2 Nov 2016

US, Brexit, Japan

US economic news improves steadily with bond traders now backing a December rate increase while Brexit continues to roil Europe and Japanese stimulus efforts continue to fall short. Equity markets have been mostly steady and Indian stocks have been mostly range-bound just above 8,500 on the Nifty. The benchmark index has surrendered 60 basis points to close 0.7% lower at 8638 after trading in a range of 2.6%. Average daily trading volumes have stayed within range of the twelve-month average at $3.6bn while foreign portfolio investors have been steadily cutting their exposure, being sellers on $697mil over three weeks. Domestic institutions took up the slack, investing a net $922mil. Volatility was steady, the India VIX trading up initially from 14 to a high of sixteen before settling back, to close at 15 for a gain of one point. Market breadth was weak, with advances just outrun by declines. Nifty futures closed on Friday at a premium of 1.1% to cash.

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