Mumbai: An action-packed week is ahead for the market. Market participants expect at least 50 basis points cut in the repo rate by the RBI on August 7 in view of the spread of slow down in the economy.
The government has swung into action with Rs 10,000-crore infusion into housing finance companies, as announced in the Union budget. The market is also expecting relief to foreign portfolio investors (FPIs) from the tax on the super rich. Last week’s heavy monsoon rains has reduced the rain deficit and weathermen have forecast normal rains in August-September.
After last week’s huge selling across the board, the market may recover with several positives getting factored in. Brent crude oil price fell from $65.17 a barrel on July 31 to $61.17 on August 2, a huge positive for the Indian market.
Kunal Shah, Fund Manager-Debt, Kotak Mahindra Life Insurance, said, “The third bi-monthly policy meeting is largely expected to deliver a rate cut amid lower core CPI print and persistence of economic slowdown. MPC members are meeting at the time of most dire sentiments in corporate India owing to demand slowdown and FPI pessimism over surcharge.”
Banks, housing finance, oil marketing and agri-input companies will be benefitting from the positive developments.
Deo Shankar Tripathi, MD and CEO, Aadhar Housing Finance, on the National Housing Bank infusing Rs 10,000 crore in housing finance companies, said, “NHB’s announcement on infusion of Rs 10,000 crore liquidity in HFCs in addition to normal refinance is well-timed and a highly encouraging move to provide some liquidity but more importantly instilling confidence in the banking sector for HFCs.”
“NHB has proposed to lend 15 per cent of net owned fund, or 50 per cent of loan book, of HFCs, whichever is lower, subject to a maximum of Rs 500 crore. By all means, the decision of NHB will be very helpful to revive the sentiments of all stakeholders--HFCs, loan seekers and the developers,” Tripathi said.
The earnings season’s impact will also play out on the broader market.
It’s a crowded earnings declaration week again. During the week companies like Tata Steel, Voltas, Titan, Indiabulls Housing Finance, Adani Enterprises, Adani Ports, Aditya Birla Fashion Retail, Aurobindo Pharma, Cipla and HCL Technologies, among others, will report their working results.
“News of PMO reviewing recent taxation provisions on FPI and postponement of increasing the public float limit of listed companies to 35 per cent may provide some relief,” Romesh Tiwari, Head of Research, CapitalAim, said.