DSIJ Mindshare

Markets May See Strong Buying Interest after Yesterday’s Selling

Yesterday there was expiry of February F&O series, which was very tough for the Indian markets. The Indian benchmark index NSE Nifty was almost down by 3 per cent. Furthermore, the constructive railway budget too could not provide cheer for the markets. Rather the market lost almost 1 per cent on the Railway budget announcement day expecting something more what the government announced earlier. Though there is no hike in passenger fare rates, the railways hiked the freight rates making various commodities to cost higher from April 1. All in all the budget was good for the economy, however, the investor fraternity sense concerns over raising finances to transform the railways and spend the proposed quantum of money.

Our Railway Minister, Suresh Prabhu, Chartered Accountant by profession presented a clear road map to transform the railways over next 5 years. The minister has clearly constructive focus on self sustainable, decentralization of authority for quick decision making and improving efficiency. The government was clearly shied from present populist budget and put thrust on reviving investment cycle in railways in near future. The railway minister put 4 point goal for Indian Railways and the goals are to deliver a sustained improvement in customer experience; make railways a safer means of travel; modernize infrastructure of railways and expand capacity and finally make railways financially self-sustainable.

Further the government plans to increase freight carrying capacity from 1 billion tonnes to 1.5 billion tonnes. Further, the daily passenger carrying capacity will be increased to 30 million from 21 million, track length to increase by 20 per cent to 138000 kilometer. The railway ministry will be spending Rs 8.5 lakh crore over next 5 years to expand above mention capacities. In line with Swach Bharat Abhiyan, Railways too proposed and focused on Swach railway. Further, Prabbhu proposes buying of electricity through bidding process for cost savings of Rs 3000 crore in next few years. The rail budget too focused on improving efficiency by decongestion, adding new network, safety and station redevelopment.

The European market surged to new seven year highs after good economic data exhibiting encouraging for the eurozone’s recovery. The data showed a number of jobless people in Germany in February declined by a seasonally adjusted 20000, less than the drop of 10000 that had been expected by market experts. The German stock market index DAX and the French stock market index CAC 40 surged by 1.04 and 0.58 per cent to 11327 and 4911 during the yesterday’s trading session. The UK FTSE closed at 6950, up by 0.21 per cent.

On US market front, those markets were too flooded with the economic data. The data showed that the inflation trend turned negative for the first time since 2009. However, the persistent disinflationary situation could complicate Fed’s desire to normalize interest rates. Further, the weekly jobless claims jumped to above 300000, more than expected. The S&P 500 and Dow industrials closed flat at 2111 and 18214 respectively. The Nasdaq closed in green at 4988, up by 0.42 per cent.

Today morning, there was too no excitement in the Asian markets. The Japanese stocks inched higher on a weaker yen. The Nikkei 225 was trading up by 0.27 per cent. The Australian stocks weighed over concerns over some weak corporate earnings announced today morning. The ASX 200 index was trading flat at 5915. The Chinese markets were too trading under pressure on the news flow of removed several leading foreign technology brands from its list of suppliers for government contracts. The Hang Seng was too trading flat at 24884.

In the morning, the SGX Nifty was trading strong at 8772.50 with gains of 27.50 points. We too expect some buying interest on today’s trade will come after yesterday’s selling in the market. However, the budget expectations will weigh the market sentiments and see volatile session. Meanwhile, the Foreign Institutional Investors (FIIs) poured almost Rs 6000 crore in Indian markets making best out of correction in February F&O series.

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