The Indian markets had a dream run during the week, thanks to positive factors such as a rising rupee, falling crude oil prices, a US waiver of sanctions from Iran and decent corporate results. The benchmark indices gained about 5 percent during the week, with the Nifty exceeding the 10,550 mark.
A guard passes the NSE building in Mumbai (India) on February 9, 2018. REUTERS / Danish Siddiqui / Files
This relief comes after a decline of 8 percent in October and a decline of 3 percent in the previous week.
Domestic liquidity issues were apparently proactively managed by RBI, which conducted open market operations (OMOs) of 360 billion rupees in October and announced OMOs worth 400 billion rupees in November.
In terms of institutional activity, FII's net sellers were Rs.38.63 billion, while DII's net buyers were Rs.53.56 billion in equities.
The rupee ended at a month high of $ 72.42. Oil prices posted their largest weekly loss since February, dropping nearly 6 percent to $ 73. The US has reportedly agreed to grant exemptions to eight nations, including India, to continue importing Iranian crude after sanctions against the OPEC manufacturer were re-imposed on 5 November. India is also looking for ways to pay that crude in rupees.
Public speculation between the government and the RBI eased slightly after the latter had described the central bank's autonomy as "substantial."
At the political level, Prime Minister Narendra Modi has presented measures to tackle MSME's credit and liquidity problems. The government announced the launch of a new portal that will help micro, small and medium-sized enterprises to obtain fast lending.
India's gross revenue from GST exceeded a trillion rupees in October due to increased festival revenues and higher compliance. Compared to 944.42 billion rupees in September.
The government's target was a monthly GST rally of around one trillion rupees for the current fiscal year, but the actual mop-up value fell short of the goal from month to month. The only exception was April, when the collections exceeded the targets. However, due to year-end adjustments, this was considered a discount.
Stock-specific measures focused on power companies such as Adani Power and Tata Power after the Central Electricity Regulatory Commission's (CERC) Supreme Court allowed for the change of Power Purchase Agreements (PPAs) of three power plants in Gujarat. The ruling paves the way for CERC to change the PPA so that these companies can pass on the increased fuel costs.
ICICI Bank rose after announcing better second quarter results. The brokerage was optimistic and the bank remained one of D-Street's preferred stocks.
Automotive stocks gained ground following the release of strong October sales. Hero MotoCorp increased total sales by 16.4 percent to 7,346,668 units. Bajaj Auto recorded its highest ever monthly motorcycle sales during the month. Sales of motorcycles increased by 33 percent to 4.32 lakh units and sales of tricycles by 30 percent. M & M posted a 17 percent increase in tractor sales to 47,376 units, while total exports rose 2 percent to 1,064 units.
In terms of the macroeconomic front, industrial production in core business rose more slowly by 4.3 percent in September, compared to 4.7 percent in August, reflecting a decline in cement, steel, refinery and natural gas production.
Manufacturing growth gained momentum in October as companies responded to higher order intake by increasing production, purchasing and employment. The purchasing managers index for Nikkei India rose from 52.2 in September to 53.1 in October.
Meanwhile, India climbed 23 places to 77 in the World Bank's Business Index, making it the first time in South Asia and third in the BRICS countries.
For the coming week, markets are expected to continue to grow on positive news flows into key variables such as rupee, oil and Iran. In the coming weeks, however, investors will focus on the state elections, where we should see volatility. The gains made last week seem to indicate that the Nifty has reached an interim level and should consolidate at its current level, albeit with minor corrections. You should start nibbling.
About the author
Ambareesh Baliga has about 25 years of stock market experience and has worked with Karvy and Kotak groups in the past. He is a regular market commentator for various business channels. He is a merchant of the University of Calcutta and a trained accountant.
The views expressed in this article are not those of Reuters News.