Just before budget 2021, experts are now trying to caution investors about this enthusiasm in the market. One of the major reasons for the recent boom is global liquidity, which is close to Rs 20,000 crore by 20 January. Regarding this rally in the market, he says that before the budget, this enthusiasm can also be about over-optimism. However, the Finance Minister has also said that this time the budget will be completely different from the last 100 years.
Why is the market looking so fast?
Quoted Rohit Gadia, CEO of CapitalWaya Global Research Limited Moneycontrol Has said in a report that support and relief can be announced on a large scale in the budget of this market. This will see positiveness on Dalal Street. Investors are expecting some better incentive provisions, which are also very important for economic recovery and growth. The Finance Minister’s statement that the budget is the most different in the last 100 years has also increased optimism. Currently, the current budget is expected from 2021. However, foreign institutional investors (FIIs) also have a role after the holidays in January.Also read: BSE Sensex crossed 50,000 for the first time, a rise of 25 thousand points in 10 months
What are the reasons why the market may fall?
If the announcement made by the Finance Minister does not meet the expectation of investors, then the market may see a downward trend. Experts believe that the figures of financial losses can also put a brake on this rally, but if liquidity continues then this break will not be for long. Kovid-19 transition or the announcement of lockdown in some parts of the world can also shock the market sentiment. Globally, if central banks put a brake on additional stimulus measures or relax in monetary policies, then it may shock foreign investors.
If you look at it in 6 points, these may be the main reasons for putting a brake on the current rally in the market:
Quarterly results of companies: After the third quarter results, it can be easily seen on Dalal Street that both stocks and markets are overvalued. The big reason for this is the announcement regarding the quarterly results.
Disappointment from the budget: In this budget, tax / surcharge, financial irregularity, signs of increase in interest rates or not meeting other expectations will be enough to shock the market sentiment. If correction does not occur in the market before the budget, then it can be seen after the budget. However, if there are some big announcements in the budget, then correction will not come.
Raising interest rates by central banks: On the global level, the effect of increasing the rate of policy interest rates by central banks and the rise in inflation in this sequence can also be seen on the market. It is believed that this phase of relaxation in monetary policies is going to end now.
US tax hike: The new President of the United States, Joe Biden, can declare a higher tax on American corporates and high-earning people. Apart from this, making regulation difficult on technology companies or taking some steps which will affect the profitability of pharma companies. Due to these reasons, there may be a decline in the market.
Kovid: The corona virus epidemic is still under control. In such a situation, if the round of lockdown starts again, there may be disappointment in the market.
Dollar strength: Recovery is being seen in US dollar. The rise in the dollar means that the attractiveness of the emerging market is decreasing. It will also have an impact on the market.