Dear
Trader…
After the budget, the BSE Sensex jumped more than 10% to
reach the seventh position in the Indian stock market in the world, the Indian
stock market continued to rise and recorded the strongest post-budget rally in
the last 24 years and hit a new high of 51835 points after hitting a
51000-point mark in the Indian stock market, while the Nifty futures hit a
record high of 15266 points with the Union Budget kicking off a new record high.
Indian equity benchmarks ended on a flat
note with negative bias amid profit-booking in Auto, Realty and FMCG stocks.
Key indices made positive start, as traders took encouragement with report that
Finance Minister Nirmala Sitharaman said the government is taking steps to
carefully monitor the fiscal deficit, which is estimated at 9.5 percent of the
GDP for the current financial year. Some support also came in with a report
that US President Joe Biden and Prime Minister Narendra Modi have agreed to
work together on the fight against the COVID-19 pandemic, renew partnership on
climate change, rebuild the global economy in a way that benefits the people of
both countries and stand together against the scourge of global terrorism.
After the positive impact of the Modi government’s
introduction of a number of incentives to the infrastructure and financial
sector with further incentives to carry out the Self-Reliant India Mission in
the Union Budget, the Reserve Bank of India has fixed the repo rate at 20% for
20 years in its credit policy review.
Funds led a record rally in stocks as a positive signal in
the direction of being placed and economic recovery, in the 145 years since the
establishment of the stock market in India, the market capitalization of BSE
has crossed Rs 200 lakh crore.
Despite the central government’s push to increase spending
on infrastructure projects in FY 2021-22, the financial position of companies
operating in the sector, such as construction, capital goods and engineering
companies, has yet to see a significant improvement. Thus, there are
indications that companies in the infrastructure and capital goods sectors are
facing challenges.
With the Corona epidemic in the coming days, the
performance estimates of the companies for the next financial year will be
based on the results of the remaining companies in the last quarter financial
results season.
The government has announced a number of measures to
drastically increase capital expenditure to pull the country’s economy out of
the Corona epidemic.Not only has the Reserve Bank significantly reduced the
repo rate in the last one year, but lending by companies has remained sluggish.
Looking at the results of the estimated 42 companies for the period April to
December 2020, it appears that the combined net sales of the companies have
declined by 19.90% in the nine months, while their operating profit has
declined by 56.80%.
Today’s Nifty future traded low around 15062 levels which is an important short term support. In case the Nifty future breaches this,
then some more correction up to
15008-14909 cannot be ruled out.
It is necessary to surpass these respective
levels for a continuation of the up move. However, since we have seen a sharp
run up post budget without any correction, some consolidation or a correction
would be healthy to set up the next leg of up move and the broader trend
continues to be positive, it would be prudent to book timely profit and look
for buying opportunities in stocks again on dips.
It is advisable to avoid aggressive positions and take a stock specific approach with a tab on the above mentioned levels.
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