Domestic Market Overview
Indian benchmarks snap two days winning streak; Nifty ends below 9,150 mark
Indian equity markets commenced the week on a sluggish note as the benchmarks showcased an unenthusiastic performance on Monday and settled with moderate cuts of over quarter percent. Marketmen turned cautious over the Centre's future reform policies in view of appointment of Yogi Adityanath as the Chief Minister of the country's most populous state. The MP from Gorakhpur, who lacks administrative experience, was unanimously elected the BJP legislature party leader at a meeting of the newly elected MLAs, in a move that took many by surprise. Sentiments remained subdued with a report that the all India Consumer Sentiments Index, measured by the BSE and CMIE, has hit a one-year low at 92.25 compared to 99.65 a year ago. This comes even as the wholesale price index based inflation jumped up to a 39-month high of 6.55%. However, losses remained capped with the report that the Cabinet approved four bills to implement a planned Goods and Services Tax (GST) bills, paving the way for Prime Minister Narendra Modi to implement the landmark tax reform from July. The four bills are likely to be taken up by Parliament this week and a separate state GST bill in state assemblies later. Some support also came with the report that the implementation of GST is likely to be fiscally neutral and its impact on inflation is expected to be less than 20 basis points. Further, India has begun the process of dismantling some of the last remaining controls in the foreign direct investment (FDI) framework. The department of economic affairs (DEA) has floated a draft Cabinet note for inter-ministerial consultation to scrap the Foreign Investment Promotion Board (FIPB), in line with a plan announced by finance minister Arun Jaitley in his February 1 budget.
The benchmark got off to a sedate opening tracking the dismal leads prevailing in Asian markets following Wall Street's declines and the G20's decision to drop a pledge to avoid trade protectionism. Thereafter, the indices traded in tight range below neutral line with moderate losses for most part of the session. Finally, the NSE Nifty, took a cut of over quarter percent to settle below the crucial 9,150 support level, while BSE Sensex slipped by over hundred points and closed above the psychological 29,500 mark. The market breadth on the BSE was pessimistic, as there were 1354 shares on the gaining side against 1443 shares on the losing side, while 226 shares remained unchanged.
Global Market Overview
Asian markets made a mixed closing on Monday
Asian equity markets ended mixed on Monday following Wall Street's decline and the G20's decision to drop a pledge to avoid trade protectionism, while the Federal Reserve's less hawkish-thanexpected comments continued to weigh on the dollar. Chinese stocks bucked the weak trend to close higher, as gains among energy stocks offset declines in the realty sector. China's property market picked pace in February despite the government announcing a raft of measures to temper speculative demand, data showed on Saturday. Japanese markets were closed for the Vernal Equinox holiday.
US markets closed mostly lower on Monday
The US markets closed mostly lower on Monday, as investors were reluctant to make big bets without major economic or corporate news. Chicago Fed President Charles Evans said that the Federal Reserve is on track to raise interest rates twice more this year after a policy tightening last week and it could be more or less aggressive depending on inflation and fiscal policies from the Trump administration. The public comments from Evans were among the first since the US central bank lifted its policy rate a notch last week, as expected. It also forecast roughly two more moves in 2017 in a nod to low unemployment and some inflation pressures. Evans, who is a voter on the Fed’s policy-setting committee this year and supported last week’s move, also echoed a comment from Fed Chair Janet Yellen that suggested the central bank could try to push inflation, now at 1.7 percent, above a 2-percent target. Evans added that while that level of growth could be reached in any given year, he said it was hard to imagine given the economy is already doing well, the labor market is very strong, and sectors like automobile sales are at all-time highs. There is room to get inflation up to 2 percent and in fact going beyond 2 percent a little bit to make sure we get there, and that it’s a symmetric inflation objective.
On the economy front, the Chicago Fed national activity index rose more-than-expected last month. Federal Reserve Bank of Chicago said that Chicago Fed National Activity Index rose to a seasonally adjusted 0.34, from -0.02 in the preceding month whose figure was revised up from -0.05.
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