A few days ago, traders and investors in the stock market were waiting for a package from the Finance Minister to boost the Indian markets. The financial package did come, and that day, we witnessed a rally of 600 points on the BSE Sensex. The budget proposals of taxing the FPI and additional surcharge were removed. However, after a three-day rally, we are again back to square one.
The slowdown in the world economy and also our unemployment problems, inflation, and more importantly, the fall of the rupee against the US dollar has taken a toll on the stock markets.
The United States President, Donald Trump, is changing his statements every day on a trade war. The date of imposing additional duty and percentage etc. on China and other countries has changed many times. This has resulted in no confidence in the market.
We have one other significant threat of war with Pakistan, which has created a lot of nervousness in the market. The negative factors are more compared to the positive ones. This is the reason for more downside risks against the upside in the Indian stock markets.
In the recent sessions, the precious metals and commodities markets have given better returns compared to the stock markets. The auto sector is in the doldrums, and the finance minister said no more packages would be offered for the auto industry. Tata Motors went down below Rs.110, and leading car manufacturer Maruti asked 10000 workers to leave. The shares of TVS Motors, which were doing reasonably better also went down from Rs. 380 to Rs. 350.
Not just the auto sector, even the biscuit giants like Parle and Brittania expressed concern about their sales projections.
In the package, the Finance Minister also seemed to ignore the NBFC companies, and no bailout was announced. Dewan Housing went down by 80%, and the company is facing difficulty in paying quarterly interest. Indiabulls Housing Finance is falling every day.
One hope for the economy is that the RBI gave a vast amount to the government as dividends, which was much higher than expected. How amount will be utilized is not announced, the finance minister even told at the press conference that it is not decided on where these funds will be used.
The monsoon this year has been erratic, with some regions received excess rainfall, which is likely to destroy the crops. The inflation is expected to go up, and the GDP has come in at 5%, much below the market expectations of 5.7%.
On Thursday the NIFTY went below the psychological mark of 11000. However, it did recover on Friday to a certain extent. Considering that the GDP numbers were disappointing and no good news coming from the Finance ministry, expect the stock markets to continue with the current bearish scenario.