Short Market Update: Higher rupee, falling crude helped markets rally during the week and closed with weekly gains over 3%, GDP growth at 7.1% and Sebi to lower capital market trading cost.
On Friday, markets closed almost flat, with BSE Sensex up 23.89 points or 0.07% and closed at Rs 36,194.30, and NSE Nifty up 18.10 points or 0.17% at Rs 10,876.80. BSE Mid Cap up by 84.20 points or 0.56% and closed at Rs 15,039.35. And, BSE Small Cap up 74.28 points or 0.52% and ended at Rs 14,427.16.
Appreciating rupee, falling crude oil prices, positive November expiry, positive global cues and ongoing polling in 5 states are some factors that helped markets closed on a positive note every day during the week.
Sensex surged 3.5% or 1213 points this week, while NIFTY surged 3.3% or 350 points. BSE Mid and Small Cap rose 1.07% and 0.53% respectively during the week.
Rupee gained 1.5% (Rs 1.08) against the dollar during the week.
GDP growth at 7.1% in September quarter
India’s gross domestic product (GDP) at 7.1%, down from 8.2% in the previous quarter. Sliding rupee, high fuel prices, relatively weaker rural demand and a squeeze in India’s shadow banking sector that hindered both investment and consumption are some of the factors holding the economy back.
- The manufacturing sector grew 7.4% slowing down from 13.5% in the previous quarter.
- The agricultural sector fell to 3.8% from 5.3% in the previous quarter, this could be because of the patchy distribution of monsoon rains, late withdrawal of rains from some regions and floods damaging the crops.
- Mining sector witnessed a negative growth of -2.4% from 0.1% last quarter.
- Public administration, defence, and other services grew 10.9% against 9.9% last quarter.
- Private final consumption expenditure (PFCE) grew 7.01%. This is a gauge to measure changes in household spending (inflation-adjusted prices).
- Government final consumption expenditure (GFCE) grew 12.67%.
- Gross Fixed Capital Formation (GFCF) grew 12.46%, a metric to measure corporate investment activity.
RBI Relaxes Securitization Norms
RBI has made changes to the holding period for securitized loan portfolios, to help ease the liquidity condition for non-bank lenders. The minimum holding period will now be 6 months as opposed to the earlier holding period of 12 months. This is applicable only for loans of original maturity of above 5 years.
Lower Capital Market Trading Costs
SEBI to decrease Capital market trading costs next year. This is under the framework for interoperability among clearing corporations (CCPs). As per the current practice, different stock exchanges have their own CCPs to handle trade settlements on respective exchanges. The framework to be operationalized by June 2019.
Through interoperability, instead of going through the CPP owned by the stock exchange on which the trade is executed, it permits to clear trade through a firm of their choice.
Excluding the International Financial Services Center, this framework will be applicable to all recognized CCPs.