A Week of Mixed Data and Mixed Sentiments
A WEEK OF MIXED DATA AND MIXED SENTIMENTS
Stock markets in India opened the week on a somewhat positive note but were unable to sustain the positive momentum. Initial positive momentum gave way to heavy selling pressure as key benchmark indices wiped off initial gains to plummet into negative terrain. Weak macro-economic numbers coupled with fears of a slowdown in global growth kept gains at bay.
On the macro front, Wholesale Price Index (WPI) for September 2018 rose by 0.7% to 120.8 (provisional) from 120.0 (provisional) for the previous month. The annual rate of inflation, based on monthly WPI, stood at 5.13% (provisional) for September 2018 (over September 2017) as compared to 4.53% (provisional) for the previous month and 3.14% during the corresponding month of the previous year. Additionally, the all-India general CPI inflation rose marginally to 3.77% in September 2018 (new base 2012=100), compared with 3.69% in August 2018. The corresponding provisional inflation rate for rural area was 3.34% and urban area 4.31% in September 2018 as against 3.41% and 3.99% in August 2018. The core CPI inflation declined to 5.82% in September 2018 compared with 5.95% in August 2018.
However, improving trade numbers gave some short-lived respite to the markets. India's merchandise trade deficit during April-September 2018 was reported at $94.32 billion. Trade deficit for September 2018 was at $13.98 billion, which is the lowest in the last 5 months, despite high oil prices.
The minutes of the Fed's September meeting, released earlier in the week, indicated that policy makers are prepared to forge ahead with increases and will likely hike rates again as early as December, as expected. This further reinstated the Central Bank’s hawkish stance. Meanwhile, US President Donald Trump continued his criticism of the Federal Reserve, calling it his biggest threat as it was raising rates too fast. Trump had previously said that the Fed has "gone crazy" and attributed last week's plunge on Wall Street to the US central bank.
Despite the markets inching lower, institutional activity has been mixed. Foreign institutional investors (FIIs) have net sold Indian equities worth INR 957.75 crore during the week. It is interesting to note that FIIs were small buyers of Indian equities in two of the sessions during the week. Domestic institutional investors continue to be net buyers and have net bought Indian equities worth INR 1011.11 crore, in the same time period.
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