Indian Markets Outlook for the week – 29.Feb.2016 to 04.Mar.2016
(Union Budget to direct market trend next week)
( www.rupeedesk.in )
The
Union Budget for 2016-17 (Apr-Mar) will direct the trend in
domestic
equities on Monday, and will have a bearing on trade in the rest
of
the week as well. Following a lacklustre Railway Budget, market
participants
do not expect any major fireworks in the Union Budget, to be
presented
by Finance Minister Arun Jaitley at 1100 IST on Monday.
Whether
Jaitley sticks to the fiscal consolidation roadmap he laid down
last
year is one of the major questions playing on the minds of investors.
The
government is aiming at reducing fiscal deficit to 3.5% of the gross
domestic
product in 2016-17, and 3.0% in 2017-18.
For
the current year, the fiscal deficit is pegged at 3.9% of GDP.
As
RBI governor's decision to cut rate will be linked to government
remaining
on the fiscal prudence path, any deviation in fiscal deficit will
be a
negative for interest rate sensitives.
Due
to distress in rural India after two successive years of deficient
monsoon,
market participants also expect the Budget to focus on schemes
to
alleviate their concerns.
The
FM's (finance minister's) priority in the 2016-17 Budget will be
higher
growth, with fiscal rectitude, we believe. Long term capital gains
tax
is another key factor that will be watched out for. Currently, Indian
investors
are exempted from tax on capital gains on shares sold after one
year
of holding.
Any
move to increase the holding period from currently 1 year to 3
years
could amplify the weak sentiments in the markets.
Among
global factors, trend in overseas markets and movement in crude oil prices will
be eyed next week.
Ahead
of the Budget, domestic stock indices ended up nearly 1% as
the
government's Economic Survey for 2015-16 indicated that the
government
may go easy on the fiscal deficit stance if it helps to spur
growth.( www.rupeedesk.in )
