Positive macro data, fall in commodity prices lifted market: Kunj Bansal

How much of a role crude is playing in the recent recovery in the stock market and, for that matter, the FM’s comments on fiscal prudence?
There are three factors that are playing at present. One is partly sudden, partly non-sudden improvement in the macroeconomic data. I will refer to three data points. It is the third month of increase in GST collections, including over Rs 1 lakh crore January. The core infra growth also was positive. Besides, the PMI index came an eight-year high. Suddenly, we have these three macro data coming positive, of which GST collections are improving for three months. The other two are more of one-offs and we need to watch out for. Crude and other commodity prices companies coming down is also positive. Cost of manufacturing various goods and articles will come down. A part of that can get passed on to consumers, hopefully resulting in increased offtake. A part of it that companies retain will improve margins.

It could also help inflation fall. Meanwhile, Saturday’s reaction to Budget was knee-jerk. The market is now seeing the Budget in a more favourable way. We need to differentiate between the listed companies that we are investing in and promoters or individuals. At tax incidence, the removal of DDT has gone up for individuals or promoters or shareholders, but it is clearly a very big benefit for the listed companies in which we invest.

These companies will be left with lot more money at their disposal in continuation to the tax reduction, which happened in September. These two are very big positive for companies where a lot of money will be left for dividend distribution or for re-investment. Their cost of capital will also come down.


These are some of the factors, which are playing over the market amid the reasonably subdued result season that is ongoing.