The finance minister unveiled measures to boost or improve investor and business sentiment.
The Nifty50 which closed with losses of about 2 percent for the week ended August 23 could see a strong opening when the market will resume trading on August 26 after Finance Minister Nirmala Sitharaman’s booster shot for the economy.
In light of slowdown fears, the finance minister unveiled measures to boost or improve investor and business sentiment.
A rollback in recent tax hikes on foreign and domestic investors, infusion of Rs 70,000 cr in state-run banks, a key measure to announce auto sector, are some of the measures to boost growth in Asia’s third-largest economy.
The government also outlined measures to support the NBFC sector and small businesses to calm the nerves of investors ahead of the upcoming festival season.
One big sentiment booster for D-Street is the rollback of higher surcharge on foreign portfolio investors (FPIs) as well as domestic investors. FIIs have pulled out nearly Rs 30,000 crore from the cash segment of India equity markets since July.
D-Street will welcome measure announced by the Finance Minister and we could see a bounce of about 100-points on the Nifty when the market resumes trading on Monday/
Post Budget, the correction was one-sided. We made a low above 10600 on Friday. But, going forward, the overall rally should be strong, and we could even touch fresh highs by December 2019 if earnings also show recovery,.
The measures which were announced on August 23 will go a long way in restoring growth and push India’s economy towards the $5-trillion economy in line with Prime Minister Modi’s vision.
It will also help in reviving faltering earnings growth seen in the June quarter. A revival in the economy will also revive demand, boost consumption, and push earnings higher. For the June quarter, excluding the banks & financials segment, aggregate net profit declined by ~5 percent for Sensex companies.
The finance minister has announced a slew of measures that will go a long way in addressing the expectations of investors and equally importantly, improving consumer confidence. We expect the market to gap up on Monday morning, and the process of restoration of growth via reforms is underway.
These measures will go a long way in reassuring investors of a pro-growth agenda. In large part, financial markets sold off on a disappointing budget. Investors will draw comfort from the measures announced today and the process for growth recovery has started.
What should investors do?
The Indian market was on the verge of turning negative for the year 2019. The Nifty50 broke below 10,682 in intraday trade but bounced back towards the closing on hopes of a stimulus package from the government.
The Nifty 50 closed with gains of more than 80 points while the S&P BSE Sensex rallied by over 200 points on Friday, ahead of FM speech.
The Nifty50 is still down by over 10 percent from its record high of 12,103, while the S&P BSE Sensex is down by about 9 percent. But, experts feel that it time to convert fear into greed as FM is likely to announce more such measure in the coming future.
Markets seem to be coming out of a fear spell which had gripped them since the beginning of August. Indian bourses should give opportunities to short term traders but some amount of money can be allocated by long term investors at the current levels as well.
FMCG, private bank, pharma sectors should be looked at by conservative investors whereas investors with a higher risk appetite can look at buying selective metal plays and cement stocks.
MORE WILL UPDATE SOON!!
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