What a rally it has been for the domestic market post budget! India outperformed most other markets globally except Brazil & China which rose ~8% & 10% respectively.
INR also turned around by gaining 2% though it was overshadowed by Brazilian Real & Russian Rouble which gained ~6% & 3% respectively.
The budget paved the way by adhering to the 3.5% fiscal target for FY17 and surprised markets with a lower than expected net borrowing target of Rs 4.2 trn. Expectations of a rate cut from RBI also gained currency. The RBI followed this up with steps to support capital adequacy. It sought to align the current calculation methodology with BASEL III norms regarding treatment of certain balance sheet items for calculating banks' regulatory capital pertaining to Revaluation reserves, Foreign currency translation reserves and Deferred tax assets. As per our calculations, capital benefit arising from the RBI’s recent move would be Rs 234 bn (for top 5 PSU banks; BOB, BOI, CBK, PNB & SBI).
A look at the market move post budget shows that Realty, BFSI, Metals and Cap goods notched near double digit gains. In terms of Nifty, Vedanta, SBI, BHEL, PNB & ICICI were the top gainers.
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