Markets saw very little action on Wednesday with both the benchmark indices closing flat. Was this the market’s reaction to the announcement of P. Chidambaram being made the country’s Finance Minister?
No, say market experts. They say that the markets are simply fatigued. So much so that only concrete actions from policy-makers will see markets move in either direction.
“Markets have reached a point where the players are waiting for some action on the policy front. In the last two years, there have been at least four to five instances where the market was expecting some reform measures, but was disappointed. So, markets have now become insensitive,” said Jagannadham Thunuguntla, Strategist and Head of Research of SMC Global Securities.
No time, little scope
Says another market analyst, “How much time does the man really have? The Prime Minister himself hasn’t done much after taking over the Finance Ministry in the interim period. The next Parliament session is in September which will most likely be dominated by the issue of deficient monsoon.
“This will only lead to corrective measures being introduced. Then by early next year, everyone will be in election mode. How much can really be done during this period?”
The broad consensus in the market is that expectation from Chidambaram are less and that even a single deliverable measure taken at this point will only be seen as a “positive, turnaround” measure.
Some hopes too
While there is one sect of the market that has been left unaffected by the announcement, there are those who are hoping for the best.
“The Prime Minister’s decision to bring him back as the Finance Minister is being seen in the market as a positive move. There are expectations that he will take measures in the near future to boost the economy,” said Alex Mathew, Head of Research, Geojit BNP Paribas Financial Services.
He is also quick to point out that on Tuesday while the markets were down post the RBI policy announcement, it moved up after the news that Chidambaram has been made the Finance Minister. “Something could be in the offing. He might take some speedy measures to tackle the situation,” he added.
The debate is still on. Reactions range from the dismissive chuckle to genuine expectations from the man who presented the “dream Budget” of 1997-98. The hope in the market is that the one he presents next should not be a “nightmare”.