India Union Budget 2019 | Financial Express Online Survey: Even as Indian stock markets continue to be volatile ahead of the Budget, a lot of domestic and global factors continue to weigh on the direction. While the outlook appears to be uncertain overall, there is some hope that Sensex and Nifty could continue their bull-run in this fiscal year.
Budget 2019 | Financial Express Online Survey: Even as Indian stock markets continue to witness volatility ahead of Union Budget 2019, experts say that a lot of domestic and global factors including global trade war, growing fiscal deficit, Fed’s monetary policy, etc continue to weigh on its direction. While the outlook appears to be uncertain overall, the expectations of corporate earnings growth and NPA recovery provide some hope that Sensex and Nifty could continue their bull-run in this fiscal year, according to a survey by Financial Express Online. Notably, the 30-share Sensex touched a fresh record high of 40,312 on 4 June 2019, while the Nifty had scaled a new peak of 12,103.05. According to broking firm Sharekhan (one of the survey respondents), the Indian market has seen a much skewed movement from specifics stocks in the last 18 months, which has led to Nifty touching all-time high. “Notwithstanding volatility, we continue to remain positive on market over next 2-3 years and expect quality stocks in both large caps and midcaps have potential to deliver good return,” Sanjeev Hota, Head of Research, Sharekhan, told Financial Express Online.
The Bulls run
The bull-run is likely to continue in the financial year, according to consulting giant EY. The overall size of the Indian economy makes the corporate sector bullish, DK Srivastava, Chief Policy Advisor, EY, told Financial Express Online, adding that the fact the government will be able to pass most Bills in its tenure will add to the confidence. Sandeep Raina, Associate Director, Edelweiss Professional Investor Research, too believes that the rally is likely to continue given improving liquidity conditions and interest rates. A large NBFC, requesting anonymity, said that recovery in corporate earnings, and leaving the NPA mess behind, adds to investor confidence, supporting the argument for rally continuing. A total of 4 out of 15 responded that the bull-run is likely to continue.
Wait and Watch
However, a majority of the respondents (9 out of 15) said that the direction of the stock market for the current fiscal year is uncertain. “The market will be primarily driven by the FII flows. This will depend on the fed action on rate cuts as well as how the geo-politics and trade tensions pan out. We can expect some movement of the retail domestic investors out of the market owing to the recent issues with mutual fund investments,” noted Ranen Banerjee, Partner and Leader Public Finance and Economist, PwC. On the other hand, several variables including global factors, fiscal deficit, RBI rate cut, liquidity situation influence the direction of stock market, said Sachchidanand Shukla, Chief Economist, Mahindra Group. “The stock market is highly dependant on news flows, add to that the valuation of the market itself,” he said.
The global economy is facing some headwind like US-China trade war, Brexit, slow GDP growth in India in the last quarter etc, therefore, it is difficult to say how the markets will work in near future, said Vikas Vasal, National Leader – Tax, Grant Thornton. Some are more pessimistic than that about Indian stock market. According to Arun Singh, Lead Economist, Dun & Bradstreet India, and Radhika Rao, Sr VP and Economist, DBS, the rally is unlikely to continue in this fiscal year. The stock market investors will keenly watch the upcoming Budget, which is likely to influence the near-term direction of the stock markets. “Domestic markets would take cues from unfolding of global trade war, Fed’s monetary policy easing, and sharing of RBI’s surplus capital (as per the Jalan Committee’s recommendations) with the Government,” Vivek Kumar, Senior Economist, Yes Bank said.