OVERVIEW OF MARKET
The Union Budget for FY19 was directed at domestic, especially rural consumption with supportive measures like increasing MSP and higher allocation to the rural economy. However, long term capital gains on equity shares and mutual funds at the rate of 10% has seen a selloff in equity markets. Crude closed ~3% higher during the month at $69.1 (up ~31% FYTD18) as OPEC agreed to extend their production cut by another year. Further, IT and Banking sectors’ outperformed while Telecom, Auto and Power underperformed the Nifty. FIIs bought approximately Rs 13,490 cr, while domestic mutual funds bought around Rs 5,109 cr of equity during the month.
The Index of Industrial Production accelerated to 8.4% in November compared to 2.2% in October. CPI inflation increased to 5.2% in December against 4.9% in November. WPI inflation cooled to 3.6% in December from 3.9% in November.
The Bond market yields rose during the month of January 2018. The benchmark 10 year G-Sec (6.79% GOI 2027) closed 27bp higher at 7.60% against 7.33% last month. The new benchmark 10 year G-Sec (7.17% GOI 2028) closed at 7.43%.