FinMin Growth Boosters May Result in Indian Stock Markets Shooting up

All eyes would be on the Indian stock markets this week as the Finance Minister made significant changes in the financial policies on last Friday. The government has relaxed on a few of the amendments made in the Union Budget 2019-20. 

The government finally withdrew the increased surcharge on the foreign portfolio investors (FPIs) registered as trusts and associations. This move is expected to reverse the selling trend of FPIs, which is prevailing since July second week. 

Nirmala Sitharaman has assured to end the tax terrorism which has left India Inc. nervous. In the fiscal rejig, the Finance Minister has promised to offer more money at disposal for banks and NBFCs by easing credit regulations. 

The new fiscal changes are expected to boost the Indian stock markets this week, and FPI investment is expected to soar high. It is anticipated that the FPIs shift their investments in debt to equities, much to the relief of small and mid-cap companies.

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Startup investment is also expected to rise as the government has decided to exempt angel tax for startups registered with DPIIT. The government has come up with the growth boosters at the right time. 

The Sino-American trade war has brought negative sentiment to the Asian markets and has shaken the investors’ confidence across the world. The trade tension has resulted in the investors going after safer havens such as gold and sovereign bonds.

The bond yield on the 10-year treasury debt papers has slumped to their least since the mid of 2016 while gold has touched its peak since April 2013. This has resulted in emerging currencies going down. 

China has fixed yuan’s midpoint at 7.0570 a dollar. This has brought some relief as it was trading at 7.1850 offshore. There were concerns of China letting its currency drop further to stay competitive in the exports front.