Indian Stock Markets Open Lower; All Eyes on Union Budget 2020

Sat, 1 Feb 09:30 am

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Global equity markets posted their biggest weekly and monthly loss since August on Friday as growing concerns about the economic impact of the coronavirus outbreak in China sapped risk appetite and lifted the safe-haven Japanese yen and Swiss franc. The Dow Jones Industrial Average fell 2.1%. The S&P 500 lost 1.8% and the Nasdaq Composite dropped 1.6% on Friday.

Back home, India share markets opened on a negative note. The BSE Sensex is trading down by 161 points while the NSE Nifty is trading down by 52 points. The BSE Mid Cap index opened flat while BSE Small Cap index opened down by 0.1%.

Sectoral indices have opened the day on a mixed note with oil &gas stocks and realty stocks witnessing maximum buying interest. Metal stocks and power stocks are trading in the red.

Speaking of Indian share markets, with the Union Budget just around the corner, the business media is already going berserk with budget related headlines.

Not to mention the numerous budget wish lists out there which give rise to speculation about their impact on the stock markets if they were to come true.

There are various things written in the media about the upcoming budget. Some want income tax cuts to revive the economy. Some want other freebies to revive consumption.

As per Tanushree Banerjee, all these are good but short-term solutions. As per her, if the government could focus on one thing, it should be the real estate sector in today's budget.

Real Estate - The Sector to Bet on After the Budget?

Here's what she wrote about it in today's edition of The 5 Minute WrapUp...

• Demonetisation, RERA, and the IL&FS crisis have hit the sector hard.
  
  The BSE Realty Index has had a tough time in the last few years.
  
  But there are signs of a turnaround. The government's Rs 250 billion package was a much need boost for the sector and homebuyers.
  
  A real estate revival is important for the steel, cement, and many other sectors. It is also an important job creator for India's young population.

A strong focus on reviving real estate will provide a much-needed boost for the Indian economy.

We will be sharing the highlights and our view on the budget here. Stay tuned.

Until then, you can watch the video below where Tanushree shares how you should react to the Union Budget announcement.

Watch Now...

Moving on, the rupee is currently trading at 71.52 against the US$.

The Indian rupee on Friday appreciated by 25 paise to end at 71.33 against the US dollar on Friday after the Economic Survey 2019-20 predicted bullish growth figures for the next financial year.

At the interbank foreign exchange market, the local currency opened at 71.46.

During the day, the local unit saw a high of 71.28 and a low of 71.52.

The domestic unit finally settled at 71.33, up 25 paise from its previous close.

Speaking of currencies, Vijay Bhambwani, editor of Weekly Cash Alerts, tells you the main reasons why not to trade commodities and currencies the same way you would trade equities. Here's an excerpt of what he wrote...

• Currencies are traded in pairs and the most liquid is the USDINR. Currencies are traded in four decimal points just as bonds are. The international derivative trader's association has indicated that forex may be traded in 6 decimals in the coming few years.
  
  It takes months sometimes for the currency pair to pass the next round figure, say from 70 to 71.
  
  Can you really trade commodities and currencies alike or for that matter, equities and currencies alike? Definitely not!

To know more, you can read Vijay's entire article here: Is Trading in Equities, Commodities, and Currencies the Same?

In another development, India's foreign exchange reserves reached a lifetime high of US$466.7 billion after a massive US$4.5-billion spike in the week to January 24, according to the Reserve Bank of India data.

In the previous week, reserves had increased by US$943 million to US$462.2 billion.

In the reporting week, the increase in reserves was mainly due to a rise in foreign currency assets, a major component of the overall reserves, which rose by US$4.5 billion to US$432.9 billion, the RBI data released on Friday showed.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units such as the euro, pound and yen held in the foreign exchange reserves.

In the reporting week, gold reserves increased by US$153 million to US$28.7 billion.

The country's reserve position with the International Monetary Fund declined by US$85 million to US$3.6 billion, the data showed.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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