Investors eye cues in Israel Hamas war

Supported by the falling international crude oil prices, healthy domestic PMI data, and Monetary Policy Committee’s status quo in repo rate; the domestic stock markets recovered significantly from weekly lows to snap two-week losing streak and closed moderately higher for the week. In the broader market, the Nifty Mid-cap index lost 0.6 per cent and Small-cap index climbed 0.7 per cent. In the shadow of the US 10 year treasury yield jumping to 16-year high and US dollar index hitting the highest level since November last year. The sharp fall in oil prices from more than 10-month high was a positive for the Indian equity markets as India is the net oil importer. Rising US bond yields and stronger dollar along with global demand concerns impacted oil prices during the week. However, this may be a short lived phenomenon say oil watchers.

The RBI policy meeting outcome as expectedly sans any major surprise elements. Policy rates were kept unchanged, and the stance of the monetary policy remained as withdrawal of accommodation. This interest gap could remain relevant for investors into the Indian debt market, including for investors through the JPM Bond Index inclusion route. In the near term apart from Q2 earnings, the market participants will keep an eye on CPI inflation for September releasing on October 12 and impact of global geo political events like Israel –Hamas War. The CPI inflation, an important data point for the MPC, is expected to cool down further due to falling vegetable prices and cut in LPG price. The activity in primary market seems to be slowing down as only one IPO is set to be opened for subscription next week.

F&O/ SECTOR WATCH

Mirroring the smart recovery from weekly lows in the cash market, the derivatives segment witnessed brisk trading volumes. Oversold conditions in several stock futures and mild short covering ahead of the Q2 results season helped the recovery in the market.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)