Thursday, 25 February 2016

Will Sensex head northwards post the Budget?

Ever since the beginning of the year, Indian equity markets have been gripped by the Bears as devaluation of the Chinese currency in the beginning of the year rattled the markets. Meanwhile, interest rate hike by the US Federal Reserve, for first time in 9 years, further added to the investors’ anxiety.
The 30-share barometer, Sensex has fallen over 10 per cent from January 1 till Feb 17 and it has corrected by 20 per cent over the past one year.

The year has not gone as planned for the stock markets as heightened global economic uncertainty along with the diminished investor confidence triggered a substantial capital flight from the local equity markets. Overseas investors have pulled out around USD 2.3 billion from Indian equities till February 22, 2016.

In such a scenario, all eyes are set on the Union Budget 2016 announcements to be presented by Finance Minister Arun Jaitley on February 29 which would decide future movement of the Indian markets. 

What’s on the cards?

Budget 2016 is expected to include some deep-rooted structural economic reforms to bolster growth and incentivize investments that may help strengthen foreign and domestic investor sentiments.

Jaitley who will unveil the Budget on February 29, is expected to make key announcements with respect to the ‘Make in India’, ‘Digital India’, ‘Start up India’ and schemes such as the Pradhan Mantri Krishi Sinchai Yojana, etc. Goods and Services Tax (GST), Smart cities and Infrastructure reforms may also feature prominently in his budget speech. The Budget could definitely act as a roadmap to the Indian economy in the coming fiscal year.

Analysts expect markets to bounce back if the government presents an investor-friendly and growth-oriented Budget, as investors who are currently worried about the global market volatility, are likely to purchase stocks post the Budget.

Latin Manharlal Group

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