How are the Indian and global economic environments affecting the financial markets?
The salient implication of the budget is the need for the development of a bond market in India to fund road, rail, water, power, and gas infrastructure through public-private partnerships. Agriculture should continue to remain in focus because nearly 50% of workers are employed in the sector and climate change requires particular attention to the sector as a critical part of India’s economic development.
The budget gave mixed signals to the financial markets: for the financial year 2019-20, on the one hand, there is an expectation of 7% growth and on the other, a lower fiscal deficit target of 3.3% which may not be achievable. The markets reacted accordingly closing out mixed for the week.
What to expect from the markets next week?
Corporate earnings results and global economic conditions will determine whether the Reserve Bank of India (RBI) will cut the repo rate again in August. Financial markets will react to corporate earnings, macroeconomic data on industrial production and inflation, and any new Information on China, Iran and the global economic front.