FM's announcement Day-2: No major trigger for market; expect a weak to flat opening on Friday

The Indian equity market is likely to witness a weak to flat opening on May 15 as there was no trigger for the market in Finance Minister's announcements and the market has to wait a little longer to get clarity on the government's Rs 20 lakh crore fiscal stimulus, said experts.

On Day-2 of her press conference, Finance Minister Nirmala Sithraman kept the welfare of society's lower strata in focus while revealing the second tranche of Prime Minister Narendra Modi's mega Rs 20 lakh crore stimulus.

While the announcements were hailed by analysts on account of it being heavily focussed on the poor and marginalized section of the society, stock market experts said that there was not much for the market to gain from it.

"Government today focused on migrant workers, farmers and on the poor. So there is a step by step address of the affected, be it industries or individuals. Execution remains key and the market will look forward to specifics. Although positive, global cues will play a part in the market trades for tomorrow," said Sony Mathews, Senior Market Strategist at Geojit Financial Services.

Vikas Jain, Senior Research Analyst at Reliance Securities said that the key takeaways from the second round of stimulus are more labour driven for the migrant workers and the market is still awaiting some reforms for the corporate and consumers to benefit from the stimulus.

"We expect a weak to flat opening tomorrow," Jain said.

Experts are pointing towards the disconnect between the market and the policy measures so far.

"The journey from the bottom of the pyramid to the top is quite complicated. We feel it should be simplistic and very efficient to meet the requirements of the current scenario," said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

"The stock market is efficient and it reflects correctly the sentiment or outcome of the announcement. So far, the stock market has not been happy with the announcements. Certainly, it would wait for the remaining announcements, but it would jump only on the bold measures. Nifty should not break the level of 9,040 to hold the current momentum in the market."

After announcing the first tranche of measures under the Atmanirbhar initiative on May 13, Finance Minister Nirmala Sitharaman on May 14 unveiled the next set of measures to alleviate the hardships caused to the farmers, migrant workers and street vendors due to the coronavirus-induced lockdown restrictions.

To spur affordable housing, the FM said the credit link subsidy scheme has been extended up to March 2021 for the lowest strata of middle-income groups (income of up to Rs 6-18 lakh/annum).

This will reinvigorate construction services and spur demand for building materials. The FM said empty government land will be used to build more housing through PPP mode.

"There is a significant demand for affordable housing in tier 2 and 3 cities. However, borrowers had postponed their purchase decisions owing to financial uncertainty around COVID-19. The extension of the CLSS scheme, along with the expectation of a correction in real estate prices and reduction in interest rates, will provide an impetus to the sector," said Sanjay Shukla, MD & CEO, Centrum Housing Finance.

"Liquidity measures announced to re-finance HFCs yesterday should provide the much-needed liquidity to meet the expected demand," he said.