The mood continued to remain buoyant for the global markets as improving health of US president Donald Trump lifted sentiments. In the midst of the week, Donald Trump and House speaker whipsawed markets as first they called off talks with Democrats but later reiterated that the stimulus package is needed to revive the economy. Overall, for the week, the mood continued to remain dovish due to increased hopes of more stimulus package from the US government.
Back in India, it was an eventful week as the bulls continued to ride on global optimism. The first half of the week was dominated by the IT pack thanks to strong results from TCS and a buyback offer. In the second half, banks which had been a laggard for some months now, led the charge for the markets led by dovish monetary policy by the RBI. Even though there was no action on the rate front, the commentary on inflation being transient and strong steps to provide liquidity, regulatory support and boost exports was taken positively by the markets. And when IT and Banking end with gains of 8.6% and 7.2% for the week, it smoothens the ride for the bulls. The Nifty and Sensex ended higher by 4.4% and 4.7% for the week.
However, another trend emerged during the week, wherein polarization was back as the rally was only limited to a few select large-cap stocks. The broader markets grossly underperformed throughout the week and ended with minor losses. On the fund flow front, the FIIs bought stocks worth Rs. 3,400 cr whereas DIIs were net sellers to the tune of Rs. 2,400 cr.
Globally, the developments on stimulus package would be the single biggest factor that would drive the markets. Further, with US election around the corner, volatility is likely to remain high. On the domestic front, the sentiments have definitely been lifted after strong measures announcement by the RBI. Going forward, the release of key macro-economic data (IIP, CPI and WPI) would be important for traders. The earnings announcement from companies like Wipro, Infosys, Mindtree, HCL Tech, Federal Bank, and HDFC Bank would be actively tracked. Further, the deadlock between states and centre over compensation continues and the decision on this is likely to be announced on October 12th when the council meets again.
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