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ShareMumbai: The exams are over. Results are out and the prizes have been distributed. Now, it's time for old lessons, once more.
With the allotment of portfolios of the new cabinet springing no major surprises, the Street will go back to looking at global cues and fundamentals, feel experts. "We are done with politics. Next week onwards, we will go back to the fundamentals. We will be tracking global cues a little bit more and news-based events will take precedence," says Hitesh Agrawal, head of research, Angel Broking.
As more ministers get allocated portfolios over the week, statements made by individuals of key ministries like finance, commerce and oil would be closely watched, say experts.
Deepak Jasani, head of retail research, HDFC Securities, says the market would watch other appointments to the cabinet.
It's back to basics as political dust settles
"Telecom, infrastructure power and commerce would be the key ministries."
"One area to watch out is the commerce ministry. Kamal Nath was holding the portfolio. But nothing was announced. It is a key portfolio as exports are under pressure," says Gopal Agrawal, head of equities at Mirae Asset Management.
"It is not a question of who becomes finance minister as much as how he deals with the reforms process. Most of the low-hanging fruit in terms of reforms have already been taken care of. The finance minister will have to balance the fiscal deficit while acting on the reforms agenda," says Anish Jhaveri, CEO of Antique Stock Broking.
Some of the key issues affecting the fiscal deficit are the petroleum, food and fertiliser subsidies. How the finance minister handles these issues will be the key in bringing the fiscal deficit under control said
The allocation of key portfolios announced on Saturday was along the expected lines with Pranab Mukherjee, who presented the interim budget in February, retaining the finance portfolio.
"Mukherjee is not known to be anti-business but a lot of water has passed under the bridge since he held the portfolio in 1982. So his reform credentials are untested," Jasani says.
Senior market hand and columnist R Balakrishnan says, "Mukherjee is a politician known to industry leaders. He has been finance minister in the past. But I'll wait for the budget."
There is also a view gaining ground that market is asking for too much reforms too soon.
The minister himself was at best non-commital in his acceptance speech. "The Indian economy is resilient, strong and we shall have to build up and come back to the growth track as early as possible. We will be able to, I hope, present the budget in due time so that uncertainties can be avoided and time of spending can be renewed," said the finance minister.
Doubts are already creeping up. Balakrishnan says, "Markets will be in for a disappointment, if it's expecting reforms. With the backdrop of huge fiscal deficit, it is difficult for any developmental work to happen. I would be very cautious if I were in markets."
But even if there is a major disappointment, the market is unlikely to go back to earlier levels as every correction is likely to bring in new investors who have missed the 6000-point Sensex rally.
There is still a lot of risk appetite in the markets according to Anish Jhaveri. "The markets do seem to have a lot of risk appetite as seen from the movement in midcaps. The left-out feeling has not vanished from the participants," he says.
Agrawal of Angel agrees. "Every correction will be bought into. I think the base has clearly shifted. With positive action from FIIs continuing, we will now trade in the new band of 12000-15000. However, anything beyond 16000 looks stretched."
As we enter the last week of May, the markets will also be looking up the sky for the monsoons. Jasani of HDFC Securities says, "The first forecasts for the monsoons were good. The markets will keep an eye out for the revised forecasts which is due soon. Overall the broader markets are expected to do well early next week. US markets are closed on Monday so there would be a lack of a cue on Tuesday. Broader markets should be in a comfortable space for the first two days of the week."
