Key events that will influence the market, have an impact on Economic Growth, foreign investment flows, Equity and Debt Market Movements.
An eventful year for the financial markets.
- Crash in Chinese market.
- First U.S. federal Reserve (U.S.fed.) Rate hike (December 2015) in a decade.
- Brexit-Global Market witnessed.
- Britain’s exit from the European Union.
- Electorate chose Donald Trump as the U.S. President.
- – RBI continued with repo rate cut and reduced it by another 50 basis points (bps).
- – Govt. decided to withdraw 86% of old currency notes out of circulation (Nov 8, 2016).
- – Stock market under pressure throughout the year and mere 2% gain for Sensex.
- – Government expected to lower direct tax rates or increase the exemption and deduction limits leading to higher savings and investments.
- – Rise in Tax contribution ofLong term capital gains.
- Rate cut by RBI
- – Decrease in repo rate by another 50-75 bps. DirectBenefit to loan seekers reducing their EMI expense, a rise in capacity utilisation of firms.
- Rate hike by U.S. FED.
- – Interest rates to be raised three times in 2017.
- – Hike may put emerging economies (including India) under pressure and cause volatility, though India is better positioned amongst emerging markets. This will benefit the sectors with significant exposure to US market.
- Demonetisation impact on growth
- – Government expected to receive substantially high tax revenue on account of tax disclosure under Pradhan MantriGarib Kalyan Yojna (PMGKY). This will cushion the fiscal deficit target for FY 2017.
- – Expected reduction in RBI liability with the delegalized currency that is neither exchanged nor deposited with the banks. This amount transferred to the Government will reduce the fiscal deficit.
- – A rise in bank deposits that will reduce the cost of funds for banks and improve their ability to pass benefits of lower rates to the customer.
- Crude oil prices
- – Rise in crude oil prices FY 2017 may hurt Indian economy and investors.
- GST Roll-out
- – The Government is constitutionally mandated to implement Goods and Services Tax (GST) before September 16, 2017.
- – Aimed at removing inter-state barriers to trade and integrating India into one common market, the destination based tax will subsume all central and state indirect taxes and levies, including excise duty, additional excise duties, service tax additional customs duty, surcharges and cesses, value added tax (VAT), sales tax, entertainment tax, luxury tax, CST, taxes on lottery, betting and gambling.
- – This is expected to add at least 2% points to the GDP growth of India.
- – This will prep up economic activity and equity markets.
- – Following the constitutional amendment, the GST council agreed on formulating multi-tier rate structure of 5, 12, 18 and 28 per cent along with cess on luxury and demerit goods over and above the highest rate.