonds while also threatening to curb economic activity and profits.

Institutional Activity

Intense selling activity by foreign institutional investors (FIIs) has been one of the reasons for the weakness in the rupee. FIIs have net sold Indian equities worth INR 7012.99 crore since 8th October 2018. So far this month, they have net sold Indian equities worth INR 16535 crore. Domestic institutional investors on the other hand have net bought Indian equities worth INR 14214.14 crore since the beginning of this month.

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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