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Market Review

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

Nifty gained 0.9% during the month led by expectations of efforts by governments to revive economic activity and inflows to emerging markets including India. Further, RBI at its latest policy meet, kept interest rates unchanged with accomodative stance. Global markets remained buoyant as a result of soften trade tension between US-China and easing liquidity by global central banks. Among the sectors Metals, IT and BFSI outperformed while FMCG, Infrastructure and Energy underperformed the Nifty during the month. FIIs were net buyers to the tune of about Rs 61bn, while domestic mutual funds also turned buyers to the tune of Rs 21bn of equity during the month.​

The Index of Industrial Production reported a degrowth of 3.8% in October compared to a degrowth of 4.3% in September. CPI inflation moved up to 5.5% in November against 4.6% in October. WPI inflation inched up to 0.6% in November as against 0.2% in October.

The Bond yields rose marginally during the month of December 2019. The 10 year benchmark G-Sec (6.45% GOI 2029) closed 9 bps higher at 6.56% against 6.47% last month.

Outlook

Uptick in headline inflation and slowdown in economic activity would likely keep the fixed income markets rangebound. RBI’s recent action aimed at lowering overall intrest rate in the economy through better transmission is favourable for the market sentiment. Surplus liquidity amid sizeable maturity of Government Bond in the near term will also likely to ensure stable demand for Fixed Income securities. However, lower revenue collection owing to slower economic activity is a cause of concern for the market. 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 fourth straight month amid positive development over US-China trade deal. On the domestic front, focus is likely to shift towards corporate earnings for the quarter, management commentary, revival in rural demand and announcement in union budget to support the economy. Further resolution on stressed accounts may provide a boost to investor confidence. Implementation of GST, IBC Code, RERA Act, digital initiative and improvement in banks’ balance sheets are likely to lay down foundation of new economic cycle. Along with this, revival in corporate earnings and global growth outlook are likely to define performance of equity market in the medium term. In this backdrop, we believe corporate banks, consumer and Infrastructure stocks offer a good means to build a core portfolio.​

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