Month Gone By – Markets (period ended January 29, 2021)
Equity indices globally and domestically saw some moderation towards the end of January after
witnesssing dizzying heights during the mid of January. While in the USA, S&P 500 recorded lifetime
highest close on January 25th at 3855 bolstered by news of stimulus amounting to USD 2tn,
it was quick to close at 3714 on January 29th as investors trimmed their posistions due to a slew
of data on earnings for the quarter, GDP for Q4 and FOMC outcomes were expected.
In line with global equities, Indian equities also saw a sharp rally in January, with Nifty recording
ever highest close of 14644 on Janaury 20th but was quick to moderate to 13634 on January
29th as traders and investors turned cautious and moderated their holdings to account for the
Union Budget due to be presented on February 1st. The initial rally was bolstered by FPI buying
which amounted to USD 3bn, while caution at the outset of budget got better of the rally
and recorded a correction by the month end. Sector-wise, CNX Auto was the best performer
of the lot recording a rally of 6.7%, while CNX Pharma remained a laggard recording a fall of
5.8%, followed by CNX Energy at 4.5%. Following the expansionary note of Union Budget 2021
presented on February 1st, which budgeted an increase of ~35% in capital expenditure at Rs
5.54Tn while allaying any fears of increase in taxation, Nifty closed the day at 14326 (+5% d-o-d).
The US 10Y yields also recorded recent highs of 1.10% only to end the month at 1.07%.
INR gained much lost ground owing to strong dollar inflows and weakening DXY and ended the
month at 72.88/USD in January