Budget, interest rates and Monsoon to dictate near term market trend
The 30-share BSE Sensex lost 62.72 points to end at 4,769.99 last week, extending a 56.29 points fall witnessed in the preceding week (week ended 11 June 2004).
Investor’s confidence would return to bourses in the event of a market-friendly budget. If the Sensex crosses 5,000 level post budget announcement, retail investors may return to the bourses.
Union Budget 2004-2005 that would be presented on 8 July 2004 is a key trigger for the market for the near term. A cut in corporate tax, extension of the exemption of long-term capital gains tax and reduction in short-term capital gains tax should boost market sentiment. However, an increase in fiscal deficit will not be appreciated by the investing community. And, the market is already worried that the new government may tend to focus on populist schemes, financed through higher taxation.
The progress of the monsoon is also being watched keenly. A good monsoon means higher farm incomes and enhanced spending capacity which in turns leads to stronger demand for consumer and industrial goods.
After the presentation of the budget, the market’s focus is likely to shift to the Q1 June 2004 corporate performance. The Q1 results would start trickling in from the 10-11 June 2004. Usually Infosys kickstarts the quarterly results season on 10th or 11th of the month.
Investor’s confidence would return to bourses in the event of a market-friendly budget. If the Sensex crosses 5,000 level post budget announcement, retail investors may return to the bourses.
Union Budget 2004-2005 that would be presented on 8 July 2004 is a key trigger for the market for the near term. A cut in corporate tax, extension of the exemption of long-term capital gains tax and reduction in short-term capital gains tax should boost market sentiment. However, an increase in fiscal deficit will not be appreciated by the investing community. And, the market is already worried that the new government may tend to focus on populist schemes, financed through higher taxation.
The progress of the monsoon is also being watched keenly. A good monsoon means higher farm incomes and enhanced spending capacity which in turns leads to stronger demand for consumer and industrial goods.
After the presentation of the budget, the market’s focus is likely to shift to the Q1 June 2004 corporate performance. The Q1 results would start trickling in from the 10-11 June 2004. Usually Infosys kickstarts the quarterly results season on 10th or 11th of the month.
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