Monthly Market Summary: October 2016

Friday, November 4th, 2016

We take a look at various asset classes in our monthly market summary and find that Indian bond yields have started to move up. We also look at returns of equity, debt, gold, crude oil and the Indian rupee. 

 

Global Equities

 

Monthly Market Summary

 

October saw a lot of churn in terms of global equities. The Sensex had flat returns in October after falling 2 per cent in September. The index is still one of the best performing assets on a 3-year basis. The S&P 500 has also given good long term returns inspite of falling by roughly 2 percent last month.

The FTSE and the broader emerging market basket have posted flat returns after many months of positive performance. The European indices continue to show poor returns while the Nikkei posted sharp gains in the last month.

 

Fixed Income

 

Monthly Market Summary

 

In the beginning of October, we had the new RBI governor and monetary policy committee (MPC) take over from the previous regime. The MPC voted unanimously to cut rates and you would expect that bond yields would fall further as a result of this action. Instead, yields have gradually started moving upwards post the policy. This could be attributed to the change in the RBI’s stance from fighting inflation to one of supporting growth. Rising yields are also a global trend, with US Treasuries also moving higher in the month.

 

Gold

 

Monthly Market Summary

 

After rallying sharply at the beginning of the year, gold continues to trade in the 1200-1400 dollars per ounce range. A strong move of gold outside of this range would give a better indication of its long term trend.

 

Oil

 

oil-october-2016

 

Oil stayed in the range of 50-51 dollars for most of the month of October. But towards the end of the month it has started falling again and continues to be  within the range of 40-50 dollars a barrel. While it is difficult to predict the price trend of these commodities, it is important to keep an eye on them because they form a large portion of India’s import bill. Any strong moves in these commodities could affect our economy’s fiscal stability.

 

Indian Rupee

 

gbpinr-october-2016
jpyinr-october-2016
usdinr-october-2016
eurinr-october-2016

 

The pound has continued to depreciate in October on concerns of Brexit and a slowing British economy. It seems to have stabilised toward the end of the month, hovering around 81 Rupees to the Pound. The rupee has also been strengthening against the Euro and the Yen while staying roughly stable against the US Dollar.


About the author

Rishad is the founder of Kairos Capital. He started his career with Standard Chartered Wealth Management and has extensive experience in markets, particularly in terms of mutual funds and stocks.

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