Sensex, Nifty underperform global peers in August; surge only 2.5% despite huge foreign fund inflow

BSE Sensex, as well as the 50-stock NSE Nifty are down 5.8% since the beginning of this year, but are up 50% from March lows.

India’s stocks markets were among the most muted performers in the month of August across major economies, even after getting heavy foreign investment inflows aided by surplus global liquidity. Sensex and Nifty, although sustaining momentum, ended the month with just over 2% gains each. This was relatively muted when compared to other major economies like the US, Japan, South Korea, and even France. BSE Sensex, as well as the 50-stock NSE Nifty are down 5.8% since the beginning of this year, but are up 50% from March lows.

Sensex entered the month of August with 37,607 points and ended the month at 38,628 points, translating to a 2.7% jump. On the other hand the 50-stock Nifty was at 11,073 at the beginning of August and at 11,388 points at the end — jumping 2.8%. Domestic benchmarks were just ahead of Shanghai Composite of China and United Kingdom’s FTSE 100 on a monthly basis. While Shanghai Composite gained 2.6% in August, FTSE 100 ended just 1.1% higher. On the other hand, Indian stock markets were significantly behind Dow Jones, which was up 7.6%; and NASDAQ, which zoomed 9.6% during the month.

Since the beginning of August, till the end of last week, Sensex and Nifty were up nearly 7% in the month. However, the staggering fall that stock markets witnessed on Monday erased their gains by over a week. “Positive global cues, partial easing of lockdown, hopes over the vaccine development, sustained FPI inflows in the market,” said CARE Ratings in a report while discussing factors that fueled Indian stock markets in August. In the United States, all three benchmark indices were seen ending with gains helped by the expectations of a stimulus package from the US Government.

Among major Asian economies, Shanghai Composite recorded the lowest gains, while Nifty and Sensex followed closely. Japan’s Nikkei 225 was the top performer with a 6.6% jump recorded in August despite the sudden fall in stock markets that was aided by Shinzo Abe’s resignation. While South Korea battled another wave of the coronavirus, its Kospi index ended 3.4% higher in August. “The markets were supported after the Bank of Korea kept its base rate unchanged at a record low of 0.5%. Sentiment was also buoyed as the unemployment rate in South Korea dropped to 4.2% in July 2020 from 4.3% in the previous month,” Care Ratings added.