Nifty hit a new high in Oct but then ended the month almost flat at 17,671 level. The broader market also took a breather in Oct with both BSE Mid-cap and BSE Small-cap indices also ending almost flat for the month. Indian markets are enjoying a considerable bull run, with Year-to-Date gains of 25%+, supported by strong domestic & foreign inflow, accommodative monetary policy, government reform measures, improved vaccine access and subsequent pick-up in service sector activity. MSCI India corrected slightly (under 1% in USD terms), underperforming the broader markets in October – MSCI APxJ / EM (+1.7%/+0.9%).
The FOMC minutes for the September policy (released in October) indicated that financial conditions in the US were broadly unchanged and remained accommodative. The spread of the Delta variant posed some risks to near term growth outlook, however the guidance on growth beyond 2021 remained constructive. The progress on vaccinations would likely reduce the effects of the public health crisis on the economy.
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