After a solid Budget rally, wait for some adverse action to deploy fresh money:
The equity indices recorded the biggest-ever ‘Budget Day’ which was the best-ever Budget week gain in 10 years. The week started off with an ‘all-around development’ Union Budget and conducted with various RBI policies to look forward to. The market announced the various reforms with Bank Nifty seeing the best one-sided rise since the pandemic.
The rise in Budget that happened is momentary, yet it is big news for everyone. It is a fact that the Budget truly aims to revive growth in the economy by letting go of the fiscal deficit limits. The Budget also made it clear that the government’s intentions are bold and it wants to free up the markets to create wealth and go for more privatisation and asset monetisation.
A capex-intensive and infra-led boom are said to be expected to provide buoyancy to the economy which had been a loss due to the pandemic The Budget, all in all, appeased the majority of people in the market. It had a growth-inclined vision and expenditure plans which is indeed needed in an economic situation like this.
Investors should keep an eye on the quality names from the cement, heavy industrials, insurance and PSU sectors with a long-term horizon as they would be prime beneficiaries of the reforms announced in this Budget.
The government of India displayed an agenda that showed growth by keeping the repo rate unchanged while continuing with its accommodative stance. RBI introduced some breakthrough decisions, one of which will allow retail investors to directly invest in G-Secs online. This would enable RBI to compete with other banks to attract retail savings deposits. The markets assumed the inflation to be within the band of tolerance. This easily made the liquidity support the structurally weak sectors. All these portray the combined efforts of the government and RBI to instigate confidence and growth in the market and the economy to continue to help run the country.
Talking about the technical outlook, Nifty50 formed a big bearish candle last week which made an even bigger green candle during the week gone by. The overall market breadth remained positive as risk-taking sentiment prevailed after the Budget Day. The Global equity indices including the emerging markets like Kospi, TAIEX and DAX are all trading near all-time highs while the risk-averse asset classes like gold and bonds are exhibiting weakness. Traders maintain immediate support on the downside at 14,580 on the Nifty.
After the Budget week, the corporate sectors are expecting positive numbers to line up. A lot of growth expectations have already been factored into the market and short-term corrections would be a part and parcel of the journey ahead. Markets should focus solely on the quality name as the indices have already run up quite a bit.