MARKETS HIT ALL-TIME HIGH

The investors’ increased confidence in the Modi led NDA government, good GDP growth at 5.7 per cent in second quarter as compared to 4.6 per cent in the first quarter of 2014 and positive macroeconomic factors such as lower Current Account Deficit (CAD) at USD 7.8 billion (1.7 per cent of GDP) as compared to USD 21.8 billion (4.8 per cent of GDP) in same quarter last year and positive cues from global markets have immensely contributed in driving the markets to all time highs. The CAD was mainly down due to the significant decrease in import of gold which stood at USD 7 billion in June’2014 as against USD 16.5 billion in June’2013 quarter, down by 57.58 per cent. Moreover, the crude oil is trading at USD 103 per barrel substantially reducing India’s import bill.

Since the last fortnight; the Foreign Institutional Investors (FII) have been net buyers of Rs.3149.38 crore and have been consistent buyers in the month of August. One of the major reasons behind this is government’s initiatives and favorable business policies. The most recent one being Prime Minister Narendra Modi’s visit to Japan, which has been positive for the country as the Japanese Prime Minister Shinzo Abe has promised an investment of USD 35 billion in India. He has also offered his financial and operational support for improving infrastructure facilities such as bullet trains.

The global markets were also trading on a positive note. The European markets were seen trading in green as the tension between Russia and Ukraine mitigated and headed for a truce. It is also expected that the European central bank will increase stimulus. Moreover, the Eurozone inflation rate fell to 0.3 per cent in August. However, the unemployment rate remained higher. Most of the Asian markets were trading in a positive zone as the Chinese services sector Purchase Managers Index (PMI) expanded at its strongest pace in the month of August. The Japanese shares have hit a seven-month high on the back of a re-shuffle in the cabinet by Prime Minister Shinzo Abe, giving fresh impetus to “Abenomics”.

The US markets were also trading in green as the S&P 500 broke the 2000 mark. It has boosted the investors’ sentiment due to better than expected GDP rate which came in at 4.2 per cent as given by the US department of Commerce.