15 May 2017

Low volatility and record highs

Global equity markets have been experiencing very low volatility while major markets have been hovering around record highs. US economic data continue to be a dominant influence and this week we saw mild inflation data and lower than expected retail sales numbers. Soft figures are considered too late to influence Fed policy, however, so markets are ready for another rate rise in June. In India the Nifty closed 97 points up at 9401 for a 1% advance after trading in a range of 1.9%, including a high of 9450. Average daily trading volume was USD 4.7bn, still well above the trailing average of $3.8bn a day. Foreign portfolio investors were small net buyers, of $38mil, while domestic institutions sustained their steady buying, adding USD 155mil. The India VIX traded in a narrow range again, from just below 11 to just over 12 before ending at 11, for no change. Market breadth was narrow, with advances just ahead of declines and points’ contributions to index movement widely spread. Once again, Nifty futures closed at a slight premium of just 0.4% to cash.

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