Budget, Monetary Policy over; what will drive the market next week? Ajay Bagga answers
Ajay Bagga, Market Expert, says Prime Minister Modi's visit to the US next week is a good sign. It is anticipated that India will sign some defense agreements and announce equipment purchases. Additionally, there are already signs of tariff relief on US products. We can expect a handshake that may draw attention to the markets. Although the recent earnings season was not strong, the upcoming quarter appears more promising, and with the rate cut, rate-sensitive sectors should perform better.
What is your take on the markets overall? How much of the positives in terms of the Union Budget as well as the RBI monetary policy coming as per expectation is now priced in and what will drive the markets ahead because January has been quite wobbly. In February, we seem to be stabilising a bit but what is the way forward?
Ajay Bagga: The Union Budget, on balance, was a good one. In terms of the RBI policy, the positive was the rate cut. What disappointed the market and led to some amount of sell off in the banking stocks. The Budget on balance has been positive for the markets. Infrastructure spend has been maintained. Fiscal deficit goes down, creating some space for RBI to cut rates and consumption gets a boost.
As far as the RBI policy went, it was positive in terms of the rate cut, but keeping the policy stance at neutral was a surprise. We were expecting they would move to an accommodative and acknowledge that now they would be focusing more on growth rather than inflation. And then at the press conference commentary,
