Comments
Foreign portfolio investors (FPIs) stepped up their buying in India’s equity markets on Friday, a day after the BJP swept the polls. The Sensex rose 1.61 per cent or 623 points to close at 39,434. The Nifty gained 1.6 per cent or 187 points to reach 11,844. The FPIs made net purchases of stocks worth ₹2,026 crore in the cash segment, provisional data showed.
Morgan Stanley, a leading global research house, said it expected the Sensex to touch 45,000 by June 2020.
Expectations on new govt
In its report, Morgan Stanley said it expected the inflation framework, the fiscal consolidation, the infrastructure spending, the FDI focus and the strong external affairs policies to continue under the BJP government. The research house also said it expected the RBI to cut rates by 25-50 basis points over the next six months; continue to infuse liquidity; and probably take banking sector liquidity to a neutral level from a deficit.
“The new administration may bring some changes such as increasing the cash transfers to poor people, laying more emphasis on portfolio flows, and increasing focus on the country’s external trade and social/Constitutional reforms (like Article 370),” the report said.
The BJP has roared back to power by cornering 50 per cent of the votes in 17 States and Union Territories and winning 303 out of the total 542 Lok Sabha seats. On Thursday, even as the vote counting was on across the country, the Sensex swung over 1,000 points, as it oscillated between positive and negative territories mainly on the back of profit-booking and negative global cues.
The rally on Friday was also aided by the fact that there was relative calm in the global financial markets and most major indices in Europe and US index futures traded in the positive zone.
“The markets will focus on the Budget announcement next month, and hence, the FPIs have stepped up buying in stocks as there is an anticipation that there could be announcement regarding reforms in this Budget itself. If the global markets remain calm, it is unlikely that the Sensex and the Nifty may see any major fall, at least up to the Budget. Dynamic agricultural reforms and major infra spending push could be the hallmark of the Budget,” said Kishor Ostwal, MD, CNI Global Research.
VRR norms revised
On Friday, the Reserve Bank of India notified the revised voluntary retention route (VRR) norms for the FPIs for debt investment. The central bank said the investment limit will be ₹54,606 crore under the VRR– Combined category, which allows investment in both government securities and corporate debt.
The minimum retention period has been kept at three years. During this period, the FPIs will have to maintain minimum of 75 per cent of the allocated amount in India, it said.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.