Dear
Trader…
In February, the equity segment of the Indian stock
market has seen a surge in investment by FPI and welcomed the Union Budget with
good global signals and witnessing a historic rally as the BSE Sensex for the
first time jumped 51,000 points to 51,073 points and the Nifty Future crossed
the 15,000-point mark for the first time at a new record high of 15,008 points.
Asian markets ended mostly in green, amid
upbeat corporate earnings results and a continued decline in first-time claims
for U.S. unemployment benefits. Progress in the vaccine rollout and optimism
about U.S. fiscal stimulus also lifted the markets.
Global shares came near record highs on
Friday and the dollar headed for its best weekly gain in three months, as
progress in vaccine distribution and U.S. stimulus hopes prompted bets on
further normalization in the global economy.
The services sector Nikkei IHS market PMI, which was
52.30 in December, rose to 52.80 in January. Demand for this specialty has
grown significantly as a result of recent corporate scandals, the service
sector PMI has been hovering above 50 points for the last four months. Trade
confidence has been at an 11-month high in hopes of vaccine success. The
success of the vaccine is expected to boost demand.
As expected, the RBI’s MPC voted unanimously
to leave the policy repo rate unchanged at 4% – for the fourth consecutive
time, the Reserve Bank of India
forecasting a growth of 10.5% in GDP in the next financial year 2021-22,
The accommodative stance of the monetary
policy is likely to continue till the end of FY22 and would be supportive for
growth complementing the budgetary measures announced ensuring revival in
growth on a durable basis.
The economic survey for the current financial year with
V-shape recovery during the Corona epidemic has projected a positive growth of
11% in FY2022 against the projection of 7.7% negative GDP growth.
This time the Union Budget has introduced historic
incentive provisions, there has been a tumultuous rise in stocks, but with the
release of this budget provision, the Indian stock market is still in the
overbought zone and the possibility of a correction required for market health
cannot be ruled out.
The Budget could potentially lay the foundation for a long term economic growth path. Overall we expect the market to continue its upward journey on the back of healthy corporate earnings, strong liquidity; positive developments on the vaccine front, broad based economic recovery and low interest rates.
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