Indian equity markets seem to have decoupled from the broader economy. After the index hit a new intra-day high came the news that core sector had contracted over 5% in September, adding to other indicators of a deepening slowdown. Yet the cult of the domestic investor keeps growing — sticky money is flowing into MFs and equity. FPIs are also buying after being on the retreat.
STREET PULSE: Where we stand Asian shares fell this morning on fresh concerns over prospects of a Sino-US trade deal and ahead of the release of key US economic data, while the dollar eased against major rivals.
HERE'S WHAT TO WATCH  | SGX Nifty traded some 20 points lower at 7 am (IST), signalling a turnaround in Thursday's positive momentum on Dalal Street. MSCI index for Asia-Pacific shares outside Japan fell 0.09%. Japan's Nikkei slid 0.63% and Australian shares 0.12%. |
| US stocks ended lower in overnight trade, as losses in the Industrials, Basic Materials and Financials sectors spooked market. Dow fell 0.52%, S&P500 0.30%, and the NASDAQ 0.14% |
Crude oil prices looked up. US crude ticked up 0.26% to $54.32 a barrel while Brent crude rose 0.07% to $59.66.
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Advantage Investors!... As Sensex touched a record high on Thursday, it traded at 19.10 times its one-year forward earnings, which was still lower than the 19.2-19.5 times P/E multiple it had quoted between January 2018 and September 2018. While the current P/E reading suggests the market is expensive, other valuation parameters are comforting: The price-to-book value of Sensex stood at 2.94 times, just 2% higher than the long-term average of 2.88 and a peak value of 3.35 times hit in January 2018.
Read More Piramal Deal... South Africa's Sanlam Group is in talks with Ajay Piramal to acquire an additional 8% in Shriram Capital, the principal holding company of the Shriram Group's financial services businesses at a valuation of Rs 17,000-18,000 crore. This is being done to simplify the corporate structure and facilitate exit for existing investors such as TPG Capital and Piramal Enterprises.
Read More Auto Booster… The government has firmed up a policy, being steered by the transport ministry, for scrapping old vehicles and will circulate it for public comments in two weeks, the Finance Ministry said on Thursday. This followed guidelines issued by the transport ministry for setting up vehicle scrapping centres.
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Contraction at the Core… India's core sector output contracted 5.2% in September, posting its worst performance in 14 years and suggesting that the economy may have slumped further in the second quarter of the current financial year. Economists said the sharp contraction showed the severity of the industrial slowdown and a recovery may take time. The Index of Eight Core Industries, which measures output in coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, grew 4.3% in September last year. The estimate for August was revised to 0.1% from a contraction of 0.5% earlier.
Read More RBI to the Rescue... India's fiscal deficit at the halfway mark in 2019-20 stood at 92.6% of budgeted estimates, lower than 95.3% in April-September, 2018-19, helped by transfers from the RBI. With muted tax revenues, the government will have to undertake spending cuts to achieve FY20 fiscal target of 3.3% of GDP, say economists.
Read More Meanwhile... A deeply divided US House of Representatives took a major step in the effort to impeach President Donald Trump on Thursday when lawmakers approved rules for the next stage, including public hearings, in the Democratic-led inquiry into Trump's attempt to have Ukraine investigate a domestic political rival. In the first formal test of support for the impeachment investigation, the Democratic-controlled House voted almost entirely along party lines — 232 to 196 — to move the probe forward in Congress, which could damage Trump ahead of the 2020 presidential election.
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