Whats ailing the Indian markets
Indian rupee plunged to a fresh 27
month low as domestic and global uncertainties weighed on the markets as well
as the currency.
The rupee closed at 66.84 down by 11
paise, a low not seen since September 4, 2013. Markets remained jittery
amidst fresh concerns over the govt reforms. The sensex fell for a fifth
straight session ending the day down by 219.78 points (0.86%), to close at
25,310.33.
Indian markets continued their
bearish journey as the Congress stalled the parliamentary proceeding over the
implication and subsequents summons issued by the court to Sonia and Rahul
Gandhi in the National tribune case. The case was filed by BJP member Dr.Subramaniam
Swamy, the Congress stalled the parliamentary proceedings alleging a political
vendetta.
Since 1 December, the Sensex has
fallen 835 (3%) points. FIIs have been net sellers in the last 22 out of 24
sessions. FIIs have sold $1.70 billion equities for the time period 30 October
to 7 December. Since the beginning of this year, FIIs have bought $2.90 billion
from local equity and $7.99 billion from bond markets.
The markets are clearly on edge as
the parliamentary proceedings have cast shadows over the fate of the all
important GST bill which the govt has made it top priority.
After strong jobs data released
recently traders see a 70% probability of rate hike by the fed and this is
adding to the volatility in the markets. Although many experts have been vocal
that a rate hike by the fed wont have a big impact on India, its is still
expected to induce severe bouts of volatility as global liquidity flows adjust
in the wake of it.
The markets have been largely focused
on the fate of the GST bill which is expected to a be a game-changer for the
Indian economy which suffers from a inefficient as well as a small tax base.
The passage of GST is expected to change this scenario thereby bringing in more
monies into the govt coffers which then can further beef up its capex spend.
The GST is crucial because it will
have a positive impact on a whole host of sectors ranging from transportation,
manufacturing, IT, BFSI to the entertainment sector. The reform is crucial as
the govt tries to use all the tools in its disposal to improve India’s ease of
doing business and make India a top investment decision in an otherwise gloomy
global environment.
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