Shares of Power Finance Corporation (PFC) fell 1.5% to Rs 413.55, while REC declined 3.5% to Rs 357 during Monday’s trading session following PFC’s board approval of an in-principle merger with REC. The merger move aligns with the Union Budget’s proposal to restructure two of India’s largest public sector non-banking financial companies (NBFCs) in the power financing sector.

PFC already holds a 52.63% stake in REC, following its acquisition of the government’s holding earlier. In a regulatory filing, PFC said its board noted the government’s proposal to merge the two entities to achieve scale, improve operational efficiency, and enhance credit flow to the power sector.

Finance Minister Nirmala Sitharaman, in her Budget speech on February 1, proposed restructuring PFC and REC to strengthen public sector NBFCs. Earlier, the Cabinet Committee on Economic Affairs had cleared the transaction under which PFC acquired the government’s stake in REC, resulting in a holding–subsidary structure between the two companies.

The proposed merger, subject to statutory approvals and detailed structuring, would combine both entities into a single balance sheet, potentially creating a stronger and more efficient lender for India’s power and infrastructure sectors.

Both PFC and REC play a critical role in financing the power sector. PFC, under the administrative control of the Ministry of Power, provides funding across the power value chain, including generation, transmission, distribution, and renewable energy. REC was originally established to finance rural electrification projects, contributing significantly to India’s near-universal electricity access.

PFC and REC share performance

PFC shares ended Friday’s session 0.6% higher at Rs 417.6 on the NSE, while REC declined over 2% to close at Rs 372.6. Despite the recent movement, both stocks have delivered strong multibagger returns, creating significant wealth for investors over the past three years. During this period, PFC has surged by approximately 260%, while REC has gained around 217%.
Technical View

PFC: The 14-day RSI stands at 74.1, indicating the stock is in the overbought zone, which could lead to a short-term pullback. However, the stock is trading above all 8 key simple moving averages (SMAs), reflecting strong bullish momentum.

REC: The 14-day RSI is at 53.2, suggesting neutral momentum. The stock is trading above 6 out of 8 SMAs, indicating a mildly bullish technical structure.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The Bhumjaithai Party’s convincing victory in the recent Thai election is widely perceived by strategists and economists as a positive development, expected to usher in policy continuity and political stability. This outcome has reassured investors who had feared further political instability and is anticipated to boost the country’s stock market and currency.

Currency & Markets

• The baht strengthened slightly against the dollar after the results.
• Thai stocks are expected to rise, with the SET Index potentially reaching 1,450 by year-end.

Policy Continuity

• BJT’s win reduces fears of political dysfunction and ensures ongoing fiscal support for consumption and infrastructure.
• Analysts expect limited stimulus hype, steady tourism recovery measures, and continuation of programs like co-pay subsidies for basic goods.

Investor Confidence

• Political stability is seen as market-friendly, reducing uncertainty and boosting confidence in equities, especially retail, transport, and tourism sectors.
• Bonds may benefit from the Bank of Thailand’s easing bias, though the baht is considered overvalued in some contexts.

Following the election, the Thai baht strengthened slightly to 31.456 per dollar in early Asian trading, as Bhumjaithai, led by incumbent Prime Minister Anutin Charnvirakul, secured the most seats in the lower house and is positioned to form the next coalition government. This performance contrasts with the underperformance of the main challenger, the People’s Party, whose progressive reform agenda now faces setbacks. The market’s positive reaction stems from the expectation of stable governance and predictable economic policies.

Economic analysts and strategists have highlighted several key impacts:

• Brendan McKenna (Wells Fargo): Emphasizes that overall policy continuity will lead to stability and clarity, which markets favor. He sees a short-term positive impact on the baht, though its medium-term trajectory will remain influenced by global factors like the Federal Reserve and China.
• Kaseedit Choonnawat (Citigroup): Projects a rise in Thai stocks, attributing it to Bhumjaithai’s enhanced negotiation power, ensuring policy continuity, and reducing the risk of short-term, non-competitive spending. He reiterates a potential rise for the benchmark SET Index to 1,450 by year-end (from 1,354.01 on Friday).
• Poon Panichpibool (Krung Thai Bank Plc): Views a Bhumjaithai-aligned coalition as the most market-friendly scenario in the near term, citing policy continuity, ongoing fiscal support for consumption and infrastructure, and a focus on tourism recovery. He expects the baht to strengthen slightly and equities (particularly retail, transport, and tourism sectors) to be major beneficiaries.
• Burin Adulwatana (Kasikorn Research Center): Believes the clear majority will expedite government formation, bolstering investor confidence. He expects a continuation of successful economic strategies, such as co-pay subsidy programs, leading to a positive response in equities.

Thai business sector calls for bold economic actions

The Thai business sector is urgently calling upon the incoming government, formed after the February 8, 2026 election, to implement swift and decisive economic measures within its first 90 days. This demand comes amidst persistent economic headwinds, a projected slowdown with GDP growth estimated at 1.6-2% for 2026, and deep-rooted structural issues that have led some foreign media to label Thailand “the sick man of Asia.” Leaders across various sectors emphasize the critical need to restore confidence, boost investment, and address fundamental constraints to prevent further economic fragility.

Key immediate priorities for the new government, as highlighted by business leaders, include:

• Economic Stability: Working with the Bank of Thailand to manage baht appreciation and maintain appropriate currency levels, as a strong baht harms exporters.
• Household Debt: Devising strategies to cope with high household debt (officially 86.8% of GDP, rising to 104% with informal debt), which has tightened lending and reduced consumer spending.
• Governance & Crime: Taking serious action against “grey capital,” scammers, and organized corruption to prevent Thailand from becoming a regional money-laundering hub and to protect its international image.
• Cost of Living: Easing living costs, particularly by reducing mass transit fares to encourage wider usage and improve urban quality of life.
• Tourism Confidence: Establishing confidence among international visitors that Thailand is a safe and trusted destination, continuing stimulus schemes like “We Travel Together,” and reviewing aviation costs, fees, and taxes.
• Agricultural Support: Ensuring an adequate and affordable supply of essential feed ingredients for the livestock sector and overseeing farm-gate prices for pigs to protect small farmers.

Beyond the initial 90 days, the business community stresses the importance of longer-term strategic actions and policy consistency. This includes:

• Strategic Policies: Outlining well-planned national strategies and ensuring policy consistency, moving away from short-term goals to avoid falling behind regional competitors like Vietnam.
• Effective Stimulus: Designing stimulus measures that generate broad economic multiplier effects, enhance competitiveness and productivity, and lead to sustainable long-term expansion, rather than short-term populist giveaways.
• Fiscal Prudence: Carefully allocating limited public resources to nurture “seeds” for future competitiveness and income generation, especially given Thailand’s limited fiscal space and risk of a credit-rating downgrade.
• Regulatory Reform: Streamlining complicated regulations and expediting approvals (e.g., hotel licensing, BoI incentives) to improve the ease of doing business and lift investment, which has been hampered by delays in large infrastructure projects.
• National Competitiveness: Prioritizing efforts to bolster national competitiveness by amending obstructive laws, promoting new S-curve industries (bioeconomy, wellness, green businesses), and investing in infrastructure.
• Digital Economy & Clean Energy: Continuing major policies from previous governments, particularly promoting investment in digital technology like data centers, and accelerating the direct power purchase agreement (PPA) scheme to provide clean energy access for these resource-hungry businesses.
• Social Equity: Reducing inequality and providing equal access to quality education, healthcare, and 21st-century skills.
• Addressing Global Challenges: Developing clear strategies to address heightened geopolitical uncertainty, climate change (floods, droughts, PM2.5 pollution), and the growing menace of cyber scams.

The election results underscore the likelihood of ongoing stimulus measures, sustained fiscal backing for consumption and infrastructure initiatives, and a strong emphasis on revitalizing tourism. These elements are anticipated to sustain domestic demand, enhance investor confidence amid global uncertainties, and provide a solid foundation for Thailand’s economic growth.

Other People are Reading

Shares of retailer Kalyan Jewellers India hit the 10% upper circuit limit on BSE, surging to Rs 417.75, as the jewellery retailer’s blockbuster third-quarter earnings triggered a wave of bullish brokerage calls with price targets as high as Rs 750, a potential 80% upside from current levels.

The stock locked into the circuit after the company reported a staggering 90.36% surge in consolidated net profit to Rs 416.29 crore for the quarter, nearly doubling from ₹218.68 crore in the year-ago period. Revenue from operations jumped 42.11% to Rs 10,343.41 crore compared to Rs 7,278.09 crore last year.

JM Financial leads the Street’s optimism with a Rs 750 price target, maintaining its BUY rating despite raising fiscal 2026-28 earnings estimates by 4-5%. The brokerage cut its target price-to-earnings multiple to 40 times from 45 times due to higher stock volatility over the past six months, but rolled forward its estimates to December 2027.

“Management highlighted sustained strong growth in Jan’26 in the face of volatility in gold prices, and noted they expect to end FY26 on a good note,” JM Financial said in its note. The brokerage flagged robust same-store sales growth across regions, with India registering 27% year-on-year growth and the Middle East posting 24% gains.

Motilal Oswal set a Rs 600 target price based on 35 times December 2027 price-to-earnings, reiterating its BUY rating while raising earnings estimates by 3-4% for fiscal 2027-28 on margin expansion in the third quarter.

“We are extremely excited with the way the current year has progressed so far. The current quarter has started very well despite the volatility in gold prices,” said Ramesh Kalyanaraman, Executive Director at Kalyan Jewellers India. “We are upbeat about the ongoing wedding season and expect to end the financial year on a strong note.”
Motilal Oswal highlighted the company’s successful franchise scale-up, with the business now contributing over 45% of revenue, and its expansion beyond Southern markets improving the studded jewellery mix. The asset-light model supports healthy cash flow generation for debt repayment while enhancing profitability through reduced interest costs. The brokerage projects 21%/18%/22% revenue/EBITDA/net profit compound annual growth during fiscal 2026-28.The company’s digital brand Candere turned net profit-positive this quarter, meeting guidance, while management remains on track to become net debt-free by end-fiscal 2027 through a combination of non-core asset sales and cash flows, according to JM Financial.

The regional brand is expected to open four to five stores over the next year, with some openings planned for the fourth quarter of fiscal 2026.

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Mumbai: The Reserve Bank of India‘s December rate cut was perhaps the last in the recent easing cycle, with economists expecting a pause, citing a slight uptick in inflationary pressures amid elevated commodity prices and a weaker rupee, and improving growth prospects.

Eleven of 14 economists polled by ET expect no further reduction in the policy rate in the coming months.

Proposed trade deals with the USA, the European Union and others have increased growth prospects, thus reducing pressure on the central bank to lower rates to push growth, economists said.

The Monetary Policy Committee (MPC) of the RBI on Friday kept the policy rate unchanged at 5.25% after lowering it 125 basis points in the last one year.

“The upward revision of inflation and GDP growth forecast gives a hawkish tilt to the policy and indicates monetary policy easing is largely behind us,” said Amit Somani, deputy head of fixed income at Tata Asset Management.

Among the 11 economists Within who expect 5.25% as the terminal rate, six said the RBI is likely to remain guided by evolving growth-inflation dynamics. With GDP base years under revision, the true momentum of economic growth remains uncertain, reinforcing expectations of a prolonged pause rather than a renewed easing cycle, they said.
Noting the momentum in private consumption, steady rural demand and improving agriculture activity, the central bank increased the GDP growth projections for the first and second quarters of FY27 by 20 basis points each to 6.9% and 7%, respectively. Inflation projection was also revised higher for FY26 to 2.1% from 2%. For the ongoing quarter, CPI is now projected at 3.2%, up from 2.9%.

“While uncertainty remains on the growth-inflation figures as we await the new series, the uptick in commodity prices and weaker currency may pose upside risks to inflation,” said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank.

A small minority, however, still expects one final rate cut, arguing that growth could slow once the new GDP base year is factored in. Elevated geopolitical uncertainty also risks weighing on economic activity. This leaves room for limited additional easing, taking the repo rate to 5%.

“The MPC meeting came against a backdrop of heightened geopolitical uncertainty, inflation below the lower end of the MPC tolerance band, and volatile currency markets,” said Sachin Bajaj, chief investment officer at Axis Max Life Insurance.

“We anticipate a final 25 basis point cut in the repo rate to 5% during the early part of the next financial year to address growth concerns emanating from the uncertain global environment,” he said.

Nomura, too, expects one more cut as “we await the implications of the new CPI and GDP series.” The brokerage has assigned a 65% probability to its baseline.

Markets saw a sharp knee-jerk reaction after the Budget despite a strong capex push, as higher securities transaction tax (STT) weighed on near-term sentiment. Naveen Kulkarni, CIO at Axis Securities PMS, believes the sell-off was largely sentiment-driven and exacerbated by thin trading volumes rather than a shift in underlying fundamentals.

In this ETMarkets Smart Talk, Kulkarni explains why the intrinsic value of equities remains intact, how FII behaviour around the STT hike could shape the near-term setup, and why a growth-focused Budget with higher capex and manageable fiscal numbers continues to support the medium- to long-term market outlook. Edited Excerpts –

Kshitij Anand: Let me also get your perspective on why markets fell sharply after the Budget despite strong capex numbers. We have seen a spike in capex to nearly one lakh crore, from ₹11.11 lakh crore earlier to now over ₹12 lakh crore. Is this reaction driven more by sentiment, or is there something else at play? What would be your take on this?
Naveen Kulkarni: Yes, clearly the reaction has been driven by sentiment. At one point, the market was down by probably around 2.5%, and then we have seen some pullback as well. If you look at the markets over the last few sessions, trading volumes have been a little thinner and not particularly exciting. When the sell-off happened, it did not occur on very large volumes; it happened on relatively thinner volumes. And when some degree of institutional buying comes in, seeing opportunity, we are also witnessing a pullback.What will be important is tomorrow, because I do not think there has been significant FII participation yet. How they read the market, especially the STT hike—which impacts them as well, given that many large trading hedge funds operate in India—and how they assess its impact on trading volumes will be key. We could see some more impact coming tomorrow. So, tomorrow and probably next week is when the market should set up. Clearly, we have been in an oversold market and have seen some additional selling, but I think we should be okay from here.

Kshitij Anand: Much of the money is also moving from bank FDs to the equity market, which is something the government has on its mind as it looks to manage liquidity in the banking system. Naveen, picking up from where you left off—given that today is a holiday—do you see the post-Budget sell-off as an overreaction to the STT hike, or as a genuine shift in market structure? The reason I ask is that we have seen substantial selling by FIIs as well. In 2025, more than ₹1.6 lakh crore was withdrawn, and so far in January, the figure is close to ₹40,000–50,000 crore. How do you see this playing out in the coming week?
Naveen Kulkarni: If you look at it, whether it is the securities transaction tax on futures or options, the intrinsic value of the underlying does not change. When you are buying in the cash market, you are holding it for the long term and for delivery, so the intrinsic value does not change because of these parameters. This reaction, whether you look at it from the perspective of FII participation or hedge fund activity, is likely to be short-lived because the intrinsic value of the underlying depends on growth in profitability and overall metrics, and that does not seem to be changing.
On the flip side, if I look at the Budget, there is definitely a focus on growth. Capex numbers are higher, and more importantly, the composition of capex also looks more interesting and growth-focused. Apart from that, a fiscal deficit of 4.3% is not prohibitive for growth. There have not been any significant cuts, and borrowing levels continue to look reasonable. If I look at the Budget numbers overall, they are not very aggressive. It is unlikely that the government will miss its budget expectations or estimates.Broadly speaking, the Budget is not a major negative factor. Yes, the STT hike is having an impact today and may continue to do so for a few more days, but overall, I do not see the underlying value changing. Underlying asset values are likely to rise over the next 12 months, and this phase could provide a good opportunity as the market clears excesses.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)