Mumbai: The Union Budget has been a source of excitement for Dalal Street historically, but this time around investor sentiment is muted.
Heightened uncertainties in the wake of the NBFC crisis and its impact on the economy have kept a lid on the euphoria ahead of the event in July.The optimism around the Bharatiya Janata Party-led coalitions decisive victory in the national elections has fizzled out.
After hitting record levels earlier this month, the market has been on the slide with the Sensex gaining just 0.8 per cent since May 23 the election results day.Foreign institutional inflows have also ebbed, with FPIs remaining net sellers of Indian equities to the tune of Rs 145 crore (till June 21) after buying around Rs 20,000 crore in April and May combined.The election results were followed by a rate cut by the Reserve Bank of India and a dovish commentary by global central banks.
This has done little to revive sentiment.Equity markets have more risks especially at these elevated levels.
Nothing major is happening as far as the economy concerned, said Piyush Garg, chief investment officer at ICICI Securities.
There are issues in NBFCs that will have a spillover effect in terms of lower credit offtake, which will hamper economic growth further, said Garg.Indias economic growth rate slowed to a five-year low of 5.8 per cent in the January-March quarter of FY19 due to poor performance in agriculture and manufacturing sectors.
Minutes of RBIs last meeting released on Thursday showed that members of the Monetary Policy Committee are concerned about growth, inflation and the trade war.Indian stock indices ended in the red for the third week on Friday because of these concerns and the nervousness spilled over on Monday.
The Sensex ended down 71.53 points or 0.2 per cent at 39,122.96 while the Nifty ended down 24.45 points or 0.2 per cent at 11,699.65.
The Sensex has come off 2.9 per cent from its all-time high of 40,312.07 on June 4.
Nifty has retreated 3.3 per cent from its record high of 12,103.05 on June 3.Analysts said the broader market comprising mid- and small-cap stocks, which have been drifting lower, reflect the pain in the economy.
Any bounceback has been short-lived as investors lack confidence.Nitin Bhasin, head of research, Institutional Equities at Ambit Capital said the market is in a wait and watch mode ahead of the Budget and is not able to find any reason for a rally beyond the election verdict.Budget will be focused more on the rural side.
But it is unlikely to be significantly change the direction of the market, said Garg.