Gold prices have been on an uptrend in the last few months, rising nearly 28 per cent to $2387 per ounce now. This rise in gold price, according to Christopher Wood, global head of equity strategy at Jefferies, is attributed to the demand from China amid lack of investor euphoria as regards the yellow metal. "Recent developments show a distinct lack of investor euphoria as regards gold, the question remains what is driving the current rally.
The market capitalisation of BSE-listed companies reached an all-time high of Rs 261.73 lakh crore on Thursday, helped by a massive rally in the equities where the benchmark Sensex zoomed 958 points to end at a fresh lifetime peak. The 30-share BSE benchmark jumped 958.03 points or 1.63 per cent to settle at its new closing peak of 59,885.36. During the day, it gained 1,029.92 points to touch an intra-day record high of 59,957.25.
If the DMK is able to sustain the momentum until the assembly polls, the AIADMK especially and the PMK and possibly the infant TVK too would find it hard to sign up with the BJP, explains N Sathiya Moorthy.
Corporate bond issuances fell by around 22 per cent in August, despite easing yields as issuers delayed raising funds awaiting the US Federal Reserve to start cutting interest rates from this month. Corporates and financial institutions expect yields to fall further and borrowing costs to become cheaper, said market participants. The US Fed is widely expected to cut interest rates by 25 bps in the 17-18 September meeting, marking the start of a downward interest rate cycle.
'Industrial countries are still struggling, with a few exceptions, to grow and the uncertainty about growth in the US as well the world is probably what impelled the Fed to stay on hold.'
'The selling in India may emerge as soon as the RBI reverses its interest rate stance.'
A higher-than-expected consumer price inflation (CPI) print for March in the US has dashed hopes of an interest rate cut by the US Federal Reserve (US Fed) in June. Analysts now expect the US central bank to start cutting rates in September, provided inflation remains in check and oil prices remain supportive. The markets, analysts believe, partially factored in this possibility.
The rate hike in the future is set to be 'calibrated and cautious'.
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Stock markets would take cues from the biggest event of the week -- the US Fed interest rate decision, besides tracking the trends in global markets and trading activity of foreign investors, analysts said. Last week, a heavy decline in smallcap, midcap firms, foreign fund outflows and elevated crude oil prices in the international market dented investors' sentiments. Experts said equity markets may remain volatile in the near-term amid a host of global central bank's monetary policy decisions lined up during the week.
'While Indian markets are indeed not inexpensive, the valuations of largecap stocks are still a considerable distance from being overstretched.'
India was less directly affected by the Chinese stock market rout and yuan devaluation that battered currencies and markets in the region.
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The demand for gold is expected to take a hit if the price of the yellow metal - which has been hovering around Rs 60,000, a level never seen before - remains elevated. Due to a sharp increase in price in a very short time and the flow of smuggled gold continuing, gold price in Mumbai is quoted at around Rs 59,000 per 10 gram. Typically, overall demand in the January-March and July-September quarters is moderate-to-dull, which is the case in the ongoing period.
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"Indian markets (are) well placed to absorb the US Fed rate hike. Gradual approach in future increases augurs well for emerging markets," Economic Affairs Secretary Shaktikanta Das has tweeted.
The barometer S&P BSE Sensex ended at 26,231, up by 517 points or 2%.
'Despite the current uncertainties, the long-term outlook remains constructive due to strong fundamentals, government initiatives, and a stable banking sector.'
World No 1 Sania Mirza was, on Monday, named captain of the Indian team for next year's Fed Cup while two six-member squads were announced by the AITA selection panel for the South Asian Games.
Inflation is expected to remain low in the near term, in part because of the further declines in energy prices.
'Higher interest rates make gold less attractive as it doesn't generate yield.' 'However, with rates set to fall, the tables are turning for gold.'
The rupee has depreciated by 0.6 per cent so far in the current financial year.
Higher levels could not be sustained as participants offloaded their long positions in view of September series expiry.
Stock markets will be driven by domestic inflation data, ongoing quarterly earnings from corporates and global trends this week, analysts said. News flows around the general election would also be tracked by investors, market experts said.
The US Fed also said that the unemployment rate too would rise to 5.7 per cent.
The US dollar has risen about 15 per cent since mid-2015.
Equities went into a tailspin on Wednesday after the Reserve Bank surprised the market with a mid-cycle rate hike in a bid to tame soaring inflation.
Among the 30 Sensex companies, Axis Bank, ICICI Bank, HDFC Bank, Tech Mahindra, Larsen & Toubro, Bajaj Finserv, State Bank of India, Reliance Industries and Infosys were the biggest gainers. Power Grid, Asian Paints, Tata Steel, Nestle, Maruti and JSW Steel were among the laggards.
RBI will now increasingly shift focus to domestic parameters
The recent weakness of the rupee has been due to yuan's devaluation.
Indian markets on Thursday shrugged off any negative impact.
Production from many gold producing regions of the world is currently constrained by power shortages; and rapidly inflating development costs are causing the postponement of several otherwise promising development projects around the world.
Hero MotoCorp was the top gainer in the Sensex pack, spurting 4.46 per cent. IndusInd Bank, Tata Motors, Vedanta, SBI, M&M, Sun Pharma, Tata Steel, HDFC and HDFC Bank too rose up to 3.63 per cent.
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Janet Yellen is guiding the Federal Reserve towards its first rate rise in a decade armed with traditional economic models that some economists worry could fail her in a world of massive money printing and near zero rates.
Govt sees little Fed hike impact on 'fortressed' Indian markets.
Equity markets will take cues from global trends and trading activity of foreign investors, while in the latter part of the week the first quarter earnings from IT majors TCS and HCL Technologies would guide investor sentiments, analysts said. Markets may consolidate after the record rally last week, experts added. "On the domestic front, the Q1 earnings season begins this week. Key companies such as TCS and HCL Technologies will release their earnings on July 11 and 12, 2024, respectively.
From the Sensex basket, NTPC, Power Grid, IndusInd Bank, Tata Steel, Tata Motors, JSW Steel, Tech Mahindra and Larsen & Toubro were the biggest gainers. Bharti Airtel, Maruti, ICICI Bank and Asian Paints were the laggards.
The bias for the BSE benchmark index, technical charts suggest, is likely to remain bullish as long as the index holds above 75,600 levels for the rest of the year.
Hawkish guidance by the US Fed raises concerns it could tie the hands of RBI from trimming rates.
