The outcome of the Reserve Bank of India’s (RBI) monetary policy meeting, assembly elections, domestic and global macroeconomic data, trend in global markets, the movement of rupee against the dollar and crude oil price movement will dictate trend on the bourses in the near term.
Auto stocks will be in focus as the auto companies will start announcing monthly sales numbers for November 2018 starting from 1 December 2018.
A steady decline in crude oil prices and firmness in rupee boosted domestic stocks in the week gone by. In the week ended Friday, 30 November 2018, the Sensex rose 1,213.28 points or 3.47% to settle at 36,194.30, its highest closing level since 1 October 2018. The Nifty 50 index rose 350 points or 3.32% to settle at 10,876.75, its highest closing level since 1 October 2018.
The BSE Mid-Cap index rose 159.01 points or 1.07% to settle at 15,039.35. The BSE Small-Cap index rose 76.33 points or 0.53% to settle at 14,427.16.
In Asia, growth in China’s services industry slowed for the second straight month in November, an official survey showed. The official non-manufacturing Purchasing Managers’ Index (PMI) released on Friday fell to 53.4 from 53.9 in October, but remained well above the 50-point mark that separates growth from contraction.
Growth in China’s manufacturing sector stalled for the first time in over two years in November. The official Purchasing Managers’ Index (PMI) fell to 50.0 in November from 50.2 in October. The 50-point mark is considered neutral territory, indicating no growth in activity or contraction on a monthly basis.
On the US data front, the number of Americans who applied for unemployment benefits last week rose to 234,000, their highest level in six months, according to the Labor Department.
The Commerce Department said gross domestic product grew at a 3.5% annualized rate in the third quarter, in a second estimate that matched the first.
The Commerce Department reported that consumer spending in October rose by 0.6%, while income rose by 0.5%. The same release showed personal-consumption expenditures, the Fed’s preferred measure of inflation, right at the central bank’s target of 2% year-over-year.
The US equity indices recovered sharply in the last week after dovish comment by US Federal Reserve Chairman boosted sentiment.
Indian equity markets mirrored a rally in global stocks in the last week of November 2018 after dovish comment by US Federal Reserve Chairman pushed up appetite for risk assets. A fall in crude oil prices and a firmness in rupee also boosted investors’ sentiment.
The Reserve Bank of India (RBI) on Thursday, 29 November 2018, relaxed rules for non-banking financial companies (NBFCs) to sell or securitise their loan books. In order to encourage non-banking financial companies (NBFCs) to securitise/assign their eligible assets, RBI has been decided to relax the minimum holding period (MHP) requirement for originating NBFCs, in respect of loans of original maturity above 5 years, to receipt of repayment of six monthly instalments or two quarterly instalments (as applicable).
On the political front, Assembly elections in Madhya Pradesh and Mizoram were held on 28 November 2018. Polling in Rajasthan and Telangana will be held on 7 December 2018. The election to the 90-member Chhattisgarh Assembly was held in two phases 12 and 20 November 2018. Counting of votes will be held across all the five states on 11 December 2018.
Yes Bank lost 13.24%. Rating agency ICRA downgraded Yes Bank’s domestic long term ratings of Senior Debt Instruments to ICRA AA from ICRA AA +and Subordinate Debt Instruments to ICRA AA- from ICRA AA. The ratings remain on watch with negative implications.
Sun Pharmaceutical Industries lost 6.37%. Sun Pharma announced that it entered into a definitive agreement to acquire Pola Pharma Inc. (Pola Pharma), a Japanese pharmaceutical company engaged in research and development, manufacture, sale and distribution of branded and generic products in Japan. The portfolio of Pola Pharma primarily comprises dermatology products. The transaction is expected to close on or before 31 January 2019, subject to completion of closing conditions.
Sectoral Indices Trends:
The sectoral indices closed mostly in positive territory during last week. The S&P BSE Auto, IT and Bankex rose by 2.5%, 6.4% and 2.6% respectively.Oil and Gas and PSU indices declined by 1.3% and 2.6% respectively.
RBI’s plan to infuse Rs.400 billion into the system through open market operations (OMOs) in the month of December 2018 have led to the INR strengthening from lows of Rs 74.49 to the USD seen in the month of October 2018 to levels of below Rs 70 in the last week of November 2018.