Will The Nifty Turn Bullish For Us?

Even though the Sensex and Nifty have been dipping steadily, and have even scaled record lows last week, analysts feel that the markets are bullish from a long term perspective. Thanks to the finance minister’s reforms, the investment climate of the Indian economy is expected to show rapid growth.

Last week Nifty had given a bearish reversal pattern, closing at around 4 week lows of 7464. The breath of Nifty is poor with Nifty breaking the 1 month low and closing below it. If Nifty breaks out below 7464, target for the weekly is 7240. However, if Nifty goes above 7562, then the markets are deemed safe. This is a crucial time for the stock markets. Whichever way the trend goes, will define a tectonic shift in market activity. Share market bigwigs feel that taking into account the reforms mentioned by Mr Arun Jaitley, the markets are bound to soar at a later point of time.

The Union Budget was hailed as positive and well-balanced by some while others seemed disappointed by its lack of clarity. People had expected more big bang announcements from the new government and market activity clearly indicated how the Finance Minister has fallen short of expectations. Analysts felt that the market players were dejected about the budget not addressing the rationalization of subsidies issue.

However, many corporate honchos and technical experts felt that the Finance minister did a good job considering the limited time frame in which the NDA government was acting. Even though the budget lacked any Big Bang announcements or paradigm shifts in strategy, the budget was beyond doubt well-intentioned, well directed and balanced. The NDA government took a pragmatic approach to issues like fiscal consolidation, job creation, inflation control and providing impetus to the growth of infrastructure, real estate, power and social sectors.

The main focus of the government is on strengthening the shaky foundation of the country’s economy, not just making sensational and drastic policy changes. The idea is to create long term financial stability and provide a business friendly environment in India. For example, increasing customs duty for flat-rolled steel can be favorable for domestic companies. Tax breaks for retail investment, plan for implementation of GST, plan to make 100 ‘smart cities’ and the formation of the REIT (Real Estate Investment Trust) were just some of the measures that can cure the Indian economy of the malaise that has afflicted it from the time of the UPA government.

Views abound on why the market responded so unfavorably. Analysts feel that one reason that the budget failed to make its mark is because it was more focused on expenditure. The budget failed on 2 counts- the implementation of reforms and the absence of new policy reforms other than the ones already mentioned by the government earlier. Many felt that nothing really remarkable has been ear-marked in this budget. It has not met the expectations of the public who were hoping for some radical strategies.

Even though the Sensex and Nifty have been dipping steadily and even scaled record lows the previous week, analysts continue to feel positive about the ultimate outcome of the NDA government’s maiden budget. The stock markets are bullish from a long term perspective. Thanks to the finance minister’s reforms, the corporate ambience of the Indian economy is expected to show rapid growth. The reforms ensure that the FIIs and DIIs will be keen to park considerable sums of money in India.