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FM’s economic booster may charge up D-St bulls

Smallcap, midcap stocks likely to recover; rising oil prices may play dampener

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A slew of measures announced by finance minister Nirmala Sitharaman last week are likely to push up domestic equity markets this week, feel experts.

The government announced measures for export promotion and the housing sector, which is expected to give a stimulus to the slowing economy. However, the drone attack on Saudi Arabian oil facility can push the crude price higher by 10-15%, which may impact the markets negatively.

According to an analyst, there are a series of events which the domestic market will track this week.

"While the finance minister's announcements are likely to bring cheer to the market, US-Iran tension and rise in crude prices could be a dampener in sentiments. However, the markets have shown signs of bouncing back last week and I expect the upside to continue going ahead," the analyst said.

The key measures announced by the finance minister include extending the scheme of reimbursement of taxes and duties for export promotion, fully automated electronic refund for Input Tax Credits in GST, revised priority sector lending norms for exports and expanding the scope of Export Credit Insurance Scheme.

According to A K Prabhakar, head of research at IDBI Capital, recovery is expected in quality midcaps and smallcaps.

"The other scheme of things is not too important. The geopolitical tension is there and will continue to be there. Saudi is saying that normalcy will be back in the next two days, and if crude price doesn't go up, there will not be any negative impact. The US-Iran issue could be a concern in the short term, but minor events may not have any major impact on the equity market," Prabhakar said, adding that he does not think the benchmark index will give much direction and his focus would be on midcaps and smallcaps.

This week, investors will also closely watch for US Federal Open Market Committee meeting on September 17 and 18 in anticipation of interest rate cut. Last week the European Central Bank announced rate cut in an effort to stimulate the region's economy.

Besides, the WPI inflation data for August will be released on September 16, followed by the current account data for June quarter on September 20. The GST Council will also meet on September 20 and the markets expect GST rate to come down for the automobile sector.

According to another analyst, there may not be any major announcement related to GST rates for the auto sector, except for the two-wheeler segment.

"The geopolitical tensions in West Asia may affect Saudi Arabia's crude stockpile, impacting crude oil prices. If the crude price goes up, that will impact investors' sentiments," the analyst said.

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