The markets, which were factoring in for Bharatiya Janata Party (BJP) President Amit Shah as Finance Minister, were in a surprise as Nirmala Sitharaman was given the Finance portfolio.
The analysts said that the appointment would trigger a sell-off. “This is being taken as a piece of bad news by the markets. It is basically being assumed that the Prime Minister’s Office will take all the decisions,” a senior market analyst told DH, requesting anonymity.
Some others, who were neutral about the appointment, also said that the decisions would be taken by the PMO. “The markets were factoring in for Shah as Fin Min and were happy with the fact that the Finance portfolio would be handled by the strong man. Now, Nirmala is an economist – so not much of problem there. Basically, it conveys that the decisions will be taken by the PMO,” according to a CEO of a top Domestic Institutional Investor.
Markets have been clamouring for reforms in the land and labour laws, banking on the strong mandate for the Prime Minister Modi-led National Democratic Alliance government.
Industry sources said that they were told by BJP insiders that Shah is sure to be finance minister. “It was a clear message in the evening. We had information from the horse’s mouth that Shah is going to be FM. Something has happened in the morning,” sources said.
Reacting to the news, the markets witnessed a sell-off in equities, with the 30-share BSE Sensex trading down 193.81 points at 39,638.16, at the time of publishing this article. Before the government announced the portfolios, the markets were trading flat in the red territory on the back of profit-booking as risk factors were weighing heavy on the scrips. The government is also expected to release Q4 GDP numbers in this quarter, which might see India losing its fastest growing economy tag on the back of subdued consumption.
On the other hand, the 50-share NSE Nifty was trading at 11,897.10, down 49 points at the time of publishing this article.