Markets Take A Breather To Welcome The New Year
US indices Dow Jones Industrial Average and the S&P 500 witnessed their worst December since 1931 this year, as investors reacted to the government shutdown, US-China trade woes, hike in interest rates and US President Donald Trump’s offensive comments on US Federal Reserve Chairman Jerome Powell.
Investors enjoyed the last days of the bygone year relaxing on the sidelines. The last fortnight was no different from the rest of the year 2018, but the silver lining was that the mid-cap and small-cap stocks ended the year on a strong note. Emulating the rest of the year, the benchmark indices BSE Sensex and Nifty50 were down by 0.56 and 0.24 per cent, respectively, in the past two weeks, while the broader indices moved northward with BSE Mid-cap and Small-cap rising 1.36 and 1.13 per cent, respectively. The concerns about the slowing economic growth in China, trade war friction and a partial government shutdown in the US triggered a sell-off in the international markets, leaving all the major global indices in the red and the selling pressure was also experienced in the Indian markets.
Sectorally, the banking sector was the most active, as the BSE Bankex gained 0.68 per cent, while BSE Power index gained nearly 2 per cent. With volatility in the currency market and the Indian rupee trading at around the Rs.70 per US dollar, IT stocks lost ground during the fortnight and the IT index became the worst performing index, declining by 3.71 per cent, followed by Realty, which was down 1.91 per cent. The Auto and FMCG indices also ended the year in the negative territory and lost 0.95 per cent and 0.46 per cent, respectively, followed by Metal index, down by 0.27 per cent The global markets dipped significantly as they experienced high volatility in the absence of liquidity due to the Christmas holiday season.
Following the trend of the last fortnight, among the US indices, the tech index Nasdaq lost the most and was down by 1.75 per cent, followed by S&P 500 and Dow Jones Industrial, which were down by 1.54 per cent and 1.13 per cent, respectively. In the European markets, DAX lost the most and was down by 1.98 per cent, followed by the CAC40 and FTSE100, which were down by 1.44 per cent and 0.67 per cent, respectively. On the Asian front, Nikkei lost the most and was down by 6.94 per cent, followed by Shanghai Composite index and Hang Seng, which lost 4.01 and 0.93 per cent, respectively, during the fortnight.
Bucking the trend this fortnight, the DIIs turned net sellers, albeit with lower volumes. The trading data showed that FIIs were net buyers to the tune of Rs. 942.83 crore, while the DIIs were net sellers with an outflow of Rs. 234.60 crore.
On the other hand, precious metal gold ended the year on a strong note, registering its best monthly gain since January 2017 as the US dollar dipped reacting to the US President’s criticism of Federal Reserve’s chief. In the domestic market, gold traded at Rs 32,470 per 10 gram, while in the international market, it was around US$1,280 an ounce.
Some of the positive factors such as fresh infusion of capital in the state-owned banks and the RBI report stating that the banks are on the course to recovery are expected to keep the markets upbeat, going ahead.
