(File photo) Photograph:( Zee News Network )
Budget proposals and the absence of any negative news globally have given another booster dose of optimism to investors.
The bulls are back once again in the Indian stock markets. If there were any fears among investors before the Budget 2021, they have been clearly put to rest by India's finance minister Nirmala Sitharaman in her speech on February 1.
Clearly, absence of any 'Robinhood' tax has cheered the investor community and the unbridled growth in the markets has resumed.
Today also both major indices in India Sensex and Nifty closed at record highs of 50255.75 and 14789.45 respectively, extending their post-budget gains for the third straight day.
Why are Indian stock markets at record high?
Budget proposals and the absence of any negative news globally have given another booster dose of optimism to investors. While the Budget proposal to raise foreign direct investment (FDI) limit in insurance from 49 per cent to 74 per cent has led to rise in prices of insurance stocks today, scrappage policy for vehicles is leading to rise in prices of auto stocks as well.
Absence of the much-feared COVID cess and any surcharge on Income Tax has also delivered much needed respite to investors. Fearing these taxes, Indian markets closed in red in some days prior to Budget 2021.
Sensex had lost over 3,500 points in the six sessions before the Budget. Also, proposal for privatization of 2 nationalized banks has put to rest speculations regarding government going slow on disinvestment process. This coupled with announcement on LIC's IPO gave a message to investors that government's financial priorities are clear.
Indian markets are also in line with the rally in major global markets that started at the beginning of this week with major corporate earnings meeting expectations.
So the 5 per cent gain in Sensex on the Budget day showed that markets have taken the annual exercise as a reform and growth-orientation Budget, supportive of the right economic policies in the country and will bring economic change in India that came after the 1991 Budget that supported liberalization.
Analysts also expect these gains in the markets to continue. However another factor that will impact markets this week will be the central bank RBI's decision on interest rates in its monetary policy meet on February 5.