Economic Survey, Budget 2018 to be keenly watched in crucial week for markets
Busy week for markets this week with crucial events like Economic Survey of India, Budget 2018 and Fed meeting lined up
Mumbai: It is going to be a busy week for market investors with crucial events lined up both in India and globally. As the budget session begins on Monday, the Economic Survey of India which reviews the economic progress in the last one year will be tabled in Parliament. The session will go into a break on 9 February. The second phase of the budget session will start on 5 March and conclude on 6 April.
The Union budget will be presented by finance minister Arun Jaitley on 1 February. In anticipation of a favourable budget, the markets have seen a major rally in the last few sessions. The first Union budget 2019 after goods and services tax (GST) was implemented in July will be presented amid several challenges such as rising crude oil prices, shortfall in revenue collections, upcoming state elections and general elections in 2019, and requirement for sustained government spending to revive gross domestic product (GDP) growth. The markets will keenly watch out government’s fiscal prudence, its spending to boost rural economy and taxation guidelines.
ICICI Securities expects the government to focus on measures targeted at improved allocation towards productive capital expenditure and infrastructure development, improve farmers’ income and boost agricultural productivity.
Jimeet Modi, founder and chief executive officer, SAMCO Securities, said in order to remain globally competitive India too will have to reduce corporate tax rates akin to the US. This is the last budget of the NDA government and the FM will really have to walk a tightrope, and in the interest of the larger development of the country, the budget may impose a tax on long-term capital gains which is hitherto tax free, he said. “The markets will not like it, which may trigger a bout of serious correction. Corporate numbers look better largely due to low base of the previous year quarter but market has thoroughly discounted such fact and therefore the reactions are muted,” he added.
Amid the noise around the most crucial budget, December quarter corporate earnings are underway. Major companies which are scheduled to announce their Q3 results this week are Tech Mahindra, HDFC, ICICI Bank, Larsen and Toubro, IDBI Bank and JSW Steel.
Auto stocks will be in focus a week after they declared their January sales data on Thursday. According to the data released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales declined marginally to 158,326 units in December 2017 from 158,617 units in December 2016. However, domestic passenger vehicle sales rose 5.22% to 239,712 units in the same period from 227,823 units a year ago.
In the primary markets, IT firm Newgen Software Technologies will make stock market debut on Monday. The Rs425 crore IPO was subscribed more than eight times during its share sale from 16-18 January, and had a price band of Rs240-245 per share.
The IPO of Galaxy Surfactants, manufacturers of surfactants and other speciality ingredients for personal care and home care industries, will open for subscription on Monday, with a price band Rs1,470-1,480 per equity share. The company aims to raise around Rs937 crore through the share sale that will close on 31 January.
Meanwhile, the US Federal Reserve is expected to hold interest rates in its Federal Open Market Committee (FOMC) meeting on Wednesday.
This is the last meeting of chair Janet Yellen. The US central bank is widely expected to raise rates again in March, and it forecasts three interest rate hikes this year.
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