INSUBCONTINENT EXCLUSIVE:
Analysts say that the Budget may support the economy in the long termDomestic stock markets rallied this week with benchmark indices
clocking gains of nearly 4 per cent after the February 1 Budget announcements triggered their worst single-day fall in at least 17 months
The S-P BSE Sensex index registered a gain of 1,406.32 points (3.54 per cent) for the week while the broader NSE Nifty benchmark added 436.5
That marked the biggest weekly gain for the 30-scrip benchmark index since March 2019
Analysts say that the Budget may support the economy in the long term, even though it fell short of near-term market expectations."From a
long-term perspective, the Budget has a lot of ingredients to drive economic growth
The dual stimulus (first the Budget, then the RBI policy) provided various measures to stimulate the broader economy which will bring
results," said Jimeet Modi, founder and CEO, SAMCO Securities - StockNote.During the special trading session on February 1 - the first such
instance since 2015 when the markets remained open on a Saturday as the government presented its Union Budget, the Sensex nosedived by
1,092.25 points (2.68 per cent) before settling with a loss of 987.96 points (2.43 per cent) at 39,735.53 for the day, and the Nifty plunged
328.8 points to an intraday low of 11,633.3 before settling at 11,661.85 - both the lowest closing levels in three months.Financial stocks
were the biggest drags as the Sensex logged its worst single-day plunge (in percentage terms) since November 11, 2016, and the Nifty its
worst since October 5, 2018
Mid-cap shares - which had outperformed larger peers in the run up to Budget - slid, with the Nifty Midcap 50 index diving more than 3 per
cent to a three-week low.The Budget failed to immediately excite investors who were mainly looking for a reduction or removal of taxes on
long-term capital gains, as sustained weaker growth and tax cuts made gross revenue targets difficult to achieve at a time official
estimates show the economy staring at the weakest pace of expansion since the 2008-09 global financial crisis.Economists said the Budget
appeared to support growth over the longer term but insufficient to provide an immediate boost to the ailing economy.The stock markets
recovered the Budget-day losses in the first two sessions of the week, and continued to rise until trimming some of those gains only on
Friday next.The Reserve Bank of India (RBI) held the repo rate - the key interest rate at which it lends short-term funds to commercial
banks - steady at 5.15 per cent for a second straight time while maintaining an "accommodative" stance, meeting economists'
estimates.Hinting at further monetary policy easing going forward, the central bank emphasised on financial stability and announced several
temporary measures in a bid to boost credit growth
It allowed banks to do away with the need to set aside extra cash reserves against incremental lending individuals and to micro, small and
medium enterprises (MSMEs).All of the 11 sectoral indices on the NSE and 19 on the BSE rose on a weekly basis, led by metal, financial
services, telecom and realty stocks
(%)Metal+9.19Telecom+6.59Basic Materials+6.24Oil - Gas+5.50Finance+5.36Consumer
Durables+4.85Energy+4.60Realty+4.49Bankex+4.43Power+4.18Healthcare+3.99Utilities+3.86Industrials+3.77Consumer Discretionary Goods -
Services+3.58Capital Goods+2.85Auto+2.06Fast Moving Consumer Goods+1.81Teck+1.09Information Technology+0.18On the 50-scrip Nifty index, all
Tata Steel (+10.96%), oil company Bharat Petroleum (10.48%) and non-banking financial company Bajaj Finance (+8.76%)
On the other hand, fast-moving consumer goods major ITC was the worst hit (-2.60%).Nifty ComponentWeekly Change (%)JSW Steel+13.99Tata
Steel+10.96Bharat Petroleum+10.48Bajaj Finance+8.76Titan+8.4Bharti Airtel+8.27Indian Oil+8.03UPL+8.01Bajaj Auto-0.26Hero
data on consumer inflation and industrial production, and auto sales data from industry body SIAM will be monitored closely for more insight
prospect of the coronavirus outbreak threatening world economic growth may weigh on the domestic markets going forward, say some.Many
factories across China remained shut in an extended Lunar New Year holiday that was originally due to end on January 30 in a bid to contain
the coronavirus outbreak that has killed more than 700 people.
