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Year 2019 in review: Major events that moved the market

Finance Minister Nirmala Sitharaman's corporate tax cut, RBI's rate cuts and PM Modi retaining power at the Centre — here are some of the major events that moved Dalal Street in 2019

December 30, 2019 / 01:38 PM IST

The year 2019 turned out to be an eventful one for the Indian stock market.

Recession fears and geopolitical concerns kept investors on the back-foot while the corporate tax rate cut and consistent Reserve Bank of India (RBI) reliefs helped benchmark indices form new highs.

Here are some of the major events that moved the market:

Corporate tax rate cut

Finance Minister Nirmala Sitharaman on September 20 announced corporate tax cut to an effective 25.17 percent.

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The rate cut, a long-standing industry demand, was seen as one of the many reliefs for key sectors, including auto and FMCG.

The D-Street went berserk post-announcement, as the Sensex climbed jumped over 3,000 points in just two trading sessions.

The overhanging sentiment has since remained positive and the benchmark indices have continually scaled new heights.

US-China trade tussle

The constant back and forth between the two largest economies in 2019 kept the tensions high on the global front.

The trade war also did not bode well for the Indian economy as investors remained cautious in the face of uncertainty.

However, the tension has finally fizzled out as both the US and China agreed to sign a preliminary trade deal.

PM Modi retained PMO

The return of Narendra Modi-led National Democratic Alliance (NDA) at the helm of the world's largest democracy sent the bulls raging as benchmark indices formed new highs before succumbing to profit-taking.

The rally began on May 20 after exit polls predicted a victory for PM Modi; the Sensex closed 3.75 percent, or 1,422 points, higher.

On the result day, May 23, the market was initially enthused to see the election results falling in line with the exit polls but the sharp rally eventually led to profit-taking as the Sensex ended nearly 300 points lower, falling as much as 1,500 points from its intraday high.

Union Budget 

FM Sitharaman's maiden Budget came as a dampener for the Street. Among a slew of measures, Sitharaman proposed to increase the surcharge on the HNIs and foreign institutional investors (FIIs).

This fueled an FII exodus as they withdrew over Rs 20,000 crore from the Indian equity market between July and mid-August. Sitharaman later decided to withdraw the proposed surcharge on both FPIs and domestic investors. The Sensex plummeted 0.99 percent on Budget day and fell 2.01 percent the following session.

RBI relief

During the year, the RBI cut interest rates five times in a row, in an attempt to give a renewed push to a slowing economy. As a result, the repo rate stood at 5.15 percent, a nine-year low.

The central bank decided to keep the rate unchanged in its last policy meet of the year in an attempt to keep the rising inflation in check.

Recession scare

India's Gross Domestic Product (GDP) growth rate fell to a six-year low at 4.5 percent in the July-September quarter exposing the country's severe demand crunch.

The mood on the D-Street turned sombre as the Sensex fell 0.82 percent following the data's release. The decline in economic growth came on the back of dwindling consumer demand, slowing private investment as well as a global economic slowdown.

Auto sale numbers

Stifled by an unprecedented slowdown, the Indian auto sector witnessed a prolonged slump in 2019.

During the April-November period, the industry reported a 16 percent fall in volumes to 15.7 million units, Society of Indian Automotive Manufacturers (SIAM) data showed. Passenger vehicle sales also saw a dip for 11 consecutive months till September, only to rise marginally during the festive season. The carnage was witnessed in the auto stocks as well as the Nifty Auto index slipped more the 11 percent so far.

The big bank merger

In September, the Centre announced it would merge multiple public sector banks (PSBs) and reduce their number from 27 to 12 over the next few years.

The move was aimed at revitalising the sector amid financial crunch as well as increase exposure to global investors. 
Moneycontrol News
first published: Dec 30, 2019 01:38 pm

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