Indian equity market is still in downward trend and now the result is that Nifty has broke major level of 10,000. From the lifetime highs made earlier by both the major indexes i.e Sensex and Nifty in January end, the market has seen downfall of more than 10 percent.
It looks like that Market is just taking a breath after a sharp rally. The main trigger for this correction in market is LTCG Tax bought in the 2018 Budget. Investors have time to book their profits on long-term holding and have option to lower their holding before April month. After it, the LTCG tax will be applicable on the Long-term capital gains.
While retail investors are also worried and avoiding any short-term long positions now, it is important to note that FIIs have now started inflowing money in markets. It could be due to strong outlook on few sectors in Indian Economy. But still as a whole, it doesn’t looks that market is participating in the positive side despite of buying from both side i.e FIIs and DIIs.
Financial year 2018 or FY18 is going to be end soon in which only five days are left now. And As i have noted and understand, recent PNB fraud has not only bought many Debt companies in focus, individual investors having exposure to stock market are also facing few problems. RBI has already directed banks to clear all the NPAs as soon as possible. And therefore, Banks have also tightened loans and advances towards individuals. So, explaining it in briefly, banking activities as of now are under stress and strong pressure and could remain in same for the the march end. After FY18, it could possible to see some gradual improvement in Banking activities. And not only in this, I think and believe that we could see some loose but a definite pickup in stock market.
After March, LTCG Tax will no more remain as a reason for selling or profit booking. Fresh Financial year has also been proved many times as a fresh buying in equity markets by many large individuals and institutions. However, trade war definetely could remain as a tension for investors for short-term because it may affect the movement of Globalisation spreading rapidly across the world. But I think international organizations like WTO would shortly find some solution and will try to finish the arised dispute between China and USA.
So, overall I think that some pressure could remain in stock market for next few days. But with the start of April month, chances would be much higher to see a new enviornmnet of bullishness in markets.
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