Equity markets remained volatile this week on account of mixed developments on the global front. While the investors cheered the approval of 2.2 trillion-dollar stimulus package by the Democrats, the political deadlock continued over additional relief measures for the US economy. The economic data coming in from most developed economies were also encouraging. Further, the investors tread cautiously as the race for the White House heated up between Donald Trump and Joe Biden. The US president testing positive for Coronavirus also unsettled the markets.
Back in India, the mood was quite positive led by supportive global cues, positive economic data (PMI – Manufacturing) and the new Unlock 5 guidelines which permitted more activities to open. The auto sales numbers announced by most OEMs also aided sentiments as it increased confidence of investors that the economy is getting back on track. Both the Nifty and Sensex ended with strong gains of 3.3% and 3.2%. The broader markets also participated equally to the headline indices. Amongst the sectors, all the indices ended with strong gains wherein domestic cyclical like Banking, Auto and Consumer Durables were the top gainers. On the fund flow front, FIIs continued to remain net sellers to the tune of Rs. 550 cr whereas DIIs bought stocks worth Rs. 1,800 cr.
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Globally all eyes would be on the US president’s health updates and the build-up to the elections. Further, the developments on the stimulus package in the US would be actively tracked. The economic data points from developed economies would also help in setting the tone for the markets. Expect high volatility in global markets in the coming week.
On the domestic front, there has been a development on Friday as the government informed the Supreme Court that it would waive “interest on interest” on loans up to Rs. 2 cr for retail and MSME borrowers during the six-month moratorium period. The cost is most likely to borne by the government (not officially announced yet though). It would be interesting to see how banking stocks react to this development especially PSUs as one must note that the government is already struggling with its finances this year due to lower tax collections.
Further, the market participants would keep a close watch on the new dates for the RBI monetary policy. Besides the earnings season is all set to begin, with TCS being the first big company to announce its results on 7th October.