{"id":250708,"date":"2023-07-04T20:35:13","date_gmt":"2023-07-04T15:05:13","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=250708"},"modified":"2023-08-31T14:41:04","modified_gmt":"2023-08-31T09:11:04","slug":"a-rising-tide-govt-should-revive-disinvestment","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-rising-tide-govt-should-revive-disinvestment\/","title":{"rendered":"A rising tide – Govt should revive disinvestment"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201cA rising tide – Govt should revive disinvestment<\/strong>\u201d published in Business Standard <\/strong>on\u00a04th<\/sup> July 2023<\/strong>.<\/p>\n

Syllabus: <\/strong>GS 3 \u2013 Indian Economy \u2013 Capital Market<\/strong><\/p>\n

Relevance: <\/strong>About the rising stock market indices and its implications for India<\/strong><\/p>\n

News<\/strong>: In the past few days, the stock market indices have reached record highs with a broad movement across various sectors.<\/p>\n

What are the reasons behind high stock market indices?<\/strong><\/h2>\n

The surge in the stock market has been primarily driven by foreign portfolio investors (FPIs)<\/strong>, who have purchased over Rs 1.14 trillion worth of equities in the 2023-24 period.<\/p>\n

There has also been strong buying from retail investors, both directly as well as via mutual funds, and domestic institutions have also been net positive.<\/p>\n

Most sectors have witnessed double-digit returns over the past year<\/strong>, including underperforming sectors like the Nifty IT index and oil & gas, which have seen gains of 5.3% and 3.5% respectively.<\/p>\n

Sectors like fast-moving consumer goods (FMCG)<\/strong>, banks, realty, and metals have all returned over 30 percent and the automobile index 29 percent. However, the biggest winner is the public sector bank index, which is up 67.9 percent.<\/p>\n

Credit growth indicates that businesses and consumers are borrowing again<\/strong>. This is supported by the fact that FMCG revenues have grown in Q4 FY23, and so have two-wheeler sales. However, other concerns are still present.<\/p>\n

What are the concerns present?<\/strong><\/h2>\n

Despite the stock market indices reaching record highs, valuations remain moderate. For instance, <\/strong>the Nifty is currently trading at a price-to-earnings (PE) ratio, which is significantly lower than its early 2021 PE ratio of over 40.<\/p>\n

Similarly, the mid-caps and small-caps are also trading at lower valuations than they had hit earlier. The implication is that the markets could sustain higher prices and valuations.<\/strong><\/p>\n

What can be the way ahead?<\/strong><\/h2>\n

A revival in activity across the primary markets is very likely, due to the optimism across secondary markets.<\/p>\n

This presents an opportune moment for the government to revive its disinvestment plans, which have been on hold for some time.\u00a0<\/strong><\/p>\n

If investors are willing to buy Indian stocks, the government should take advantage of the market conditions and push disinvestment. This additional revenue can be used to push capital expenditure.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cA rising tide – Govt should revive disinvestment\u201d published in Business Standard on\u00a04th July 2023. Syllabus: GS 3 \u2013 Indian Economy \u2013 Capital Market Relevance: About the rising stock market indices and its implications for India News: In the past few days, the stock market indices have reached… Continue reading A rising tide – Govt should revive disinvestment<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216,8184],"class_list":["post-250708","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","tag-indian-economy","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/250708","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=250708"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/250708\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=250708"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=250708"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=250708"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}