Monthly market commentary: November

On the domestic front, the latest IIP number showed 2% growth in industrial activity.

Mint

November began on an optimistic note for global financial markets with the US government shutdown getting over and the European economy being steered in a positive direction. Adding to this was the positive news coming from China, both on the policy and growth fronts. In the US and other global financial markets, there was a sense of relief once it became clear that Janet Yellen, the successor to Ben Bernanke at the US Federal Reserve, is also going to maintain status quo on the bond buying programme till the growth data improves. While some experts say this could stretch to the middle of the next year, others think the tapering will start by the end of the first quarter of the calendar year 2014. Nevertheless, for now, the nerves of global financial markets have calmed down.

According to EPFR Global (which tracks fund flow data), in the first half of November nervousness prevailed among investors and as a result money market funds saw the biggest inflows. The pace of investments into US equities slowed down but inflows into European equity funds maintained pace. Despite the positive news from China, inflows into China-dedicated funds did not pick up much. Indian equities, too, received much less patronage from foreign institutional investors in November.

On the domestic front, while the latest Index of Industrial Production number showed 2% growth in industrial activity and optimism around a pick up in capital expenditure increased, other concerns on the macro front lingered. The biggest being inflation: the Consumer Price Index inflation for October came at just over 10%, showing no respite in price rise of goods and services. This showed red flags to the bond markets and equities didn’t react much. A lower current account deficit was good news but inflows from foreign investors seem to have peaked in October as November saw net inflows of around $1.13 billion, less than half of the previous month

nagesh dubey
pgdm 1st