OVERVIEW OF MARKET
The Union Budget for FY18 which was presented post demonetisation was directed at domestic, especially rural consumption. Public investment in infrastructure, especially roads, railways and affordable housing was stepped up. Despite this, the government has maintained its expenditure growth target below 7% and the fiscal deficit at 3.2% of GDP. On the international front, US protectionist policies could impact the Indian IT and pharma sectors.
The Index of Industrial Production (IIP) for the month of Nov 2016 rose 5.7% as compared to decline of 1.87% in Oct 2016. Consumer Price Index (CPI) decreased to 3.41% in Dec 2016 from 3.63% in Nov, 2016.
In January 2017, Nifty gained 4.6%; metal, telecom and power sectors’ outperformed while IT and pharma underperformed the Nifty. FIIs were sellers for more than Rs1,177 cr which was absorbed by domestic institutional buyers who bought more than Rs4,749 cr of equity during the month.
The Bond market rallied during the month of Jan 2017. The benchmark 10 year G-Sec (6.97% GOI 2026) closed 10bp lower at 6.41% against 6.51% last month.