After the encouraging rally in the last few days, the markets this week decided to take a breather and ended on a flat to positive note. The beginning of the week however saw the markets fall due to profit booking and aggressive selling by foreign portfolio investors. Other developments in the Tata Group did not help things either, with investor sentiments shaken badly.
It was not surprising to see Tata scrips take a beating. Many investors decided to book profits and stay out for the time being and till there is better clarity about who is going to lead the Group. Equity markets are driven a lot by sentiment and a development like this in one of the most respected Groups in the country was more than enough to spook the Indian equity markets. NPAs and World Bank report adds to the depressed sentiments Then there were other factors as well. The increasing NPA or non performing assets in the banking sector remains a cause for concern. Many large infrastructural projects are not seeing the light of day due to delays in getting the land or due to non approval of these projects. These accumulated nonperforming assets are weakening the balance sheet of banks that have lent money for such projects and are unable to get the return they hoped for. While this is not a phenomenon that is specific to this week, the fact there is no improvement in the figures led to a selloff of some of the banking stocks. The World Bank report that was released about the ease of doing business in India was another factor. It said that the improvement was only by a single point over last year. This is very disheartening when one considers the positive steps taken by this government to make things better for those interested in doing business in India. This did lead to some foreign funds outflow. Late rally saves the week Fortunately, the better than expected Q2 results of some of the companies that released data saved the week. Bargain hunters bought into some of these stocks with the Sensex even crossing the 28000 mark briefly. The performance of the equity markets in the coming weeks will be determined by global cues such as the US Q3 GDP data, the US Fed FOMC meet, the Bank Of England and Bank Of Japan meets and crude oil prices. On the domestic front, the outcome of the meet on GST will also matter.
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September 2017
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