Sunday December 15, 2019
Home Business Fate of India...

Fate of Indian equity market in the hands of upcoming Budget Session

0
//

Mumbai: The upcoming week in the Indian equity market will witness Parliamentary proceedings, US macro-economic data and trends in crude oil prices, leading the fate of markets’ next moves.

Even the budgetary announcements, rupee’s trajectory and the interest of foreign investors will give vital cues to where the market is heading.

“Markets would continue to be lacklustre and news driven. Forthcoming budget expectations and corporate earnings would be watched closely,” predicted Devendra Nevgi, chief executive of ZyFin Advisors.

Pankaj Sharma, head of equities for Equirus Securities, elaborated that investors will be guided and influenced by developments surrounding the union budget.

“The market would read the important cues on the budget from key decision makers, both politicians and senior bureaucrats and react accordingly,” Sharma noted.

“One good thing in all this market mayhem over last 6-7 weeks which has been led by global factors is that the usual buzz on the budget has largely been missing.”

Vaibhav Agarwal, vice president and research head at Angel Broking, pointed out that investors have not priced in the possibility of key reforms being passed in the parliament session.

“Any progress towards implementation of important reforms such as the GST (goods and services tax) would be a key trigger for the markets,” Agarwal told reporters.

Market participants expect the central government to increase expenditure, announce tax concessions and pave the way to reduce the NPAs levels of the banking sector.

“Sentiments are currently down and any positive announcement is surely going to trigger a relief rally in the equity markets. This rally might spill over to the currency markets,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told reporters.

According to Banerjee, normal parliamentary proceedings, after the recent political turmoil will be keenly followed by market participants. The parliament’s budget session will commence on Tuesday.

“Any signs of a washout in the initial few days will dampen sentiments and dent the rupee,” Banerjee stated.

He explained that an “over-valued rupee” will come under pressure from February 22 onwards as a string of US economic data released till date is expected to keep the dollar well supported.

The rupee had crashed to an all time low at 68.89 to the dollar in the oversees currency markets on Friday and ended the day’s trade at 68.72.

Domestically, the rupee had closed unchanged from its previous close of 68.47 to a greenback on Thursday. The domestic currency markets were closed on Friday.

Besides, the union budget economic survey and railway budget will dictate trend on the bellwether indices informed Gaurav Jain, the director of Hem Securities.

“Indices may seem to remain volatile with a positive bias ahead of the expiry of February series derivative contract, economic survey and reform measures announced in the upcoming railway budget in the week ahead,” Jain said.

In addition, global cues, such as crude oil prices and the trends in foreign funds inflows will be keenly observed.

“Markets will continue to react to global cues with US home sales and GDP data expected next week,” Agarwal added.

Analysts forecast the continuation of the relief rally at the Indian bellwether indices. Short-covering, value buying and positive global cues had swelled the equity markets, during the just-concluded weekly trade.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE) zoomed by 723.03 points or 3.14 percent to 23,709.15 points during the just concluded week.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) rose by 229.8 points or 3.29 percent to 7,210.75 points.

Global indices too rose with the Dow Jones Industrial Average closing the week with gains of 2.6 percent. London’s FTSE rose by 4.2 percent during the week under review. (Rohit Vaid, IANS)

Next Story

Advance Of Summit, NATO Pacify Trump

NATO also plans to consider a Franco-German proposal

0
Flags of NATO member countries
Flags of NATO member countries are seen at the Alliance headquarters in Brussels, Belgium. VOA

As Britain prepares for the NATO leaders’ meeting outside London December 3-4, the alliance said Thursday it had agreed to redistribute costs and cut the U.S. contribution to its central budget.

NATO’s central budget is relatively small at around $2.5 billion a year, mostly covering headquarters operations and staff, and different than its defense budget. U.S. President Donald Trump often complains of inequitable burden-sharing, with only nine of the 29 member countries meeting the 2%  of gross domestic product target for the alliance’s defense spending.

Regarding the central budget, “The U.S. will pay less, Germany will pay more, so now the U.S. and Germany will pay the same,” NATO Secretary-General Jens Stoltenberg said in Paris Thursday.

The United States currently pays about 22% of NATO’s central budget. Beginning 2021, both U.S. and Germany will contribute about 16%.

NATO also plans to consider a Franco-German proposal to create a working group of “respected figures” to discuss reform in the alliance and address concerns about its future.

The announcement to reduce the American contribution is seen as a move to placate Trump, who has considered withdrawing from the alliance but has since taken credit for its promised reforms.

“In 2016, only four allies spent 2%  of GDP on defense,” a senior administration official told reporters Friday, adding that there are now nine countries, including the U.S.,  meeting the 2% target, with 18 expected to do so by 2024.

“This is tremendous progress, and I think it is due to the president’s diplomatic work,” he said.

 U.S. forces from Syria, a move Trump made without consulting NATO
A convoy of U.S. vehicle is seen after withdrawing from northern Syria, on the outskirts of Dohuk, Iraq. VOA

Internal strife

Leaders of the 29 member states will attempt a show of unity during the summit but the alliance is facing questioning about its relevance and unity, particularly after the October withdrawal of U.S. forces from Syria, a move Trump made without consulting NATO.

“It’s exactly in the wake of that decision that you had [French] President [Emmanuel] Macron say what he said about the alliance being ‘brain-dead’ and referencing the lack of American leadership in the sense of leading in a community and not just going out on your own,” said Gary Schmitt, a NATO analyst with the American Enterprise Institute.

U.S. troops’ withdrawal from Syria prompted Turkey to launch an offensive against Kurdish YPG militia in northern Syria. The move spurred Macron to vent his frustration over what French diplomats say is NATO’s lack of coordination at a political level, and triggered fear among allies that the assault will undermine the battle against Islamic State militants.

Meanwhile, a simmering war between Russia and Ukraine has become the backdrop of Trump’s impeachment, with the American president allegedly having withheld hundreds of millions of dollars of military aid to pressure the Ukrainian government to announce an investigation of former Vice President Joe Biden, a Democratic presidential candidate running against Trump. Kyiv needs the aid to counter Moscow’s aggression.

The two conflicts in Europe’s eastern and southern flank further complicate Washington’s already-strained relations with other NATO members. Meanwhile, despite American efforts to reassure European leaders of Washington’s continuing commitment, anxiety about U.S. neglect of NATO under Trump persists, said Hans Kundnani, Senior Research Fellow in the Europe Program at Chatham House.

Ukrainian President Volodymyr Zelenskiy, welcomes NATO Secretary General Jens Stoltenberg
Ukrainian President Volodymyr Zelenskiy, left, welcomes NATO Secretary General Jens Stoltenberg during their meeting in Kyiv, Ukraine. VOA

Kundnani noted a series of American officials who have come to reassure Europeans not to take Trump’s tweets too seriously and focus on what is happening on the ground, particularly the military reinforcement of NATO’s eastern flank. Still, Kundnani said that in the last year Europeans have started to realize it’s “not really good enough” and they’re now facing the “reality of the of the crisis in NATO.”

“Some of them are hoping that Trump will be out of office in in a year’s time but the real fear is that Trump wins a second term,” said Kundnani, adding that some Europeans are hoping that “U.S. gradual withdrawal from Europe” might “snap back to the status quo ante if Trump is not re-elected.”

Diverging European responses

“The upcoming celebration of NATO’s 70th anniversary will be marked by important divisions within the alliance — not just across the Atlantic, but also within Europe,” said Karen Donfried, president of the German Marshall Fund of the United States.

In Paris, the view is “strategic autonomy,” said Donfried, with many in France concluding that Washington’s security guarantee can no longer be relied on. Warsaw is promoting “strategic embrace”  developing close bilateral relationship with Trump to guarantee its own security, while Berlin is advocating “strategic patience.”

Germany in the middle is a little bit divided between the “Atlanticists” and the “post-Atlanticists,”   Kundani said, adding that “Europeans are very much arguing” about these approaches.

Donfried said that against this backdrop, NATO allies are approaching the London summit with a sense of foreboding, knowing that they carry the responsibility to articulate alliance’s common purpose and ongoing relevance.

“If they don’t, [Russian President Vladimir] Putin will be raising a glass in Moscow to the fraught state of the alliance at 70,” she said.

Another summit goal for most European leaders, is to simply avoid a Trump flare-up, like those that have happened in past meetings.

NATO meetings
President Donald Trump meets with British Prime Minister Boris Johnson at the United Nations General Assembly, New York. VOA

Many have discovered this can be achieved through flattery. “They can talk about all the things that they’ve done and very smartly suggest that President Trump has generated the kind of pressure to make those things happen,” Schmitt said.

“They can actually praise President Trump, even though this is very hard for them to do because of the personality clashes.”

Many will be watching Trump’s encounters with Macron, including their bilateral meeting, as well as with British Prime Minister Boris Johnson. Johnson has pleaded for Trump to stay out of the upcoming British election during his London trip.

The senior administration official said that Trump is “aware of this” and “absolutely cognizant of not wading into other countries’ elections.”

ALSO READ: Trump Secure The Higher Ground On Criminal Justice Issues in 2020 Campaign

Other potential clashes are simmering too. Turkish President Tayyip Erdogan said Friday that Emmanuel Macron’s NATO “brain-death” warning reflects a “sick and shallow” understanding, telling the French president “you should check whether you are brain dead.”

The French foreign ministry has summoned Turkey’s ambassador to Paris to protest the statement. (VOA)