Global Macro & Markets
Global market continued to rally
in October on the back of emergence of green shoots in global macro data. Year
till date in 2019, MSCI World is up 18.6%. Central banks’ easing and progress
on Brexit as well as US-China trade talks helped the sentiments. US$ also
partly gave up its year till date gains in October. Dollar index fell 2%m/m.
Within equities, the gain was broad based across markets. However, Emerging
markets (EM) equities materially outperformed. With developed markets, Japan
performed better than the US and Euro area by rising 5.4%m/m in October. The
S&P 500 index (US) gained nearly 2%m/m in October. EM equities gained
4.1%m/m as gained were broad-based across most EMs. After strong gain in
September, Indian equities performed well in October by rising (Nifty index)
3.5%m/m. INR remained stable versus US$. Commodities prices improved in
October. LME metal index went up 1.5%m/m. Crude oil prices ended the month on a
flat note.
Domestic Macro And Market
Indian markets continued to rise
In October on the back of improved sentiments. The broad market outperformed as
midcap and small cap jumped 5.4% and 2.9%, respectively in October. FPI
(Foreign Portfolio Investor) inflows continued for the second consecutive month
with net inflows of US$1.8bn in Indian equities. Stocks got the boost from
better than expected earnings season along with media reports that investor
friendly moves by the Government will continue after historic Corporate tax
rate cut announcement in September. Consumer Discretionary, Energy and
Financials outperformed in October while Industrials, IT Services,
Communication Services and Materials underperformed during the month.
India's High Frequency Data Update:
After remaining weak for a
prolonged period, there are tentative signs of some improvement in economic
data.
- PMI: India's manufacturing PMI declined to a two year low at 50.6 in October.
- Auto sales: Automobile sales improved on the back of festive demand in October.
- Core sector production: Growth in the eight core sectors in September slumped further to -5.2%yoy. Core sector growth expanded by 1.3%yoy in 1HFY2019-20.
- Index of Industrial Production (IIP): August IIP contracted 1.1%yoy led by consumer durables and capital goods production. April to August IIP growth stands at 2.4%yoy.
- Credit growth: Bank credit growth slowed down to 8.7%yoy in September versus 10.2% in August.
- Trade deficit: Trade deficit in September 2019 came in lower at US$10.9 bn as against US$15 bn in September 2018. August exports degrew 6.6%yoy, imports witnessed degrowth of 13.9%yoy. Taking merchandise and services together, overall trade deficit for April-September 2019-20 is estimated at USD 45 bn as compared to USD 60 bn in April-September 2018-1
- Inflation: CPI inflation came in at 4%yoy in September. Core CPI inflation moderated to 4.2%yoy. WPI inflation softened to 0.3% in September led by decline in fuel prices.
- GST collection: Gross GST collections for October improved marginally to INR 953 bn versus INR 919 bn collected in previous month.
- RBI monetary policy: In the October monetary policy, the RBI lowered repo rate further by 25bps and maintained the ‘accommodative’ policy stance. All MPC members unanimously decided to cut rates and maintain the need for keeping the easing bias as inflation trends are benign and growth recovery may take some time.
- Corporate tax rate cut: India jumped into the 63rd rank in the World Bank’s latest Ease of Doing Business rankings, soaring 14 notches from last year. India’s ranking has improved 79 notches in the last six years as the World Bank recognized India as one of the top 10 improvers for the third successive time. As per the World Bank, with the current reform agenda like Insolvency and Banking Code, enforcing contracts, tax reforms being completed next year or two, India may get within the top 50.
Sources:
Various publications
Disclaimer: The
information provided herein is based on publicly available information and
other sources believed to be reliable, but involve uncertainties that could
cause actual events to differ materially from those expressed or implied in
such statements. The document is given for general and information purpose and
is neither an investment advice nor an offer to sell nor a solicitation. While
due care has been exercised while preparing this document, we do not warrant
the completeness or accuracy of the information. We will not accept any
liability arising from the use of this material. The recipient of this material
should rely on their investigations and take their own professional advice.
Follow, Like, subscribe and
share
"Your Trust, Our
Financial Expertise."
Infyture, Investment For Your Future
Contact: +91-7990271953
// 8347871052
Website: http://infyture.wordpress.com
Great understanding. And good info compilation. Thank you for this article.
ReplyDeleteThanks for appreciating.
Delete