If history is a guide, the recent rough ride for Indian stocks will continue after Monday’s budget.
The S&P BSE Sensex index has climbed in the month after budget day on only two of the past seven years since Prime Minister Narendra Modi came to power, while falling or staying rangebound on other occasions. Risks are compounded in 2021 given stretched valuations.
“There are expectations that the government will keep aside fiscal prudence and open its pockets to spend more,” said Ajit Mishra, vice president of research at Mumbai-based Religare Broking Ltd. “Investors and businesses are pinning high hopes on the budget and any disappointment could lead to profit-taking.”
The Sensex had a blistering advance last quarter — even as data showed that the economy had plunged into recession — led by record inflows from foreign investors. But there are signs the rally is petering out: the index clocked its biggest weekly decline since early May from its peak on Jan. 20.
“Valuations are correcting from all time high levels for most sectors,” said Dhiraj Relli, chief executive officer of Mumbai-based HDFC Securities Ltd. “We don’t expect significant upside.”
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.