Are the markets coming back on track?

The markets had a tough week as they reacted sharply to the cues which demonetisation created. FIIs believed this phenomenon will hamper Indian GDP growth down by 2 per cent, thus gushing out more than Rs 10000 crore from the Indian system. On the other hand, the global markets had a different story to tell and all the major markets throughout the week ended strong.

The Sensex this week ended 2 per cent higher, thanks to the November 25 rally, where the S&P Sensex ended 456 points higher and Nifty registered its highest single day gain in the past six months. Information Technology stocks sizzled in the markets as the dollar appreciated strongly. These companies earn more revenue when rupee depreciates. The S&P IT index rallied over 440 points and gained 4.69 per cent from its previous close. Amongst the top sectoral gainers were TCS, Infosys and Tech Mahindra which gained 5.9 per cent, 4.77 per cent and 5.83 per cent respectively. Nifty Pharma index ended 3 per cent higher with Sun Pharma gaining 4.39 per cent, Aurobindo Pharma 4.04 per cent and Lupin 3.16 per cent.

Although it looks like markets are coming back on track. It will still be too early to anticipate the impact demonetisation had over short-term. Fed rate hike is still a trigger which may drive the markets down.