One Above - Markets notching up gains
It has been a choppy week on the bourses as benchmark indices oscillated between sharp gains and sharp losses, through the week to finally close with marginal gains. In line with global markets, domestic markets started the week on a negative note to trade with losses of nearly 1%. However, subsequent positive macroeconomic updates during the week changed investor sentiment and propelled the markets towards gains of over 2%. Trading sentiment got a boost amid a fall in global crude prices and a rising rupee. Markets got a further fillip after the government clarified on a tussle with the Reserve Bank of India and said that it respects and nurtures central bank's autonomy.
On the macroeconomic front, manufacturing sector growth in India gathered momentum in October 2018 with the Nikkei India Manufacturing Purchasing Managers' Index (PMI) rising from 52.2 in September 2018 to 53.1 in October 2018. According to the survey, firms responded to stronger order inflows by scaling up production, input purchasing and employment. India's exports rose by 9.8%, in the financial year 2017-18, which is the highest rate of growth in six years. This positive growth in exports has taken place at a time when there is a lot of negative headwinds globally. Market participants were cheered by this and accordingly took to buying Indian equities. Additionally, the combined Index of Eight Core Industries stood at 127.20 in September 2018, which was 4.3% higher as compared to the index of September 2017. Its cumulative growth during April to September 2018-2019 was 5.5%. The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
Meanwhile, India climbed another 23 points in the World Bank's ease of doing business ranking to 77th place, becoming the top-ranked country in South Asia for the first time and third among the BRICS.
On the economic front, India and Japan signed a bilateral currency swap agreement on Monday, October 29, 2018, for up to $75 billion during Prime Minister Narendra Modi's visit to Tokyo. Under the arrangement, India can acquire dollars from Japan in exchange for rupees. The agreement would help bring greater stability to foreign exchange and capital markets in India. In the global commodities markets, Brent for January 2019 settlement was off 18 cents at $72.71 a barrel. The contract had fallen $2.15 a barrel or 2.87% to settle at $72.89 a barrel during the previous trading session.
October 2018 has been a tumultuous month on the bourses with foreign institutional investors (FIIs) aggressively selling Indian equities. FIIs have net sold Indian equities worth INR 29200 crores in October 2018 which is the highest net sell figure by the FIIs in the last 10 years. FIIs had net sold Indian equities worth INR 29447 crore in January 2008. Domestic institutional investors, on the other hand, have continued to shore up Indian equities and have net bought equities worth INR 26034 crores in October 2018.
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