Stock markets not bothered by GDP numbers, say experts

Stock Market News: After the Gross Domestic Product or GDP numbers were revealed, various sectors are assessing the impact from their perspective. However, as far as the Indian share market is concerned, they are not bothered by it. They are of the opinion that this has put pressure on the Reserve Bank of India (RBI) to continue cutting the Repo Rate - a process it had begun from February 2019. According to the stock market experts, the equity indices may receive some beating in the morning session on Monday, but overall the it is expected to remain a bull market.

Speaking on the GDP impact on Indian stock market, Amar Ambani, Senior President and Head of Research – Institutional Equities at YES Securities said, "The GDP growth figure is as per our estimate for Q2FY20. The stock market has been trending lower in the last couple of trading sessions, in anticipation of poor numbers. While there may be a mild negative reaction on Monday, it will not change the medium-term trajectory for equities. For the fiscal year FY20, our real GDP forecast stands at 5.2 per cent, with risks to further downside. After a 135 basis rate cut delivered by the RBI since February 2019, we expect the RBI to cut rates by an additional 25 bps in December, taking the repo rate to 4.90 per cent. Going forward, we believe the fiscal policy will need to play a dominant role in supporting overall growth. The government may choose to mildly deviate from its fiscal deficit target for this year as well as next fiscal."

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Standing in sync with Ambani's views is Prakash Pandey, MD & CEO at Plutus Advisors, who said, "The tepid GDP growth numbers have put RBI under pressure to cut the Repo Rate by at least 25 bps and in a bull market like we have witnessed these days, it's enough for the markets to extend their rally after some small hiccups." He said that banking, oil energy and metal stocks would continue to fuel the stock market and investors will forget the GDP numbers after a few trade sessions.

Agreeing to the view that the RBI rate cut is set to happen post-tepid GDP numbers, Arun Kumar, Head of Research at FundsIndia.com said, "The tepid domestic growth has been led by weak investment activity, moderate consumption growth and slow global growth environment.  While further policy support can be expected from both the government and the RBI, we expect the recovery to be more gradual than a V-shaped sharp recovery.”