Budget gushes up markets

Highlights

The eventful calendar year 2015 turned out to be a year of boom and gloom for the Indian stock markets. The previous year\'s uptrend sparked out of a change in regime in New Delhi, post the general elections, percolated in the year 2015 when it dawned and lifted the Sensex to its life-time high of 30025 in March. However, from April onwards the tide turned and the buying euphoria gradually subsided.

2016 to witness buoyancy as economy is poised to improve

The eventful calendar year 2015 turned out to be a year of boom and gloom for the Indian stock markets. The previous year's uptrend sparked out of a change in regime in New Delhi, post the general elections, percolated in the year 2015 when it dawned and lifted the Sensex to its life-time high of 30025 in March. However, from April onwards the tide turned and the buying euphoria gradually subsided.

The resultant downtrend was then aided by multiple negative factors that took big a toll on the markets which gradually sent the market barometer, the Sensex down to the year's low of 24834 by September.

The markets, since September, have been attempting to come out of the bearish grip and with the last three weeks consistently ending in the green, the benchmark indices, the BSE Sensex for 30 scrips, was still short by 1382 points when compared with the previous year's closing of 27499, thus defining the year as bearish.

However, though, it certainly provided excellent intermittent profit making opportunities in the early part when the trend was still rising and prices of stocks were lifted up really very high. Those who booked profits in early part of the year and then stayed away from the markets especially from re-buying shares so sold or enter into buying of other stocks, were a happiest lot while those who booked profits in some scrips and redeployed funds in others, are a repenting lot as prices of most of the shares have slid to low levels now, at the end of the year. Thus, it proved to be a year of boom first and then a year of gloom, in the end.

The issues that haunted the markets in the form of interest rate hike by the US Fed Reserve, and the sustained off-loading by the FIIs, as a result, in the emerging markets, consistent high inflation rate and the consequent hesitation in cutting interest rate by RBI for a prolonged time-frame, besides terrorist activities including brutal attacks on France and unabated killings by the ISIS in Iraq and Syria and China's economic fall resulting into huge devaluation of its currency, Yuan, were among the hurting factors that not only damaged the Indian markets but also took a toll globally. Back home, the last year's union budget was not looked upon as a bullish one that hardly provided any boost to the economy as revealed by two poor quarterly numbers season. The markets failed to get slightest bullish hint from the last two quarterly corporate numbers.

Politically also, lack of enough numbers in the upper house of the Parliament came in the way of the Government getting the crucial GST Bill cleared in two sessions including the last winter also dampened the market-mood for a prolonged time.

The monsoon this year turned out to be very unsatisfactory and that also affected the markets very adversely.

The above-mentioned factors continued to haunt the markets in the year 2016 and many more new negatives might emerge suddenly or unexpectedly but at the same time many of would pave way for positive factors too. The FIIs that have sold big chunks of Indian equity in the past four months mainly on hope of a rate hike by Federal Reserve, are most likely to return to India for parking their huge investible funds as for them it is the only best investment destination.

The ensuing union Budget could spark long lasting buoyancy in the markets. After two bad monsoons, the nation is most likely to receive ample and well spread good rains this year. These are the factors that have the capability of lifting the markets significantly up by July-August period and therefore, it would be beneficial to think and act bullish in the New Year 2016.

Talakshi Gosar
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