Budget Puts Markets On Upward Trajectory
A well-crafted budget from the team of Piyush Goyal and Arun Jaitley amidst bench-thumping accolades from the man of the moment Narendra Modi himself has steadily put the markets into a northward trajectory. The Union Budget 2019 had something for all, starting from the taxpaying individuals to farmers to unorganised sectors to realtors. The ruling NDA also managed to give a vision statement in its budget, which can be equated as an overview of its manifesto for general election 2019. The Budget, followed by the RBI’s repo rate cut, elated the markets during the fortnight.
The benchmark indices shed the lethargy seen in the last few trading sessions and moved upwards. The BSE Sensex gained 1.45 per cent, while Nifty50 gained 1.51 per cent during the fortnight. However, the same was not reciprocated by the broader indices. The BSE Mid-cap and BSE Small-cap lost 2.40 per cent and 2.45 per cent, respectively. This damage is in-line with the poor results reported by many mid-cap and small-cap companies in contrast to the consistent and betterthan-expected results reported by large-cap index companies.
Sectorially, the BSE Power index dipped the most and was down by 5.40 per cent while, on the other hand, the BSE IT index rose by 5.68 per cent during the fortnight. The other sectors which saw selling pressure were Metals, followed by rRealty and FMCG, which were down 4.37 per cent, 1.21 per cent, 0.64 per cent, respectively. The Auto index and the BSE Bankex managed to post gains of 1.71 per cent and 0.56 per cent, respectively.
The Indian equity markets were buoyed by positive cues from the global markets during the fortnight. This was on the back of renewed hopes that the talks between the US and China will progress as planned and will diffuse the trade war tensions. On the back of this, the US and Asian indices were upbeat during the fortnight. The US-based Nasdaq, S&P 500 and Dow Jones Industrial gained by 1.86 per cent, 1.62 per cent and 1.49 per cent, respectively, during the fortnight. The Brexit deal still remains uncertain; however, the UK-based FTSE100 gained by 3.85 per cent, while on the other hand, the German DAX dipped 3.32 per cent and the French CAC40 was up 0.73 per cent. Among the Asian markets, Japan’s Nikkei dipped the most down by 2.12 per cent, while the Shanghai Composite index and Hang Seng gained 1.47 per cent and 1.37 per cent, respectively
Institutional trading data showed that FIIs are back in the Indian markets. Bucking the trend set during the past few fortnights, FIIs were net buyers to the tune of Rs. 5,460.91 crore, while DIIs were net buyers with an inflow of Rs. 511.85 crore during the fortnight. On the day of the budget, FIIs were net buyers to the tune of Rs. 2,755.63, which displays their optimism in the India story.
Another positive cue for the market is the fact that crude oil prices in the international markets are easing. Consequently, the Indian rupee is gaining consistently against the US dollar. The Reserve Bank Governor Shaktikant Das in his first policy review meeting surprised the markets by cutting the benchmark repo rate by 25 bps to 6.25 per cent. Moreover, the RBI changed its stance from calibrated tightening to neutral and also eased the ECB norms for corporates borrowers providing shortterm relief to the banking and finance sector as well as stressed companies. Going ahead, the macro numbers, global cues, crude oil prices and activities of institutional investors will give direction to the equity markets.