2 May 2017

Cling to record levels

Equity markets continue to cling to record levels though they are finding it hard to sustain upward momentum. The US administration’s efforts to fulfill election promises on policy initiatives are also meeting resistance, so investors’ confidence in making America great again may be waning. In India, a lukewarm results season has not so far excited investors but consistent domestic liquidity support is holding the markets at historic highs. The Nifty has added another 153 points or 1.7% to 9304 after trading in a range of 3.2%. Average daily trading volumes moved further above the trailing average to $4.8bn in spite of net selling of $434mil by foreign portfolio investors. Domestic institutions more than compensated buying a net $712mil in cash equity. Market breadth was good with advances exceeding declines by 30%. Volatility stayed muted as the India VIX traded at historic lows: it opened at 12 and traded up a point before sinking back to close a point lower at 11; in the meantime it fell below 10. Reflecting the difficulty in sustaining firm upward movement, index futures traded at a premium of just 0.4% to cash.

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