Market Back To Chasing Earnings Growth

As the government drew the roadmap for making India a US$ 5 trillion economy by 2024, the budget earmarked an investment of Rs. 100 lakh crore for infrastructure. The budget provided relief to the realty sector by increasing the cap of interest deductions on loans for affordable housing, while also helping the cashstrapped NBFCs with liquidity

Clearly, the government addressed many burning issues in the Union budget 2019, yet the markets reacted negatively as most of these measures proposed by the Prime Minister Narendra Modi-led NDA government will be beneficial in the long-run. Markets did not get any quick fix triggers from the budget and slid more than 2 per cent in the past two weeks. Finance Minister Nirmala Sitharaman has given a growthoriented budget bearing in mind that the government has a full term of five years to serve the nation and doling out freebies was never the focus of the Modi government.

Post the budget announcement, the benchmark index Sensex slipped down by 2.39 per cent, while Nifty dipped by 2.64 per cent during the fortnight. The downtrend was broad-based with almost all stocks experiencing selling pressure. The BSE Midcap index was down by 2.25 per cent and Smallcap index lost more ground and dipped by 3.54 per cent during the fortnight.

As the government drew the roadmap for making India a US$ 5 trillion economy by 2024, the budget earmarked an investment of Rs. 100 lakh crore for infrastructure. The budget provided relief to the realty sector by increasing the cap of interest deductions on loans for affordable housing, while also helping the cash-strapped NBFCs with liquidity by provisioning Rs 1 lakh crore securitisation facility with a government guarantee. Despite this, in the absence of any immediate triggers, all major sectoral indices headed southwards, with BSE Metal index losing the most, followed by BSE Auto, Power and Realty indices. During the fortnight, the BSE Metal index lost 5.04 per cent, while the BSE Auto, Power and Realty indices lost more than 4 per cent each. The BSE IT index was down by 3.53 per cent; Bankex was down by 2.27 per cent and FMCG was down by 1.27 per cent.

The international markets were mixed during the fortnight with major US indices showing an uptrend, while the European and Asian indices experienced some downward pressures. Dow Jones was up by 2.30 per cent; S&P 500 was up by 1.67 per cent and Nasdaq was up by 1.89 per cent, during the fortnight. The UK’s FTSE 100 was up by 0.11 per cent, while the German DAX was down by 1.59 per cent and the French CAC 40 gained marginally by 0.09 per cent. Among the Asian indices, the Shanghai Composite lost the most, down by 3.76 per cent, followed by the Hang Seng, down by 0.25 per cent, while the Japanese Nikkei dipped 0.20 per cent, during the fortnight.

Institutional investors were active post-budget, with nearly equal participation by both foreign institutional investors (FIIs) and domestic institutional investors (DIIs). The trading data for the fortnight shows that FIIs were net sellers to the tune of Rs. 4,953.77 crore, while DIIs mitigated the outflow by being net buyers to the tune of Rs. 4,071.19 crore, during the fortnight.

Modi Sarkar 2’s first budget is a fiscal stimulus programme designed to reviving investment and growth of the economy while trying to improve exports and protect domestic enterprises. On the other hand, the increase in minimum public shareholding requirement from 25 per cent to 35 per cent is expected to keep the markets from scaling new high in the short-term. However, the fundamentals are likely to come back into focus and corporate earnings growth is expected to give direction to the markets, going forward. 

Rate this article:
No rating
Comments are only visible to subscribers.

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR