Market Outlook

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Market last week

Market witnessed intensified selling in the beginning as fears of surge in oil prices and weakening rupee impacted investor’s sentiment. However, the bold decision from the government to slash corporate tax surprised the market which indeed is a right move to revive the slowing economy. Companies will get more elbow room to pass on benefits to customers, which in-turn will improve earnings visibility.

Gains in rupee and recovery in oil prices from $69 to $64.7 with signs of faster restoration in Saudi production reduced the fear of volatility in the market. Mid cap and small index gained some momentum, as value buying was witnessed in beaten down stocks/sectors on account of cheap valuation. Banking and Financials, Metals and Auto sector were key sectorial gainers this week. On the global front, hints of progress in the US-China trade dispute and aggressive stimulus from the ECB was providing some positive sentiments.

Week ahead

Markets will witness a revival in enthusiasm as the newly announced fiscal measures will give a relief from the slowdown fears in domestic market. FIIs now have a good reason to come back to India and this progressive step will stimulate consumption and ignite capex cycle. On the flip side, the cut in rates may further bring short fall in tax collection and will have an impact on the fiscal deficit. Positively, RBI is also likely to take one more rate cut in October meet as inflation continue to remain in the comfort zone.

Posted: September 23, 2019.

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