Three Positive Signs For Market Over The Next Year

New Delhi, October 26: After a volatile year since last Diwali, markets are expected to perform better over the coming year with the new Samvat bringing a lot more decisiveness to the market along with a bullish bias, experts feel. 

Here are three factors, which are expected to push the market towards a growth trajectory over the next year:

Reduction in the corporate tax rate

In a significant move, the government in September reduced the corporate tax rate from 30 per cent to 22 per cent. The effects of this cut will bring dividends over the next one year.

Mustafa Nadeem, CEO, Epic Research, says that this move has “certainly changed the outlook.” “This is very positive and will have its own benefit in the long term… FMCG will see some good returns and corporate tax reduction will hugely benefit this sector,” he adds.

Consecutive rate cuts by the RBI

In five back-to-back rate cuts, the RBI has already reduced its key lending rate by 135 basis points (bps) this year. It is also taking steps to ensure transmission of the rate cuts to the consumers. This is expected to boost the market in the short to medium term.

“The auto sector which has been underperforming may see pick up in coming quarters on the back of recent rate cuts,” says Nadeem.

He further adds, “Not only that, the RBI is very accommodative to make sure the economy is on the growth track. We have also seen various measures from the government which will also take its effect in the coming few months hence bridging the gap between liquidity and consumption.”

Good monsoons

According to India Meteorological Department (IMD), India recorded the highest monsoon rains since 1994. This has raised expectations of a good Rabi crop next year, which along with the government's increased spending, is expected to ease the distress in the rural. The positive effects of the good monsoons will be visible over the next few months.

Nadeem says that despite these positive signs, some concerns still remain such as the global tensions due to Brexit and the US Trade war with other countries. The slowdown in India’s GDP growth rate is another major concern which needs to be addressed for the markets to meet expectations.