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The budget math seems to have pleased the bond market. Finance Minister Nirmala Sitharaman ticked all the right boxes by focusing on growth and at the same time not letting her eyes off the fiscal deficit. The upshot: the numbers have improved sentiment in the bond market, which has rallied since the budget. With the borrowing programme being in line with the Street estimate, bond yields have fallen.
After the budget, the spotlight will now be on the RBI Monetary Policy Committee meeting next week. The meeting comes at an interesting time as most central banks are now rapidly becoming dovish.
In fact, the Bank of Canada became the first central bank in a G10 economy to hint it was ready to pause its tightening cycle on account of a slowdown in domestic demand. The Federal Reserve increased interest rates by 25 basis points, but Chair Jerome Powell came across as dovish. The Bank of England raised interest rates by another half percent, but it now forecasts a shallower recession this year than previously feared. In an accompanying monetary report, it hinted that there is a chance this week's might be the last interest rate hike for some time, saying it would only raise rates further "if there were to be evidence of more persistent (inflationary) pressures" than it expects. The ECB has said it would evaluate the path of monetary policy after another rate hike in March.
In short, a turn in the interest rate cycle appears imminent. For the RBI, there are enough signals given by the Street and central banks in the developed world, to start to re-evaluate its stance. Indeed, that is precisely what our columnist has said in his article, 'Why Budget 2023 is like a Curate's Egg'.
But while global markets are celebrating the end of jumbo interest rate hikes, the Indian stock market has held back. That's because the allegations by short-seller Hindenburg against the Adani group have depressed sentiment. Nevertheless, the Indian markets have a lot going for them and it's just a matter of time before the positives of an excellent budget and the end of the monetary tightening cycle start getting reflected in Indian equities, too.
Investing insights from our research team
Budget 2023: Which life insurance stocks should one consider?
Weekly Tactical Pick – A trust-worthy play on the economic recovery cycle
Ashok Leyland: Why this automaker is a steady bet at this juncture
Titan Company: Marginal miss in margin, long-term story intact
Dabur India: Volume, margin recovery a work in progress
SRF: Agrochemical opportunity offsets weakness in other areas
What else are we reading?
Larger companies make the most of new corporate tax regime
Three questions without clear answers in Budget 2023
Budget 2023: Electoral compulsions, growth and fiscal prudence all get their due
Budget 2023: Investors should keep laser focus on relative valuations across sectors
Budget 2023: Tepid rural allocations unlikely to derail farm inputs demand
Does the Bitcoin rally mean crypto is back?
Share buybacks: welcome payments in a suspect currency (republished from the FT)
Global economy has turned the corner, but the negatives haven't fully gone away
Budget 2023: Making India the next research, innovation and bio-manufacturing hub of the world
Old Pension Scheme not a game changer for 2023 assembly polls or 2024 Lok Sabha elections
Oh Canada! Warmer times for immigration in the Great White North
Technical Picks: SBI, TCS, Karur Vysya Bank and Finolex Industries (These are published every trading day before markets open and can be read on the app).