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Budget jitters, FII selling led to market crash: Ajay Bagga

Market expert Ajay Bagga expects to see an uptrend over the three-six-month period.

Just when we thought that things were off to a firm terrain on the back of strong earnings and FII flows and the runup to the Budget, the market is perhaps showing its true colours and we have reached the sub 14,000 mark. A lot of heavyweights are taking quite a knock in trade. Is this trend here to stay? Is there any decisive reversal in the market mood?
I would say it is more to do with some lightning of positions going into the Budget. Second, we have had two days of FII net selling so maybe there is a tapering off of the FII inflows while the DII outflows continue. So, somewhere there will be a point where the liquidity which is sitting on the sidelines domestically will find it to be value accretive to enter. So maybe yes, in the very short term, the market goes down but I am confident that over the three-six-month period, we will see an uptrend only.

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The global factors which led to the recovery last year very much in place. We had a bad-news-is- good-news year. Now for the last few days, good news is also being treated as bad news. We had very good numbers from Asian Paints and it went down 3%. Like that, we have had good earnings but the market remains skittish.

One reason can be the global lockdowns but against that, huge monetary and fiscal stimuli are continuing, interest rates remain very low and economies have started recovering. Yesterday, we had the IMF number as well. India has an 11.5% growth baked in for 2021-22. In case of corporate earnings, we are looking at 25-35% growth this year in the coming financial year. So all those trends stay intact. This is some wariness going into the budget and some amount of profit booking by FIIs that we are seeing. But I would not say that the major trend of the market is yet broken. We will have to wait and watch and post the Budget, some buying could return to markets.

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