Indian economy registered its slowest growth in six years at 4.5 per cent during the September quarter. Ahead of the GDP figures, the benchmark Sensex settled 336 points lower with Rs 82,407 crore investor wealth getting eroded on expectations of a sharp fall in the growth. The index had hit its record high of 41163.79 in Thursday's trade. With this, the Sensex gained 665 points or 1.65 per cent in November so far compared to 3.8 per cent and 3.6 per cent, respectively in the previous two months.
"Equity markets showed caution before the release of Q2 GDP data. Profit-booking after the recent rally and weakness in global markets impacted sentiments," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Private. Concerns of US-China trade deal had a negative impact on metal stocks, he added. Auto stocks witnessed profit-booking ahead of November monthly data announcement.
But, this did not spoil the party entirely as the index at 40,196 points on the first day of November kept setting new highs .To be precise, it has hit 19 lifetime highs in November this year. There were 12 all-time highs in May 2017, 15 in April 2014 and 16 in March 2014.
The announcement of corporate tax reduction in the last week of September provided the much-needed trigger that lifted the market by around 4 per cent during the month and a little over 7 per cent till date. This was despite a dismal GDP growth of 5 per cent in Q1FY20 which was released on August 30. The record rally defied the slowdown in the economy on the back of positive global cues and strong FII inflows.
There has been a turnaround in foreign investments in the current financial year. The period between April-November 2019 witnessed net inflows of Rs 4,52,017 crore as against the outflows of Rs 50,169 crore in the corresponding period last year. Barring July-August 2019 all the months in the current financial year have registered net FPI inflows. "There was an outflow of foreign funds following the July 2019 budget proposal to levy surcharge on FPIs. The subsequent rollback of the same in late August 2019 along with the announcement of policy measures by the government to stimulate the domestic economy not only stemmed the outflows but also led to the overall rise in inflows," said a CARE Ratings report. The net outflows during July-August 2019 were a tad over Rs 30,000 crore and inflows during September-November 2019, following the withdrawal of surcharge on FPIs, were alone to the tune of Rs 43,519 crore.Eight core sector industries shrink 5.8% in October