Indian stock markets opened on a very positive note a day after they were closed for Ganesh Chaturthi, rising as much as 300 points. However, the markets had reversed directions on Wednesday itself with the Nifty bouncing back from the 11,250 mark and closing with a gain of 82 points or 0.73% to 11,369. The reasons thereof include the U.S. markets rallying on the back of Apple and technology stocks and possibilities increasing of a thaw in the Sino-US trade relations.
The US has made a positive move to move away from the trade war scenario to a friendlier direction and opened up the possibility of talks. VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities reacting to the moves said, “While China will accept the U.S. offer for negotiations but don’t expect Beijing to make any significant concessions. With poll numbers sagging, we believe Trump may settle for face saving concessions.”
As far as the domestic situation is concerned, Sharma said, “But as far as our markets are concerned they will do well as the chief villains in the Indian saga – Crude and Dollar – both are weak.”
Adding to the international perspective, he averred, “We had pointed out Wednesday morning that the U.S. Oil prices had gone ballistic un-necessarily with no oil platforms, deep sea ports or other oil facilities in the expected path of Hurricane Florence. Now Florence has weakened to a category 2 Hurricane, which will be even less destructive.”
The takeaway for the investors, according to him is that, “The most positive development from India’s perspective is the increase in OPEC’s August production by 420,000 barrels a day, to average 32.63 million a day. That output more than made up for an expected decline in Iranian supply due to extant and pending U.S. economic sanctions. Nothing can be more heartening.”
Its impact on the Indian currency, according to him is that, “The falling crude will strengthen our rupee and the markets.”