20 Feb 2017

S&P 500 'Trump surge'

US equities continued their 'Trump surge' as the S&P 500 reached another record close. The Dollar faltered a bit, however, as markets took stock of a possible disconnect between monetary and expected fiscal policy. In the rest of the world, there were some signs of a tentative return of risk appetites, notably in emerging markets. The Nifty has added 81 points since our last commentary, closing 0.8% up at 8822 after trading in a range of just over 2%. Again the driving force has been domestic buying, as mutual fund inflows added a net $363mil of net cash equity buying by domestic institutions. Foreign investors were scarce but net buyers nonetheless, of $50mil in cash equities. Average daily trading volumes were strong: $4.2bn compared to a twelve month trailing average of $3.bn. Volatility was subdued, however, rather like in the US, as the India VIX traded mostly to the downside of its opening at 13, where it closed unchanged. Market breadth was positive, with advances ahead of declines by 1.3:1. There were some heavy concentrations though: HDFC Bank contributed 37 points on the upside as it emerged from a foreign trading limit only to return promptly after a surge of buying. The IT sector was also strong with TCS and Infosys contributing 62 points on the upside. The Nifty futures reflected the weak upward momentum, closing at a premium of 0.8% to cash.

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