India Market Outlook For The Week: 05 to 09.02.2018

India Market Outlook For The Week: 05 to 09.02.2018

             Equity Cash/Futures/Options Segment 

The Domestic benchmark indices are seen volatile next week, with Nifty 50 likely to decline further due to selling pressure after the Introduction of the long-term capital gains tax on equity investments. The Oct-Dec earnings results of companies and trend in global markets will also set the tone for Indian markets next week. The rise in bond yields hurt global markets and investors fear that any weakness in overseas equities will add to woes in the domestic market. The recent rise in indices to peak levels and the high valuation of stocks caused by the strong liquidity is now cause for worry, and sharper fall could see investors turn nervous and sell more. In his Budget speech on Thursday, Finance Minister Arun Jaitley said longterm gains from equity investments worth over 100,000 rupees will be taxed at 10%, while tax on short-term gains was kept unchanged at 15%. This move is aimed to increase revenue and the government expects 200 bln rupees in 2018-19 (Apr-Mar) and higher revenues in subsequent years from the long-term capital gains tax. The Budget also asked the Securities and Exchange Board of India for proposals to encourage large corporate tap the bond market for 25% of their funding requirement. While this could lead to a deepening of the bond market, the credit disintermediation will impact the bank's growth. The rise in fiscal deficit and expenditure, introduction of long-term capital gains tax and beginning of volatility in global markets are factors that will lead to short-term pressure in stock markets.

Source : Cogencis Information Services Ltd.

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