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Market Review

​​​​​​​​​​​​​​​​​​​​​OVERVIEW OF MARKET

Nifty gained 1.5% during the month led by in line corporate earnings, Governments efforts to revive stressed sectors and resolution of a large stressed account. Further, RBI, at its latest policy meet, left interest rates unchanged and retained its policy stance as accommodative. Global sentiments eased as a result of positive news flows surrounding US-China trade talks. Among the sectors, BFSI, Metals and Pharma outperformed while Auto, FMCG and IT underperformed the Nifty during the month. FIIs were net buyers to the tune of about Rs 231bn, while domestic mutual funds turned sellers to the tune of Rs 20bn of equity during the month.

On the economy front, 2QFY20 GDP growth slowed to 4.5% compared to 5.0% in 1QFY20. The Index of Industrial Production reported a sharp degrowth of 4.3% in September compared to a degrowth of 1.4% in August. CPI inflation moved up to 4.6% in October against 4.0% in September. WPI inflation was broadly stable at 0.2% in October as against 0.3% in September.

The Bond yields rose marginally during the month of November 2019. The 10 year benchmark G-Sec (6.45% GOI 2029) closed 2 bps higher at 6.47% against 6.45% last month.

Outlook

Uptick in headline inflation and bottoming economic activity would likely keep the fixed income markets rangebound. Central Government continues to show its commitment to remain on the fiscal consolidation path which is positive for the Fixed Income Market. With global central banks continuing interest rate cuts, Foreign Portfolio Investors (FPI) are likely to purchase higher amount of Indian Bonds. However, over the medium term, possibility of additional Government borrowing, crude price movement and FPI flows are the key factors to watch

Outlook​

Indian equity markets recorded positive FII inflows for the third straight month amid sustained global growth concerns and downward pressure on US and global yields. The revival package announced by the Government for the real estate sector is expected to provide relief to homebuyers, lenders and the economy. Resolution on stressed accounts would provide a further boost to investor confidence and may ease liquidity concerns. Corporate earnings were in line estimates and growth pick up is dependent on implementation of reforms, transmission of cumulative interest rate cuts and global growth scenario. In this backdrop, stocks with strong business models within the retail banking and consumption space offer a good means to build a core portfolio.​​

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