Indian Equity Markets To Take Cues From Global Markets And Q2FY18

Global markets are on a roll and the strong momentum is pushing the equity markets to record highs. The two most visible factors that can be seen supporting the positive sentiment in equity markets is the global economic recovery and the abundant liquidity in the system. 

The past fifteen days saw global markets outperforming key Indian benchmark indices Sensex and Nifty. Some of the positives for the economy in the last 15 days were auto sales data and manufacturing and services PMI data, which suggest optimism in the economy. 

The global markets rallied in the past couple of weeks, with NASDAQ proving to be the best performing index globally, gaining 3.28 per cent. DJIA gained 2.09 per cent over the last couple of weeks, while S&P 500 was up by 1.93 per cent. The European markets were major gainers over the past 15 days with both FTSE 100 and DAX gaining more than 3 per cent each. French index CAC 40 was up by 1.87 per cent. 

Asian markets, in line with the global trend, gained impressively. Hang Seng was the best performing index in Asia in the past 15 days. Nikkie was up by 1.44 per cent and Shanghai was up by 0.98 per cent. 

Indian benchmark index Sensex was up by 0.94 per cent in the past couple of weeks. India markets have actually underperformed their global peers in last couple of weeks. Nifty was up by 1.46 per cent during the same period. Metal index was the best performing sectoral index during the fortnight, delivering gains of almost 7.71 per cent. Realty stocks outperformed the broader markets along with the metal stocks. Realty index sizzled by gaining 6.59 per cent over the past 15 days thus outperforming other sectoral indices along with the metal index. The small-cap stocks yet again proved to be profitable for investors as the index gained by 5.82 per cent. The mid-cap index gained as much as 3.26 per cent, thus outperforming the benchmark indices Sensex and Nifty. All of the sectoral indices gained in the fortnight and this indicates the positive momentum in the market.

FIIs turned out to be net sellers yet again. The FIIs sold to the tune of RS.13,144.32 crore in the markets. At the same time, DIIs were net buyers in the market and bought stocks worth of RS.14,608.10 crore. 

All eyes will be on the coming earnings season and it will be interesting to see which companies might surprise on the positive side. On the global front, markets seem to be poised for higher stock prices as there are no visible signs of liquidity drying up. IMF has in its recent study raised the global growth forecast for 2017 to 3.6 per cent.

The synchronous growth in both the developing world and the developed world is expected to boost the demand in the world economy, thus benefitting export sector in countries like India. With the world economy in the right shape and flush with liquidity, the equity markets can inch up further from the current levels based on improving fundamentals.