The Union Budget was presented by Finance Minister Arun Jaitley on Thursday the 10th of July. While the budget had a little for everybody and considering that the same was presented by a government sworn in as late as the 26th of May, it is growth oriented and has the stamp and vision of Narendra Modi the Prime Minister.
The markets liked some and did not like some and though post budget they were up over 2%, they finally closed in the negative. A bank in Portugal was in serious trouble and this threw Portugal into a state of crisis and saw global markets crash. Call it the Portugal factor or the Jaitley factor, markets corrected and continued the correction into Friday. From intraweek highs, the SENSEX lost 1,166 points while the NIFTY lost 349 points.
The Midcap and Smallcap were badly mauled and thrashed. There are some lingering doubts in the mind of investors on “retrospective” and “GAAR”. Hopefully the FM would provide clarity and clarification on the same. Any clarification and acceptance of the FM’s statement on the issue could be a trigger for the markets.
Results season has kicked off with Infosys declaring them on Friday. The results were better than expected and helped IT shares outperform the rest of the market which seemed to be crashing all around.
Statistics show that the BSESENSEX has risen 11% from its 30th August close of 18,619 by the time election results were declared of the states in December 2013. It rose 23.5% before the May2014 election results were declared and rose 40.66% at peak before the markets fell in the last couple of days. At the close of trade of Friday, the markets at 25,024 are still 34.40% higher than its August close, a period of under eleven months. Nifty has performed similarly rising 11.26% from its August close of 5,476 in December, 25.35% before the May results and 42.71% at its peak of 7,808 points in the week gone by. At the close of 7,459 points, the NIFTY is up 36.2%.
Going forward FII flows will be a key for markets and one would like to see the progress of Monsoon and how the government controls inflation. Inflation data both wholesale and consumer would be declared in the week ahead. Results would determine the movement of individual stocks and the overall picture would depend on the government implementing measures that have been announced in the budget.
The markets are on a roll and the sharp sell-off post the budget is a welcome thing to make the markets healthy. It makes sense to look at investing in the markets in fundamentally strong stocks post this fall. The investment period should be 24 months and longer but not less.