Where is Indian stock market headed?
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Following sharp declines in European shares after Greece said international lenders have rejected its latest proposal to attract credit in a bid to come out of the mounting debt crisis which began to raise its ugly head years ago but is now poised to literally destabilise its economy with clear negative ramifications for the entire Eurozone, India watchers wonder how discouraging cues from Europe and rest of Asia too would affect the domestic equity markets. With the While addressing a conference at the Stockholm School of Economics on Wednesday, Reserve
In fact, over the last week, the Indian stock market seemed to be on a comeback trail, posting 10 days of gains before European tremors played spoilsport.
The gains were supported by
In fact, in the recent past, India’s
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Continued inflows from domestic institutional investors have been one reason that contributed to the momentum. Over the past two months, while FIIs sold equities worth close to Rs 15,000 crore, domestic institutions bought stocks worth Rs 26,700 crore.
Some market players also see a 28% growth in the central government’s spending in April and growth in indirect tax collections in April and May as positivesigns.
However, according to the more pragmatic ones, whether flows from domestic institutions can sustain the rich valuations of Indian stocks remains a key question.
In addition, uncertainty over the government’s stance on tax issues continues to haunt investors. The recent move by the government to send demand notices to foreign institutional investors (FII) levying the minimum alternate tax (MAT) with a retrospective effect fanned the worst fears that India is yet to wake up from its crude, conventional approach when it comes to shore up tax revenue.
Besides, the government’s recent decision to review the Land Acquisition Bill and the Good and Services Tax (
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While improving corporate performance is welcomed by market players, better earnings in June quarter and the ones which follow will be crucial for sustaining the positivity that erupted over the last couple of weeks.
(Image: The Economic Times)
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