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Budget to Chart Market Direction

The outcome of the Union Budget on Wednesday will set the tone for Dalal Street, which is looking for triggers to extend the previous week’s surprise rally. Market participants will rely on the government to unleash measures to revive the economy that is under pressure after demonetisation.

“People have built up expectations prior to the Budget. So it will have to be a robust one for the pace of this rally to sustain,“ said Anshul Saigal, head, por tfolio management, Kotak Mahindra Asset Management.

Last week, benchmark indices post would advise caution,“ said Gautam Chhaochharia, ED at UBS Securities.“We don’t find the risk-reward attractive at current levels.“

Market participants would be watching out whether the government tightens taxation rules for stock market transactions. “Anything negative on the LTCG (long-term capital gains tax) front may act as a speed breaker for this rally . It would be best to remain cautious. In the long term, markets are in an upward trend; hence, near-term volatility should be borne for long-term gain,“ said Saigal.

Whether the fiscal deficit target of 3% for 2017-18 will be maintained will also be keenly watched.

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