August was largely an eventless month but filled with anticipation. Global market participants are still on a wait-and-watch mode for further quantitative easing. In the interim, the dollar index weakened and gave a boost to gold prices in August. Overall, there was status quo in economic activity and speculation on monetary easing by the US Federal Reserve and European Central Bank continued. Amid all the uncertainty, Bank of England cut UK’s growth domestic product (GDP) forecast to around zero from close to 1% earlier. According to data from EPFR Global (aggregator of fund flow and asset allocation data), for most of August, money moved towards gold, high-yield debt and bond funds, whereas equities saw outflows globally.
Market participants in India are not only watching out for policy action but are also keen on rate cuts, which don’t seem to be happening. The concern on inflation hasn’t cooled off with food inflation remaining high and Brent crude prices tracking around $115 per barrel. Experts say that if crude trades at the current levels on a sustained basis then a hike is expected.