, India

Indian equities outperform major bourses

But Indonesian counterparts performed poorly.

According to IG Asia, last week, India’s equity indices were the best performers in both the developed and emerging Asian markets category.

The Sensex and Nifty posted a strong end during the five days with a 3.2% and a 3.5% gain, while the US bourses were mostly unchanged.

Here's more from IG Asia:

There were many factors, such as the better-than-expected corporate earnings, increasing net foreign fund inflows. Efforts by the RBI Chief Rajan, bolstered the stability in the financial sector and Diwali fuelled the momentum to an exuberant end to the trading week.

The better-than-expected earnings in the Sensex, 10 out of 17 companies reported sales surprises that exceeded expectations by 13%, and earnings surprises that exceeded expectations by 5%. In the Nifty, 22 out of 29 companies reported earnings with sales surprises on the upside by 11%, while earning surprises were at 0.8%.

For both indices, the consumer goods sector was the outperformer with 152% in sales surprise. This shows the driver of growth in India’s economy is still in domestic demands.

This was also reflected in the Markit/HSBC flash manufacturing PMI report in October, where it stated “consumer goods as the best performing sector with new orders and exports rising”. Foreign buyers bought $761m in Indian equities for the week ending 31 October.

Selling in Indonesia

In contrast, Indonesia performed poorly after exports fell and trade balance went back into a deficit. Investors exited Indonesian equities, bonds and rupiah.

Exports year-on-year have been on a decline since hitting a high on Jan 2010 and monthly exports have shown a decline for the past 18 months.

The Jakarta composite lost 3%, and the rupiah lost 2.3%, in the past five days. However, it is not all bad with the HSBC flash manufacturing PMI for Indonesia showing an expansion of 50.9 in October from 50.2 the month prior. 

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