The Diwali, the festival of festivals when almost every Indian uses all his economic might to celebrate and purchase most of the items on their shopping list, is about to witness a weak buying spree by the people.
The season of festivities is here and the markets of the economy seem to be closing down to the enthusiasm of the nation. The markets possibly have impacted the enthusiasm for the festivities.
The Dhanteras, which was yesterday is the occasion to mark the opening of the doors of the Indians to prosperity and wealth. This day has been marked as one of the days with the highest sales recorded in the country and marks the week-long celebrations.
This year as the economic growth has been keeping slow, due to several macro factors affecting the growth of the economy, there has been a downward trend in the key sectors this year. The downward trend discontinued for 6 days prior to the Dhanteras, and now the Sensex and the Nifty have taken a deep dive from the high which was seen as a moment of growth.
Recently, Finance Minister, Arun Jaitley while attending the IMF-WB summit at Chicago, hailed the moves taken by the Centre to re-invent the economy as a step in the right direction. He also said that the Government never intended to wait for a time when the economy would have in a trough and would have then give the economy its due for an overhaul.
The overhaul exercises of the government which include demonetisation exercise and the GST . These moves have not inspired confidence in the investors so far and the Foreign Institutional Investors have pulled out heavily from Indian markets as the Indian markets are one of the world’s most conservative markets. The Indian investor is often described as the emotional investor.
The rigours of muscle flexing being carried by the Income Tax department have kept the buyers away from the markets.
The day before Dhanteras saw a spike in shares of automobile industry and banking sector, alongside the FMCG.
This Diwali, Gold has lost its shine as there was sluggish buying of Gold despite the relaxation of norms by Government. This move saw a relaxation in providing credentials while buying Gold more than 50K; this move was taken after a series of protests and lobbying by the Sarrafa community.
The Sensex on the eve of Dhanteras slipped to a negative, which has gained by 13.99 points while the Nifty has gained a slight pace to reach 8.22 points.
The growth is not taking pace and the Diwali is set to become mild in respects of festivities considerable scaling down due to lowered buying power of the masses.
The lowering of buying power is a direct outcome of the push in the economy to create a direct tax based economy which has ushered in a surge of taxpayers, and a heavy crackdown on shell companies giving a tough time to unchecked subversive business practices.
The Diwali light seem to be simmering due to lowering of incomes and unemployment which is prevalent and the push for transparency keeping the spends of the public in check.
There is no direct outcome of the DeMo but combined factors with GST implementation seem to have slowed down the growth of business, where small and middle-sized businesses struggle to adapt to new taxing system.
The official inflation figures and wholesale consumer price index is keeping at a terminal low of 4%, the markets still seem dizzy.
The combined effect may be taken to be a direct outcome of the cleanliness moves taken by the government to clear the economy of the ills for long.
Arun Jaitley further added that they could not have waited for a time when the economy was in a lull and then move ahead with reforms.
IMF Chief Christine Lagarde has praised the moves and has assured that Indian economy will become one of the most competitive economies in the world. This coincides with the ‘three-quarter’ trial time by the Centre where they assure that the economy will pick up.