The FII Layer - Keeping Markets Steady
Stock markets in India
have had a relatively benign week, as they witnessed mild swings to close the
week on an almost flat note. Macro-economic data released during the week was
mixed and consequently precluded the emergence of a strong trend. Global
sentiment did impact domestic market activity while buying interest by foreign
institutional investors (FIIs) kept larger losses at bay.
Macro-Economic
Updates
On the macro front,
India's exports rose by 17.86% to $26.98 billion in October 2018 mainly due to
the low base effect even as trade deficit widened to $17.13 billion, according
to the commerce ministry data. Imports during October 2018 also rose by 17.62%
to $44.11 billion, leading to widening of trade deficit to $17.13 billion. The
deficit widened despite a steep decline of 42.9% in gold imports to $1.68
billion during the month under review. The trade gap was $14.61 billion in
October 2017. Another spot of positive news came from IIP numbers. India's
industrial production grew 4.5% in September 2018 compared to the upward
revised 4.7% in August 2018. August 2018 growth had initially been estimated at
4.3%. Inflation as measured by the Consumer Price Index cooled down a bit and
stood at 3.31% in October 2018 compared to 3.70% in September 2018.
Additionally, the annual rate of inflation, based on monthly Wholesale Price
Index (WPI), stood at 5.28% (provisional) for the month of October 2018 (over
October 2017) as compared to 5.13% (provisional) for the previous month and
3.68% during the corresponding month of the previous year.
Global Updates
In the global
commodities market, Brent for January 2019 settlement was down 26 cents at
$65.21 a barrel. The contract fell $4.65 a barrel or 6.63% to settle at $65.47
a barrel during the week. A fall in crude prices could augur well for the
Indian economy considering that India imports a majority of its crude
requirements. Market risk sentiment improved following British Prime Minister
Theresa May’s statement that she had obtained enough support for her proposed
Brexit deal to move forward. The uncertainty surrounding a deal had earlier
weighed on risk sentiment. However, a spate of resignations from Prime Minister
Theresa May's government, including Brexit Secretary Dominic Raab, snipped this
recovery at the bud. Across the Atlantic, US stock snapped a multi-day slide
after media reports suggested that the US and China may step up efforts to
resolve their trade conflict, starting with postponing higher tariffs and
allowing working-level negotiators to iron out a deal.
Institutional
Activity
During the week,
foreign institutional investors have maintained a long bias on Indian equities
having net bought Indian equities worth INR 2657.64 crore since 12th
November 2018. A fillip was given to the market sentiment after provisional
data released by the stock exchange indicated that Foreign portfolio investors
(FPIs) bought shares worth a net Rs 2043.06 crore on 15 November 2018. Domestic
institutional investors have net sold Indian equities worth INR 1172.61 crore,
since 12th November 2018.
Source:
www.nseindia.com
Bloomberg.com
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