Nifty Futures Surge As Market Participants Cheer Modi Promise
Here’s what market experts had to say about Prime Minister Narendra Modi’s announcements.
Stock market participants were exuberant after Prime Minister Narendra Modi announced that his government will provide economic support of up to Rs 20 lakh crore, including the prior measures already done, to help the country tide over the impact of the Covid-19 pandemic.
Nifty futures traded on the Singapore Exchange, usually seen a precursor to the Indian stock market’s reaction, surged soon after Modi’s address to the nation. The SGX Nifty rose as much as 5.5 percent following the announcement. It was trading 3.9 percent higher as of 10:25 p.m.
The Prime Minister said the fiscal package will encompass several areas such as land, labour and laws and cover all stakeholders from farmers to entrepreneurs. The details of the package will be announced by the Finance Minister, he said.
Measures covering half of the Rs 20 lakh crore have already been announced by the Finance Minister and Reserve Bank of India, according to economists.
This means that Rs 9 lakh crore of total measures have already been undertaken, and there is space for another Rs 10.7 lakh crore of spending/support, which needs to be clarified, said Barclays Chief India Economist Rahul Bajoria, in a note late Tuesday night.
Yet, market participants are enthused by the promise of more large spends.
While the size of the stimulus is indeed big, it’s the implementation which should take centrestage, according to Kotak Mahindra Asset Management Company Managing Director Nilesh Shah. “Quality of spending, out-of-the-box thinking on financing, and flawless execution will change the orbit of the Indian economy,” Shah said. “Markets will constantly evaluate those to determine the future course.”
“The size of the package is surprisingly large. Nobody expects this whilst we wait for details what’s intriguing is the theme of self-sufficient India,” said Saurabh Mukherjea, founder of Marcellus Investment Managers. “When the markets open tomorrow focus will be on the details of the package and specifically understanding what it means for manufacturing and within that electronics, electricals, auto ancillaries, medical equipment.”
Mukherjea said that when he thinks of self-sufficient India, he thinks of the big deficits which are there in high tech and defence manufacturing. “So the sheer size of the package will be a positive surprise for the market tomorrow.”
Sudip Bandyopadhyay of Inditrade Capital agreed. “A total economic package at 10 percent of GDP is a bold move to support the ailing economy locked down to prevent the spread of Covid-19,” the chairman of Inditrade said. “I expect equity markets to take it positively in the near-term.”
The stimulus and structural reforms expected to accompany them are “unprecedented” and will help make India globally competitive, said Nilesh Shah, Managing Director and Chief Executive Officer of Envision Capital. “This is India’s big leap towards revival, resurgence and economic development.”