How Dalal Street’s Veterans Reacted To Steep Fall After Budget
The Sensex and the Nifty 50 indices have both fallen below their 50-day moving average.
Indian equities dropped the most in a year today as investors were disappointed with the lack of stimulus and confusion over taxes in Union Budget 2019-20 presented on Friday.
The S&P BSE Sensex declined 2.01 percent to 38,702 and the NSE Nifty 50 Index fell 2.14 percent to 11,558. This was also the biggest drop for the benchmarks in a session after the budget since Feb. 17, 2009.
Both the indices have fallen below their 50-day moving average after the Narendra Modi government focussed on narrowing its budget gap, contrary to expectations that it would spend more to boost a slowing economy.
All of the 19 sectoral indices compiled by BSE Ltd. declined, with a gauge of capital foods stocks falling 3.8 percent. Five of the sector indices dropped more than 3 percent each.
Here’s How Dalal Street’s Veterans Reacted To The Steep Fall:
Instead of being a consumption expenditure growth-driven budget, what was presented was exactly the opposite, with an increase in petrol and diesel prices among other things. The revenue projections are also way off, so we have more cuts in government expenditure.Ajay Srivastava, MD, Dimensions Consulting
The lack of an immediate policy stimulus to revive auto sales and consumer goods, coupled with imposing higher taxes and duties on goods, which will further dampen sales, is impacting markets. The focus on higher taxes rather than reviving growth isn’t positive for market participants.Chakri Lokapriya, MD and CIO, TCG Advisory Services
The slowdown in the economy has become pervasive and broad-based. The markets were expecting some radical ideas from the budget for growth revival. But the budget has been more incrementalist than radical. There is a case for PE-derating for India.Pankaj Murarka, Founder, Renaissance Investment Managers
The [today’s] fall is just a continuation of the Friday fall. It’s not only because of the budget [but also due to] a lot of profit booking.Nilesh Shah, MD and CEO, Envision Capital
Confusion on tax provisions has led to correction of the markets today. Find the Nifty Index levelling at 11,400.Atul Suri, Trader
Combination of budget, low expectation of earnings and weak global cues have led to this market correction. There is unlikely to be valuation re-rating for the near-term as I expect markets to trade at 20 times its one-year forward earnings. Nifty 50 Index should remain in the range of 11,500-12,000. Further upside will be a function of earnings delivery in Q1FY20, corporate commentary, monsoon progress and on improvement in overall macro environment. The only good thing in the current environment is that the cost of capital has gone down.Gautam Duggad, Head of Research (Institutional Equities) Motilal Oswal Financial Services