sqrrl analysis of markets this month May 2018

May 2018 sqrrl blog market analysis snapshot

Highlights from the markets during the month

Indian markets remained flat during the month. The indices started on a volatile note as investor sentiment was primarily weighed down by caution ahead of key events including US monthly employment report, and talks between China and the US on their trade dispute.

In addition, investors remained cautious on the outcome of the US Federal Reserve (Fed) policy meeting. Domestically, the volatility was primarily due to uncertainty surrounding the outcome of Karnataka election. However, as weeks passed by market started to stablize with a rally in shares of oil & gas, banking, metal and FMCG firms. Sentiments were also supported as softer US inflation data eased fears of faster rate hikes by the Fed. However, the excitement did not last long with auditors resigning for some of the large companies raising concerns with respect to governance.

Further, Italy political instability along with the US President Donald Trump scraping Iran nuclear deal caused volatility in commodity prices particularly crude. This weighed on the Indian market. In the last week of the month, the market inched up due to its F&O expiry with a good show from HDFC twins where FII interest was significant. The month ended with a positive news with respect to the GDP numbers which indicated healthy growth for the economy. Other key highlights of the month are:

  • India’s industrial production moderated to 4.4% growth annually in March from 7.1% in February
  • The government is considering allowing 100% FDI in insurance intermediaries
  • The RBI rejected the government’s demand to relax the guidelines on resolution of stressed assets for power companies
  • SEBI allowed exchanges to extend trading time for equity derivatives till 11.55 pm from October 1, 2018
  • SEBI asked listed companies to split the post of chairman and managing director, and have at least six independent directors, including a woman
  • India’s GDP grew by a strong 7.7% in the fourth quarter of FY18. This is the fastest growth since the demonetisation saga back in November 2016

Things to watch out for in March 2018 and its impact

  • RBI policy meet on June 6, 2018, ahead of monsoon season will remain a key monitorable. Any surprise cut will cheer the market though majority expects a status quo
  • The global market is concerned about rate hike by the Federal Reserve. Fed meeting on Jun 13, 2018, remains a key monitorable. Any hike could result in selling pressure in the Indian market
  • Data for US inflation, US job openings and India inflation, export-import and IIP growth are expected in the second week.


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