Green shoots in Market Cheer Investors: Future Uncertain

Mumbai, March 13, 2018: Those who are glued to the stock market have reasons to rejoice. It is not alone increase in the Index of Industrial Production (IIP) and lower retail inflation that helped the market to recover some sheen. The market has taken a cue from the global rally. Posting its highest single-day gain since March 2016, the market yesterday (Monday 12th March 2018) grew by 611 points sending cheers across, recovering from the bloodbath it had undergone since February 1, 2018.

Investors India Live contacted to know the underlying reasons for the smart recovery yesterday said that in the US worries about the inflation has been put into the backburner when unemployment data for February showed a decline. This has, to a great extent, countered the fear of trade war between US and its trading partners.

The US showing olive leaves to Canada and Mexico and Trump prodding Australia to sit and discuss to get preempted from higher import duty of their steel and aluminium imports in particular, has to some extent relaxed the tense atmosphere. Japan and EU authorities have expressed their willingness to talk with US Trade Representative (USTR) to resolve the vexatious issues.

As a result, the NASDAQ closed at a record level of 1.79%. Japan’s NIKKEI finished at 1.7% and the maximum upward move was in the Hong Kong’s Hang Seng, which climbed to 1.9%.

Sensex got shaved off to the extent of 2600 points or 7.24% since February 1, 2018 mainly driven by looming trade war and expected the crash in commodity prices, impact of banking scam and a perceived dip in the feel-good factor as reflected by the continued lacklustre performance of the corporate sector.

Monday’s IIP result indicated signalled an uptick of industrial growth, though the figures are not meaty and too early to predict it could be a sustained trend. Industrial growth rose higher than anticipated to 7.5% in January 2018 as against 7.1% in the previous month (December 2017). Manufacturing sector fueled the growth and it is expected to go up further mainly driven by sectors like automobiles and FMCG etc, which have shown smart recoveries. Simultaneously released consumer price index, showed a decline in retail price index to 4.4% in January 2018 as against 5.1% in the previous month.

The statistics released by the labour ministry also cheered up the market. It has revealed that 1.36 lakh jobs were added across eight sectors in the July-September quarter of 2017. The sector-wise hiring during July-September 2017 was manufacturing 89,000, transport, 20,000, education, 21,000, accommodation and restaurant 2000, trade 14,000, health 11,000 and IT-BPO 1000.

Is the bull run a sustained one in the Indian market? Investors whom India Live spoke to are keeping their fingers crossed. “ Though we are cheerful about yesterday ’s big jump, the market has to come to grip with the fundamentals. More than external factors like possible trade war, what that matter to the investors, particularly the retail ones is the performance of the corporate sector, which has yet to show a trailblazing performance. Also, the interest rates should be brought down to enable corporate access to funding,” says an investor, who does not want to be named.