Sensex, Nifty may rally after FM’s economy booster; FPI relief and other key reforms for stock market investors

After FM Nirmala Sitharaman announced a slew of measures in a bid to calm the nerves of the investors, stock market experts say that the Sensex and Nifty may see a relief rally in the coming days. In what would come as a major relief to stock market investors, Finance Minister Nirmala Sitharaman on August 23 announced the abolition of tax surcharge on foreign portfolio investors (FPIs) as well as domestic investors. “In order to encourage investment in capital market, it is decided to withdraw enhance surcharge on FPIs. Surcharge on domestic investors in equity also goes. Pre-budget position is restored,” said Nirmala Sitharaman, addressing the media in New Delhi. Apart from this, the Narendra Modi-led government also announced a slew of measures including an “upfront” capital infusion of the budgeted Rs 70,000 crore in PSU banks, allowing NBFCs to use the Aadhaar-authenticated bank KYC to avoid repeated processes, raising credit support to HFCs to Rs 30,000 crore, and simplifying GST rules for MSMEs.

Taking stock of the development, Rajiv Singh, CEO, Karvy Stock Broking said that the market to form base around current level and inflows will be witnessed in broader markets among quality mid cap & small cap stocks. “We may witness rally in the favorite stocks of FIIs which majorly constitute our benchmark Index,” he added.

Amit Gupta, Co-Founder and CEO TradingBells said that we can expect the markets to bounce back on Monday with a gap up opening, and continue the rally for a few sessions to come. “These are just the kind of measures which were required to boost the economy. With the stimulus to FPI taxation, we can expect this FII outflow trend to reverse in the immediate term,” he said.

According to Ashish Shanker,Head- Investment Advisory, Motilal Oswal Private Wealth Management, the announcements should help stir positivity and gradually bring back animal spirits. “The steps taken to infuse liquidity in the banking and nbfc sector should help alleviate stress in the system and set in motion the recovery process,” he added.

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