Though the global scenario isn’t looking all that good today, Indian markets are likely to continue trading with an upward bias. However, you could see some pressure build up owing to the global sentiment. Big investors are likely to wait out the next 48 hours before they make any major commitment. In fact, a little bit of profit booking can be expected today. The real move of the market will begin in a couple of days from now. Then on, the bulls should remain in charge.
The Sensex has crossed 26000 and is rearing to go much beyond it. Market participants are already talking of a 30000 plus on the benchmark by financial year end (March 2015). And, given the fact that India sticks out very favourably against its peers in terms of foreign portfolio flows, this could well happen even before the timeline those experts are talking about. Well, the countdown to the first trigger for the benchmarks to scale those heights has begun. The Budget is just a little more than 48 hours away from here. It is probably going to be the most keenly watched events in recent times, not just in India but throughout the global financial world.
The repercussions of a ‘good’ or a ‘bad’ budget will be felt far and wide. The way the markets are behaving, a ‘good’ budget seems to be on the minds of most. But, one has to keep in mind that the NDA is up against a tattered economy; an economy, which despite having all the ingredients necessary for good growth, has suffered due to the inaction and indecisiveness of its preceding government. This should be enough to gauge from a distance on what to expect from the Finance Minister come Thursday.
There is a kind of consensus which is building on one point. The time is ripe for some harsh decisions which will enable the economy to come out of the pit. A resounding mandate which ensures no disruptions, no matter what is about to be decided in the Parliament, is the best thing to have happened to India in years. The government has to now showcase its spine by ensuring that it takes some bold decisions which will be helpful in putting the economy back on its feet.
The equity markets continue to discount a ‘good’ budget, which does not essentially mean that expectations are high on populist measures. For person with even the slightest inclination towards economics, it is quite clear that the days of freebies, dole outs and subsidies are a thing of the past. With revenue heavily on its mind, a rationalization or tweaking of the tax regime is also ruled out. What a ‘good’ budget would mean is essentially a less harsher budget.
But there surely is a slight doubt in each one’s mind as to, what if the budget turns out to be harsher than expected. Well, as far as the markets are concerned, there could, at the most be a knee jerk reaction to some of the important measures that may be announced. Every such measure, whether it is the reduction of subsidies or hiking duties in a bid to shore up revenues or even tax rates for that matter would mean a better economy in the time to come and hence a stronger equity market going ahead. After all, doesn’t the market discount the future much in advance? While all this is domestic in character, one has to look around to seek more triggers.
Globally it’s been a weak start to the week. US equities came down yesterday as markets there prepare themselves for the June quarter results. After a long weekend spanning across its Independence Day, the US markets are now getting a little jitters as talks of an interest rate hike are getting louder. The Dow fell by a quarter percent yesterday, while the S&P 500 was down 0.39%. Europe too suffered due to weaker economic data points emerging from Germany, which is considered to be the growth engine of the Euro zone.
Asia too doesn’t seem to be very good this morning. Except for Indonesia, Malaysia and Taiwan all others are trading negative in early trades. The Japanese Nikkei is down by more than a quarter percent, while the Shanghai Composite in China is down by almost half a percent so far. Singapore too is showing signs of weakness with the Straits Times down 0.33% as of now. The Hang Seng in Hong Kong is down 0.31%, while Seoul Composite in Korea is slightly better than these having declined 0.15% so far.
Though the global scenario isn’t looking all that good today, Indian markets are likely to continue trading with an upward bias. However, you could see some pressure build up owing to the global sentiment. Investors are likely to wait out the next 48 hours before they make any major commitment. In fact, a little bit of profit booking can be expected today. The real move of the market will begin in a couple of days from now. Then on, the bulls should remain in charge.
