Did The Markets Know A Rs 2-Lakh-Crore Bonanza Was Coming?
At around 3.20 p.m., I returned to my desk. As always, I checked where the Nifty was and, to my surprise, saw a sudden spike. I asked around, got no answers and checked again for some clues. I couldn’t find any. By then, the Nifty had spiked past 22,600. The markets closed. I told myself we would see tomorrow! But in minutes, the big bang news hit the screens; there was noise and a rush of action in our newsroom. The RBI has given the government a dividend of over Rs 2 lakh crore. That’s when I realised why the market surged past the 22,600 mark, after bets reluctantly played only around 22,500–550 throughout the day.
Did the markets know what was coming? It's difficult to prove, but I always believe the market knows well ahead before the news hits the screens.
So, what has the RBI giving dividends to the government to do with equity markets? A lot! First, the amount is unbelievably huge—nearly 140% more compared to last year’s. Second, the timing coincides incidentally with the Prime Minister’s ambitious economic agenda-setting narrative.
I read the RBI action as setting the stage for the 100-day action plan, which Prime Minister Narendra Modi has been talking about. In fact, it is a springboard which will help the government in many ways.
But I will mark some of the remarkable thoughts the PM told the NDTV network in an exclusive interview. I will underline two sets from his interview—fiscal discipline and widening the tax base. These two are the most important pillars of any government in pushing its agenda. All measures and actions will be built on these two. I am not speculating that there will be tax cuts. That’s not the point here.
A strong fiscal path will be the basis for opening a virtuous cycle. Ability to invest more, attract more capital and give that much-needed big push to the economy that will take us towards the 2047 goal of Viksit Bharat.
Without reading too much into this at this stage, I will circle back to my desk with the thought that the market’s hopes are rekindled. Short-sellers had raised doubts about a decisive mandate, giving the much-talked-about 400 plus. FIIs have been sellers. Will this bring back the FIIs? Will fear of holding long positions make way for fear of missing out? The market seems to believe so. At least, that’s what the 3 p.m. factor on Wednesday indicated.
(Muralidhar Swaminathan is Managing Editor of NDTV Profit.)
