Business & Investment

Market Outlook: Hug your horse on Dalal Street.Budget can turn in either direction

The domestic stock market has witnessed a long-awaited correction during the past week. Nifty That global companion has been tanked too much to take the lead. The amendment coincided with the monthly expiration of futures and options contracts, which acted as double pain and bruised the rise in stock prices.

Perhaps the timid hands had already moved before the big budget day.

The market is currently bright, so a blockbuster budget may rekindle the animal spirits on the stock exchange and restore buoyancy. However, if D-Street does not fully accept the budget, the bruise will be sharp due to the current low volume due to strict margin requirements.

When zoomed out, the entire market is very likely to be at the top of the metric in the short term, so the current revision phase is either time or price, even if the street has budget buoyancy. You might expect it to happen.

Subsequently, the long-awaited vehicle scrappage incentive policy was finally approved by the Ministry of Road Transport. However, the approval only applies to official cars older than 15 years, which has brought a negative surprise ahead of the budget. industry The Bulls were eagerly awaiting a recovery in demand for commercial vehicles, mainly due to this policy. This is also one of the reasons for the market revision, suggesting that the government may have limited room to boost the economy through fiscal measures.

Therefore, all eyes focus on the heart of the budget. Increasing domestic consumption is a central theme there and could be a top priority for putting India back on the path to growth and recovery.

This week’s event

Declaring that the fight against the coronavirus is not over, Federal Reserve Board of Governors Jerome Powell has decided to keep the financial valve wide open to support the pandemic-hit economy. I promised. Leaving the major overnight interest rates near zero, he made no changes to his monthly bond purchases, at around $ 80 billion for government bonds and $ 40 billion for mortgage-backed securities.

When a flush of liquidity is injected into the system, inflationary trends creep in and accelerate in the future. This should not be ignored as it will ultimately raise the price of risky asset classes such as stocks, commodities and real assets. As a result, it could lead to a weaker dollar, which would hurt developed economies and improve inflows into developing markets.

Technical outlook

Nifty50 formed a large bearish candle after a long period of time. In fact, the past week saw a meaningful sell on a closing price basis, about 12 weeks later. The market remains off-average for a little longer than usual, so in the short term you may see meaningful dips and / or time adjustments. Nifty IT, energy and real estate were the biggest losers, with all sector indices closing negative.

Persistent movements with Nifty below the 13,900 level will support the bearish scenario. This is because the immediate support and resistance levels are at 13,700 and 13,900 levels, respectively. Traders need to stay on the sidelines, as budget days can cause massive volatility and random kneeling reactions.


Expectations for this week

Markets are expected to remain volatile next week due to various rumors of rounds. One of them is a 1 rupee national bank for infrastructure financing. But there are too many assumptions and estimates in the budget, and ultimately the question is, can the government be willing to contribute in terms of infrastructure spending and long-term capital spending to revive sluggish growth? , Or fine-tune fiscal policy.

If the government chooses the latter, the market will be very disappointed. However, if you choose the former, cheers can rise and stock exchanges can move towards recent highs. Therefore, investors are advised to make selective purchases at a lower level and not make rush decisions based on the news.

Nifty50 ended the week at 13,634, down 5.13 percent.

Market Outlook: Hug your horse on Dalal Street.Budget can turn in either direction Market Outlook: Hug your horse on Dalal Street.Budget can turn in either direction

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