New Delhi: With the budget out of the way, the lens is again on corporate profits, RBI’s policy and the unexpectedly spreading coronavirus. At the same time as the budget has gone down well with the market contributors, the three hundred points or 2. 5% fall in the Nifty ranks among the highest on budget days. A part of the fall is attributed to the risk aversion that is currently gripping the global markets as corona virus fears escalate.
Then again, the budget has not provided the much-anticipated large stimulus, while it banks on big ticket disinvestments that can be problematic. The outbreak of coronavirus and its impact on the global supply chains and economic growth, then again, is making traders wary. Similarly, some of the foreign participants who may have shied away from the markets on Saturday, can be back on Monday, and their response is awaited.
There isn’t plenty to count on from the Reserve Bank of India’s monetary policy statement scheduled on 6 february. A status quo on interest rates is anticipated. The current increase in consumer price inflation does not provide forRBI room to interest interest rates.
Thankfully, while the gross and net borrowings projected in the budget are marginally higher, it won’t impact the bond market’s borrowing calculations. That should keep rates in the bond market steady, though the bond market reaction, which was closed on budget day, is also awaited.
“Gross market borrowing for next year at ₹7,81,000 crores are similarly in the ball-park expectation range, while no extra borrowing for the current year is an unequivocal positive surprise for the market,” noted Suyash Choudhary, Head – Fixed Income, IDFC Asset Management.
The proposal to do away with exemptions in the new income tax slabs triggered a new set of worries for insurance and asset management companies. “The new direct taxes complicate the situation more than they resolved and would contribute a little surplus in the hands of the people,” says Raghvendra Nath, managing director, Ladderup Wealth Management.
