Two key macroeconomic indicators in July — manufacturing and services PMI surveys — fell below the 50-point threshold to register contraction primarily on account of GST, but the NSE Nifty posted a record performance in the same month, thanks to many factors. India also ended as one of the best-performing stock markets for calendar year 2017 till July-end.
The calendar year-to-date (CY17 YTD) gains for both the benchmark indices — BSE Sensex and NSE Nifty — also catapulted Indian stock markets among the best globally. "For CY17 YTD, MSCI EM (+24 percent), India-Sensex (+22 percent), Korea (+19 percent), Taiwan (+13 percent) and US (+10 percent) were the best performers among the key global markets in local currency terms. On the other hand, Russia (-15 percent) delivered negative returns," brokerage Motilal Oswal Securities Ltd. (MOSL) said in a note.
The benchmark, 50-scrip Nifty gained 5.8 percent for the month, ending at 10,077 on July 31 from 9,521 at the beginning of the month, marking the highest monthly return in 16 months.
The July rally was driven primarily by continued dollar inflows from foreign institutional investors (FIIs), good progression of the monsoon and no major hiccups in implementing the GST, according to a note by the brokerage.
"July witnessed inflows of $400 million from FIIs and $1.8 billion from domestic MFs. In YTDCY17, India has received MF inflows of $8.1 billion, more than full year inflows of CY16 ($7.1 billion). FII inflows for YTDCY17 stand at $8.7 billion, more than the cumulative CY15 and CY16 inflows of $6.3 billion," the brokerage said in its note.
From a sectoral viewpoint, gains were a mixed bag, with the SPU Bank index (up 13 percent) outperforming other sectoral indices such as Cement (up 9 percent), Metals (up 9 percent) and Consumer Goods (down 3 percent) in July.
On Friday, at around 11.15 am, the BSE Sensex was down 91 points to 32,146 while the NSE Nifty slipped below the crucial 10,000-mark and was trading 18 points lower at 9,997.