Sensex first 39000, wires are connected to the election?

In India, the ruckus of the general elections has started and countdown of the first phase has started. Countdown is also for the new government and the ending picture of May will be clear who will be the next power.

Not only neighbors of India, the eyes of the whole world are on these elections. With every news related to the state-of-the-art bets, the breathlessness of those investors around the world is rising, whose money is invested in Indian markets and in the hope of profitable profits, they are constantly relying on Indian markets.

In the month of March, the stock markets started to have feathers, and on the first day of April, the Sensex made history. For the first time the Sensex crossed the figure of 39,000.

So what has happened in the Indian economy that there is a shopping environment on every side or is it because of the elections and this sentiment is also that the next government will be taking forward the stable and economic reforms?

In March alone, the Bombay Stock Exchange's sensitive index Sensex and the National Stock Exchange's Nifty jumped more than 7%.

Bull run in the market
It is said that the stock market moves more on speculation. There is also the saying ... Boy on rooms and sell on news (Sell on rumors and buy news). What are the speculations in the market that everybody is seen buying shares?

Says Sudeep Bandyopadhyay, financial affairs expert: "The smart clever player is the one who can quickly analyze political or economic decisions, what will be the far-reaching impact of that decision and how much it will be, whenever the Central Bank of America declares something important. So, its impact is on the stock markets around the world. But in order to take advantage of this announcement, the investor needs to show up faster than Formula Racer The Minister. "

But Sudeep believes that the current rally of the stock market has come from foreign investors.

Record purchase
Foreign portfolio investors (FPIs) have recorded purchases. So far, FPI has bought more than 34 thousand crores in March, which is the record of the highest purchase in any month in the history of the Indian stock market.

Earlier, in March 2017, the figure of purchasing of FPI was Rs 30,906 crores.

Asif Iqbal, a research head attached to a securities brokerage firm based in Delhi, says that this strategy of FPI is really shocking. In addition to shares, foreign investors have invested heavily in the debt market, and in March, about 13 thousand crores of shares have been invested in the debt markets considered to be more secure. That is, if the foreign investors see the total investment of the march, then it becomes more than 43 thousand crores.

However, in March, only domestic institutional investors (ie mutual funds) had sold 15,654 crore rupees. So why is the difference between the strategy of domestic and foreign investors?

Asif Iqbal says, "In March, there is pressure of redemption on mutual funds, a large number of people withdraw money from mutual funds, and elections are going on, money is needed in the market."

Apart from this, foreign investors have turned India towards profit for some reasons even at the global level. Sudeep Bandyopadhyay says, "Business activity in Europe and the USA has become somewhat sluggish, even some economists are accepting it as a sign of recession, so that Indian markets with huge consumption of foreign investors seem to be lucky for profit."

Fear of recession in the US
Inverted yield curve has been found in the US bond market. It is often seen when the long-term debt instrument yields lower than the short-term debt instrument yield. Before every recession, such yield curve has been observed in the United States and it is considered as a sign of recession.

Although there will be a recession in the US, it is not necessary. Economist Sunil Sinha says, "It is a hurry to declare a recession now, we should wait for the data of this month's growth rate in America and also see how the Donald Trump government reviews it."

There is another factor that Indian markets are still waiting for. Crude oil is in control and when foreign investors are coming in dollars, then the health of the rupee has to be improved. Rupee has been strengthened against the dollar and now the price of one dollar is about 69 rupees, which was Rs. 74 in October last year.

Currency expert S. Subramaniam says, "Crude oil prices have a great reason to be in control, India has to spend a large amount on the purchase of foreign currency petrol and diesel." If the oil gets cheaper, From that on, foreign funds invested in India and from time to time the Reserve Bank's dollar auction process has strengthened the rupee. "

Expecting cheap debt

Apart from this, another hope has wings in Indian stock markets, and that is the hope of cheap debt. The monetary policy committee of the Reserve Bank of India ie the MPC will be meeting from April 2 next month. In this three-day long meeting, the decision to cut the repo rate (the rate at which the Reserve Bank lends to commercial banks) can be decided.

RBI Governor Salman Das met Finance Minister Arun Jaitley on March 25, although the ruling Das had called this meeting a "general visit". He said, "The tradition is that before the review of the monetary policy, the governor meets the finance minister, so this is the part of it."

The Reserve Bank had cut interest rates 0.25 percent in February and now it is 6.25 percent. After 18 months of long wait, he had loan and cheaper for the customers.

Asif Iqbal says, "Retail inflation is in control, which was at 2.57 percent in February and was at a four-month high, but still it is below the benchmark of 4 percent of RBI. Point (0.25%) is the only way to cut. "

However, it is different from the fact that many banks did not give full benefit to the RBI cut and cut interest rates only by 10 basis points.

BBC

 




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