The market snapped three-day losing streak with the Sensex rising more than 250 points intraday Friday, the last trading session before Union Budget announcement. Along with short covering & positive global cues, likely achievement of FY16 fiscal deficit target of 3.9 percent and early recapitalisation of banks boosted investors’ sentiment ahead of Budget.
The 50-share NSE Nifty started off March series on a positive note after losing 6 percent each in previous two series (January and February), up 59.15 points or 0.85 percent to 7029.75.
The 30-share BSE Sensex climbed 178.30 points or 0.78 percent to 23154.30 while the broader markets underperformed benchmarks with the BSE Midcap rising 0.3 percent.
Experts expect the market to be rangebound in March series due to global volatility.
Dipan Mehta, Member BSE says he does not see sharp fall in the market on Budget day but if the government raises holding period under long term capital gains tax then there might be knee-jerk reaction. There has been relentless selling by FIIs in the past due to global volatility, he adds.
Technical analyst, Ashwani Gujral expects sell-off in the market, falling 200-300 points if it breaks 6850. According to him, the Nifty may not cross 7250-7300 in near term.
For the week, the Sensex plunged 2.3 percent and Nifty lost 2.5 percent on global weakness post correction in oil prices.
The Finance Minister Arun Jaitley will present Union Budget 2016-17 on February 29.
Ajay Bodke of Prabhudas Lilladher says the FM will have to stay focused on medium-term fiscal consolidation to anchor inflationary expectations to help RBI maintain its accommodative stance on interest rates.
Significant allocations to revive investment demand through public investments in roads, railways, farm infrastructure; democratizing equity culture among retail investors by providing aggressive tax incentives and providing a booster shot to consumption-led growth through a cash-for-clunkers scheme for auto sector as well as significantly enhancing tax incentives for housing sector will act as force multipliers for downstream sectors, he feels.
The Macro Economic Survey for 2016 has voted for fiscal discipline, saying that ‘credibility and optimality argue for adhering to 3.5 percent fiscal deficit target’ for FY17. The Survey said that the government needs to be in a strong position to service its debt. At the same time, the Survey also recognised the challenges in meeting the fiscal deficit target for FY17, in view of a slowing world economy, and the higher expenditure due to implementation of One Rank One Pension (OROP) and the Seventh Pay Commission report.
Bank Nifty gained 1.7 percent after Economic Survey listed out measures to clean up balance sheets. State Bank of India gained nearly 3 percent and Axis Bank rose 1.8 percent. HDFC Bank and HDFC were up 1.4 percent each.
Coal India extended rally, up 4 percent after Economic Survey said coal imports declined in the last one year on the back of higher domestic production of the fossil fuel.
Among others, ITC, L&T, Tata Motors, NTPC and Hindalco rose 1-3 percent while Lupin, Bajaj Auto, Hero Motocorp and Bharti Airtel fell 1.5-3.5 percent.
The market breadth was weak today as about 1441 shares declined against 1037 advancing shares on the Bombay Stock Exchange.
On the global front, European markets traded higher after a rally on Wall Street overnight following a rise in the oil price. CAC, DAX and FTSE gained 1-2 percent (at 16 hours IST) as finance ministers from the Group of 20 (G-20) meet in Shanghai to try and assuage fears over global economic growth. Asian markets also closed higher with the Hang Seng rising 2.5 percent.