There could be a slight delay in the signing of the US-China trade deal, which is now likely to be signed in London in the month of December. The proposed trade deal, which was supposed to happen as early as mid-November, is now likely to be delayed to December. There is a disagreement over the specific terms and the venue. China has been asking for a full rollback of the tariff hikes since March 2018, which the US is sceptical about. It is also reported by Reuters that bother countries may prefer a neutral venue like London. However, this delay did disappoint asset markets across the world.
Nifty scaled Mount 12,000 on Wednesday but US Indices closed flat as trade deal delay weighed on markets. The Nifty did scale 12,000 briefly during the day but saw some profit booking at higher levels despite all-round buying from FPIs. On the global front, the US markets closed almost flat as the possibility of a delay in the trade conflict resolution weighed on the markets. China has been asking for a roll back of most of the tariff hikes over the last one year as a precondition to the trade deal. While the Sensex has breached 40,000, the Nifty has been struggling to breach the 12,000 mark.
The month of September had an interesting piece of data as the share of individual holdings in mutual funds is now higher than institutional holdings for the first time. Individuals held 54.1% of the AUM while institutions held 45.9%. This shift has been largely due to a surge in retail participation since 2014 and heavy institutional redemption in the last few months. The surge in individual holdings was driven by retail appetite for SIPs and the absence of returns on other asset classes. Institutional appetite for debt funds took a hit after the defaults on debt paper issued by IL&FS, Dewan and Essel group.
A day after the announcement made by the Finance Minister for the housing sector, the centre has cleared the creation of a corpus of Rs.25,000 crore to give a boost to the housing sector. The government, LIC and SBI will jointly contribute to the corpus of the fund, which will also leverage on this corpus. The idea is to boost GDP via housing considering its strong multiplier effect on jobs and consumption. The housing sector in India has been in state of stupor for a number of years due to excess supply, string of unfinished projects in housing and lack of funding for builders.
After a sustained rally for 3 trading days, Brent Crude corrected from higher levels to close more than 170 bps lower at $61.72/bbl. The pressure on oil prices was driven by higher stockpiling of crude in the US as well as the trade deal delay on the back of larger demands made by China ahead of the deal. China stimulus will hold the key to oil demand. Gold prices firmed up as the bullion markets awaited outcome of trade talks. According to a Reuters report, the delay in the trade deal between the US and China forced the investors to take a step back from risky assets and seek refuge in gold. As a result gold prices in the international market firmed up to $1486/oz. On Tuesday gold prices had lost 1.7% on the back of a stronger dollar and higher bond yields. Retail demand for gold in India is still weak.
Ecommerce giant, Flipkart which is now part of the Wal-Mart group, has managed to get a stay against the insolvency proceedings initiated at the NCLT over a plea by one of its suppliers of LED TVs. Cloudwalker Streaming dragged Flipkart to NCLT contending that the ecommerce company had failed to honour a purchase agreement of Rs.27 crore for selling on the ecommerce platform. It may be recollected that last year Wal-Mart of the US had paid top dollars for a 77% stake in Ecommerce giant Flipkart to expand its ecommerce footprint in India.
