Parliamentary Proceedings to Steer Indian Equity Markets

Parliamentary proceedings, coupled with US macroeconomic data and trends in crude oil prices will play key roles.

Dalal Street. (Photo: Reuters)

Parliamentary proceedings, coupled with US macroeconomic data and trends in crude oil prices, are expected to steer the Indian equity markets during the upcoming week.

Even the budgetary announcements, rupee’s trajectory and the interest of foreign investors will give vital cues to the markets’ next moves.

Markets would continue to be lacklustre and news driven. Forthcoming budget expectations and corporate earnings would be watched closely.

Devendra Nevgi, chief executive of ZyFin Advisors

File photo: Finance Minister Arun Jaitley arrives to present the 2015-16 Budget at Parliament House (Photo: Reuters)

Pankaj Sharma, head of equities for Equirus Securities, elaborated that investors will be guided and influenced by developments surrounding the union budget.

The market would read the important cues on the budget from key decision makers, both politicians and senior bureaucrats and react accordingly. One good thing in all this market mayhem over last 6-7 weeks which has been led by global factors is that the usual buzz on the budget has largely been missing. 

Pankaj Sharma, head of equities for Equirus Securities

Vaibhav Agarwal, vice president and research head at Angel Broking, pointed out that investors have not priced in the possibility of key reforms being passed in the parliament session.

Any progress towards implementation of important reforms such as the GST (goods and services tax) would be a key trigger for the markets.

Vaibhav Agarwal, vice president and research head at Angel Broking

Market participants expect the central government to increase expenditure, announce tax concessions and pave the way to reduce the NPAs levels of the banking sector.

Sentiments are currently down and any positive announcement is surely going to trigger a relief rally in the equity markets. This rally might spill over to the currency markets.

Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities

According to Banerjee, normal parliamentary proceedings, after the recent political turmoil will be keenly followed by market participants. The parliament’s budget session will commence on Tuesday.

“Any signs of a washout in the initial few days will dampen sentiments and dent the rupee,” Banerjee stated.

He explained that an “over-valued rupee” will come under pressure from February 22 onwards as a string of US economic data released till date is expected to keep the dollar well supported.

An employee counts rupee notes inside a private money exchange office in New Delhi. (Photo: Reuters)

The rupee had crashed to an all-time low of 68.89 to the dollar in the overseas currency markets on Friday and ended the day’s trade at 68.72. Domestically, the rupee had closed unchanged from its previous close of 68.47 to a greenback on Thursday.

The domestic currency markets were closed on Friday. Besides, the union budget economic survey and the railway budget will dictate trends on the bellwether indices informed Gaurav Jain, director, Hem Securities.

Indices may seem to remain volatile with a positive bias ahead of the expiry of February series derivative contract, economic survey and reform measures announced in the upcoming railway budget in the week ahead.

Gaurav Jain, director with Hem Securities

Fluctuating crude oil prices have been a major concern. (Photo: iStockphoto)

In addition, global cues, such as crude oil prices and the trends in foreign funds inflow will be keenly observed. “Markets will continue to react to global cues with US home sales and GDP data expected next week,” Agarwal added.

Analysts forecast the continuation of the relief rally at the Indian bellwether indices.

Short-covering, value buying and positive global cues had swelled the equity markets during the just-concluded weekly trade. The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE) zoomed by 723.03 points or 3.14 percent to 23,709.15 points during the just concluded week.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) rose by 229.8 points or 3.29 percent to 7,210.75 points. Global indices too rose with the Dow Jones Industrial Average closing the week with gains of 2.6 percent. London’s FTSE rose by 4.2 percent during the week under review.

(In arrangement with IANS. Rohit Vaid can be contacted at [e-mail])