“There are some expectations that the government will announce a package but government may not have too much fiscal space. I don't expect the market to rise significantly,” said Piyush Garg, CIO at ICICI Securities.
Mumbai: Investors may need to brace for some turbulence as the gloom surrounding the extended lockdown across the country could lead to the market giving up some of its recent gains. All hopes are pinned on the government’s much-awaited stimulus for industries that have been hit the most by the economic disruptions because of coronavirus but the size of the programme will be crucial.
“The situation remains the same as there is no clarity on lifting of the lockdown. The markets could remain volatile in the near term,” said Harsha Upadhyaya, chief investment officer — equity at Kotak Mahindra Asset Management Company. “Any stimulus would benefit industries only after the lockdown is lifted.”
On Monday, the stock market ended 1.6% lower after gaining almost 20% in the previous 12 sessions. Markets were shut on Tuesday on account of Baba Saheb Ambedkar Jayanti. Nifty contracts traded in Singapore rose 2.7% shrugging off concerns over the Prime Minister Narendra Modi’s announcement to extend the lockdown and the absence of a stimulus package.
The main trigger for the market would be a stimulus for the hard-hit industries and small businesses, said experts.
“There are some expectations that the government will announce a package but government may not have too much fiscal space. I don't expect the market to rise significantly,” said Piyush Garg, CIO at ICICI Securities.
So far, the government has announced fiscal stimulus of around 0.8% of GDP, which was primarily designed as a social security net for the most vulnerable.
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Emkay Global believes that a month of lockdown could shave off Rs 10 trillion of GDP.
