DNA Money Edit: Stocks face the music, now

As India's economy looks to recover from mild tremors it faced recently, the stock market is keeping its fingers crossed. After recording a grand 22% jump, Sensex has dropped around 1400 points from the peak of 32686 in just over a week.

The concerns over ballooning fiscal deficit, rupee fall and not-so-good Q3 seem to have taken the wind out of the market's sail. The latest data estimated fiscal deficit at Rs 5.25 lakh crore during April-August, 96% of the target of Rs 5.46 lakh crore for 2017-18, despite a decline in capital expenditure of late.

A year ago, fiscal deficit stood at 76.4% of the 2016-17 target. While expenditure looks to inch up, there are risks of revenue slippage.

The government has budgeted a deficit of 3.2% of the GDP for the current fiscal, compared to 3.5% last year. Government officials have claimed the high fiscal deficit till the August-end was due to frontloading of spending due to the early passage of the Budget while revenue will flow in later in the year. The government may be constrained to reduce expenditure if tax revenues disappoint.