WEEKLY TRENDSETTER (JANUARY 30th ,2021)
| 2021 | 22nd Jan | 29TH Jan | Ch % |
| NIFTY | 14372 | 13634 | -5.13 |
| BANK NIFTY | 31167 | 30565 | -1.93 |
| USD/INR | 72.94 | 72.98 | -0.04 |
The market saw a healthy correction and Nifty touched 13600 .However, derivative expiry jitters coupled with shaky global markets and the forthcoming Budget uncertainty unnerved bulls and huge unwinding was seen in the markets.Even good corporate results were largely greeted with profit -taking .Now the focus shifts to the Union Budget to be presented on Feb 1 which will set the tone of the market for the coming months
BIG PLAYERS ACTIVITIES
The FII s turned sellers during the week while DII s continued with their profit taking .
BUDGET EXPECTATIONS
The FM has already expressed her intent to present a landmark budget .Taking hints from the Economic Survey,pandemic effect at large and general expectations, following possibilities are discussed:-
1.Economic Survey hints
a)It appears privatisation could get further boost after a lacklustre FY20-21 .
b)Focus on demand side to boost discretionary spending
c)Focus on infrastructure spending which has very strong multiplier effects
2.Expectation on the personal income tax front
Last year a 2nd method to calculate income was offered which received mixed reactions.The intent seems to be to “keep it simple” where all deductions are done away with and a simple tax structure is adhered to .In this aspect some relaxation is likely .The basic exemption limit could be raised from 2.50 lacs to 5 lacs which would be a big boost ,atleast in sentiments .
3.Pandemic hit sectors could expect some relief
The worst affected sectors were the hotels ,travel & tourism ,entertainment ,real estate to name a few .These sectors need some support atleast in terms of relaxation in high taxation shackles they are currently in.
3.Boost to healthcare
This sector came into prime focus during pandamic and has exposed its inadequacies.It is likely to get some incentives to extend facilities across India .
4.Banking could get special focus
The Govt has addressed the first set of reforms by consolidating PSU banks and reducing the number of banks .The 2nd big reform could possibly be to actually privatise some of these banks which could be to attract more capital ,better management, increase valuation and more importantly reduce vulnerability .Infact a better approach would be to sell stakes in a staggered manner where the Govt can also benefit from improved valuations. Best example would be the sale of Govt stake in Hind Zinc where the valuations have improved and the Govt still has a stake !!
5.Telecom sector
Probably the backbone of almost all sectors, this sector has had its share of problems. With 5G round the corner and digitalisation increasing rapidly, the industry expects some reliefs from regulatory fees on 5G acquisition.Besides the AGR verdict put enormous strain on finances of 2 telecom players .With a 3 player scenario ,this sector is highly critical and its well being would be good for retail and business as both are heavily dependant on them.
6.Covid surcharge ?
This has been making the rounds for the last few weeks .However ,the Govt can breath a sigh of relief as GST collections seem to have gathered momentum in the last couple of months .A token surcharge on corporates cannot be ruled out which will give the Govt some leeway to grant some incentives to some affected sectors.
So…… all in all a Budget which hopefully would stand up to expectations of the common man and the industry as the FM has stated her intent to make it a landmark budget !!
WHAT DOES THE COMING WEEK HOLD ?
What could we expect from the markets ?
This is the worry of marketmen after a harrowing week where the complacent bulls were clearly shaken up .The market was in an overbought scenario for the last few weeks .Global market meltdown was the primary trigger as well as some jitters on the border and skirmishes with China .13600 level on Nifty was expected to be the support and the same got visited last week itself !! However the silver lining was that the broader market was fairly stable and it was the index heavyweights which were facing the brunt of selling .In this scenario ,it is quite possible that any recovery would again see selling pressure in heavyweights which in anycase have stretched valuations .2021 could well be the year for small and mid caps where the uptrend has just begun .
Wishing all readers a great trading week ! Encash on the volatility and do not get swayed by the same !!
Krish Subramanyam