Thursday, 21 December 2017

Indian Indices Continue Momentum; IT Sector Up 1.6%

After opening the day in the green, stock markets in India have continued their momentum and are presently trading on a positive note. Sectoral indices are trading on a positive note with stocks in the IT sector and auto sectorwitnessing maximum buying interest.
The BSE Sensex is trading up 166 points (up 0.5%) and the NSE Nifty is trading up 41 points (up 0.4%). The BSE Mid Cap index is trading up by 0.3%, while the BSE Small Cap index is trading up by 0.7%. The rupee is trading at 64.03 to the US dollar.
In the news from global financial markets, Japanese Prime Minister Shinzo Abe's cabinet has endorsed a record 97.7 trillion yen (US$860 billion) budget for fiscal 2018. This was opted to keep the economy on a sustained recovery with aggressive monetary stimulus.
The budget is recorded the biggest amount ever and slightly more than this year's initial plan to spend 97.5 trillion yen.
The budget is also influenced by welfare spending to respond to a fast-ageing population and a record military outlay amid regional tensions related to North Korea.
The above development come after the recent win of Japanese Prime Minister Shinzo Abe in elections and signal the continuation of Abenomics - the ultra-loose monetary and fiscal policies. These policies have influenced excessive money printing, too much debt, and too much government intervention in Japan.
As Ankit writes in one of the editions of Equitymaster Insider... "With Abenomics, Japan has gone overboard trying to revive its economy. The Bank of Japan is a Top 10 holder in over 90% of Japanese stocks. And it remains one of the biggest buyer of Japanese stocks."
It would be interesting to see the impact central bank's ultra-easy money policies will have on the economy going forward. Meanwhile, we'll keep you updated on all the recent developments in this space.
Apart from the above, market participants are also tracking the US tax code, which the Senate Republicans passed this week.
The Senate approved the US$1.5 trillion tax bill, which includes permanent tax breaks for corporations and temporary tax cuts for individuals, by a final vote of 51-48.
The bill lowers the top individual tax rate from 39.6% to 37% and the corporate tax rate from 35% to 21%.
Once enacted, the above legislation will represent the most drastic changes to the US tax code since 1986.
The US federal deficit is projected to grow by US$1.5 trillion as a result of this tax overhaul.
Market participants are widely tracking the US tax overhaul as it has a significant impact on both domestic and global financial markets.
We will be sure to keep an eye on the developments on this front and keep you updated.
In the news from commodity markets, gold witnessed buying interest this week. Most of the gains were seen on the back of a firm global trend overseas.
The yellow metal had witnessed losses last week on the back of an interest rate hike by the Fed. However, it managed to cover losses this week and ended its session with marginal gains, as can be seen from the chart below:
Gold Trades on a Positive Note

To keep a tab on the movements in crude oil and other commodities, you can read the stock market commentaryfrom the Daily Profit Hunter team. Their commentary tracks the developments in the global economy as well as stock, currency, and commodity markets.
This article was originally published in English at www.equitymaster.com
Read the complete Indian stock market update. For the terms of use, go here.

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