14 Nov 2016

Trump swings markets

The election of Donald trump as President of the US was the major event of the week as global markets saw wide swings but largely settled down by Friday. We got a new catch-phrase though: a “reflation trade frenzy” is forecast as a conciliatory tone from the President-elect fueled hopes for tax cuts, infrastructure investment and a recovery of inflation. India had its own rollercoaster ride with the Nifty briefly falling to 8,000 before recovering its composure. In the end, the Nifty shed 138 points on the week, to close 1.6% lower at 8296 after trading in a range of 3.8%.  Average daily trading volumes jumped sharply to $4.4bn as FPI selling followed the global 'risk-off' reaction into selling $366mil in net cash equity. Domestic institutions were heavy net buyers, investing $425mil. The India VIX also reflected the global sensitivity, trading up from its opening of 17 to spike at 23 mid-week before settling back to close where it opened. Market breadth was quite tight, with declines outpacing advances by just five to four. At the close, Nifty futures were trading at a premium of 1.7% to cash.

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