Global markets were mixed during the week as investors remained cautious in the face of uncertainty over Syria, escalating fears of a new weapons test by North Korea and tightening polls in the French presidential election.

Investors were concerned about tensions between the United States and Russia after US President Donald Trump suggested there could be no peace in Syria while Moscow-backed President Bashar al-Assad remains in power. Similarly, tension has escalated in the Korean Peninsula following a warning from North Korea of a nuclear attack on the US.

The US dollar and Treasury yields tumbled on Thursday on the US President Donald Trump’s comments favouring lower interest rates. The US markets were down 0.3% for the week gone by.

Asian stocks put in a mixed performance amid a raft of regional economic data. The stock market in China and Japan was down by 0.3% and 1.3% respectively for the week gone by.

The stock market in France suffered the heaviest losses of the major Eurozone markets, as opinion polls showed left-wing candidate Jean-Luc Melenchon who had previously not been seen as a serious contender gaining ground ahead of the first round of voting in the presidential election on April 23. France’s CAC 40 was down by 1.1% for the week gone by.

Oil prices rose on Wednesday, putting crude futures on track for their longest streak of gains since August 2016. Saudi Arabia was reported to be lobbying OPEC and other producers to extend a production cut beyond the first half of 2017. Crude was up 1.3% for the week gone by.

Key World Markets During the Week

Back home, rising geopolitical tensions, coupled with disappointing fourth quarter result of an IT major dragged the Indian equity markets lower. The BSE Sensex was down 0.8% for the week, while the NSE Nifty was down 0.7%. Midcap and Smallcap stocks outperformed the frontline indices to gain 0.8% and 1.4%, respectively.

BSE Indices During the Week

Now let us discuss some key economic and industry developments during the week gone by

Key macro-economic data released earlier this week showed India’s expanded last month due to healthy demand conditions and softer inflationary pressure. The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) which is a composite indicator of manufacturing performance rose to a five-month high of 52.5 in March, from 50.7 reported for February.

An index reading of above 50 indicates an overall increase in economic activity and below 50 an overall decrease.

In other news update, the Prime Minister’s Office (PMO) recently conducted a meeting with representatives of private developers to review the progress of the affordable housing schemes under the government’s ‘Housing for All’ initiative by 2022. In the meeting, the PMO discussed challenges faced by developers while launching and executing such housing projects, including high land cost and slow approval processes.

The meeting was attended by representatives of industry bodies National Real Estate Development Council (NAREDCO), The Confederation of Real Estate Developers’ Associations of India (CREDAI), and MCHI-CREDAI apart from officials of the National Housing Bank. One shall note that the affordable housing segment saw an increase in new launches in 2016 and has also made things merrier for housing financing companies.

However, there remain many challenges before India will see affordable housing picking up. These include high land prices and state-level taxes as well as lack of builders for affordable housing. Right now, the “Housing for All” initiative by the government still seems a distant dream. For the above initiative to gain traction, the cost of constructing homes needs to fall. For this to happen, first and foremost, the cost of land in and around cities needs to fall.

For the cost of land to fall, the government needs to increase supply. This can be done by increasing the FSI allowed on buildings. Further, the government also needs to sell some of the land parcels that it owns in and around cities. This is essentially the land that it inherited from the British colonial administration.