Indian economy is on the path of becoming $3 trillion economy this year and $5 trillion economy in a few years, recapitalization of PSU banks by injection of INR 70,000 crores to boost the liquidity in order to enhance their capability of advancing loans, liberalization of Foreign Direct Investment in aviation, media and insurance ancillaries to boost their operations and expenditure of INR 100 lakh crores in infrastructure of the economy to support the companies to optimize their operations, shifting the corporate taxes of 25% bracket from companies generating a profit of INR 200 crores to INR 400 crores and consideration of slipping the Securities Transaction Tax (STT) to thrust the trading in derivatives are enough initiates by a Finance Minister and that to from a new comer to thrust the Nifty-50 for reaching new highs.
Indian market punters and foreign market researchers were betting upon continuation of the uptrend in the 50-stock bundle to reach new highs but the last laugh by FM Nirmala Sitharaman to increase public shareholding in listed companies from 25% to 35% dampen the sentiments of market participants and the index fell like a house of cards.
Higher shareholding in the palms of promoters always acts as catalyst of confidence in the sentiments of potential investors to stay invests in companies with higher promoter stake. The reduction in stake from promoters will increase the number of shares in the market available for the investors to add in their basket and market has reacted earlier. There will be more In and Out of the stocks in the Nifty50 index as per the free-float market capitalization methodology. High market capitalization stocks that have 75% stake of promoters such as TCS and Wipro erased almost 4% each today.
Considering the halt in continuous slippage of daily volatility and breakdown of ‘Bearish Wedge’ pattern on hourly scale is not painting a rosy picture for the market next week. A slippage in the Nifty50 to a level of 11,450-11,500 cannot be ruled out that will provide an excellent opportunity to the investors to channelize their funds into low beta stocks. Till then sit tight.