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Analysts expect FPI selling to reverse; see a market rally on Monday

The rollback of surcharge proposed in the Budget on foreign portfolio investors and measures to prop-up the economy, especially the auto sector have been welcomed by experts, who now expect the markets to react positively to the development on Monday.

In a post-market hours press briefing today evening, Finance Minister Nirmala Sitharaman withdrew the enhanced surcharge on long and short-term capital gains. That apart, public sector banks will be infused with Rs 70,000 crore capital. Read more here

Analysts have given a thumbs-up to the measures announced and expect the selling by foreign FPIs to halt. In this backdrop, they expect the markets to to rally on Monday. Here’s how they have interpreted the announcements:

Vijay Chandok, MD & CEO, ICICI Securities

We welcome the new announcements made by the finance minister and are confident that the slew of measures revealed by her would act as a major stimulus for the economy and provide an all-round sentiment boost.

These steps are as much on ease of doing business as they are on rationalizing of taxes and injecting liquidity into the system. The measures are expected to aid both - consumption and investments as borrowing cost will come down.

With withdrawal of surcharge on key investor categories like FPIs, inflows into the market is expected to improve. Some key job creating sectors like auto and real estate, who have been under pressure lately, have been given a good boost, which is a welcome step.

Ashishkumar Chauhan, MD & CEO, BSE

Long term measures which will improve ease of doing business and ease of living include giving GST refund in 30 days to MSME and randomized- faceless - e assessments for IT. These are some of the deep reforms which require a lot of thinking as well as preparing and IT prowess. Overall, the take home is that the government is listening, has listened, has identified solutions and have taken some quick and bold wide ranging decisions. 

CSR spend and criminal proceeding on that was a surprise to many when it was announced. Taking it back, is a welcome move. It will allow corporations to think and employ their CSR funds in an effective way without the fear.  This step has certainly given a boost to the morale of corporate India

V K Vijayakumar, chief investment strategist, Geojit Financial Services

Withdrawal of the surcharge on FPIs is a shot in the arm for the sagging market. One can now expect reversal of the FPI selling. The market is likely to look up from now on. However, sustained rally in the market will happen only when we have visibility on good earnings growth and reversal of the slowdown in the economy. This requires more reforms. The FM has announced that she will come back with more reforms soon. So, there is hope.

Ravindra Sudhalkar, ED & CEO, Reliance Home Finance

Today’s announcements from the Finance Minister to revive the economy is a welcome move, especially provisions where Rs 70,000 crore will be immediately be released, and an additional liquidity of Rs 5 lakh crore being made available to the banking sector will definitely help in reviving the real estate sector and in turn the housing finance sector. 

Additional liquidity support to the housing finance companies (HFCs) increased to Rs 30,000 crore from current Rs 20,000 crore by NHB is encouraging. As well as banks deciding to pass on rate cuts to customers is another significant move and hopefully the NBFC sector which has been reeling under pressures due to lack of liquidity will see much better times going forward

Anuj Puri, chairman, ANAROCK Property Consultants

The government is taking a heads-on approach to addressing issues, supporting the key drivers of the economy and giving each of the sectors - including real estate – a massive shot in the arm in these stressful times. 

The announcement to offer more credit support for purchase of homes, vehicles and consumption goods is an extremely welcome move which does not come a moment too soon. This move gives a major liquidity support of an additional Rs 20,000 crore to HFCs and this will significantly improve the momentum of lending to cash-strapped developers by the NHB. Many developers will now be able to complete their projects stuck or delayed which were languishing due to lack of funds – thereby benefiting their buyers directly.

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