Union Budget 2020: Litmus Test For The Market Wishlist

Finally the markets are entering the most exciting week beginning Monday. The week ahead is going to be the most eventful as not only the important international events/meets are happening, India’s finance minister Nirmala Sitharaman will be presenting her second budget at the end of the trading week on Saturday, February 1.

The BSE-30 Index declined 0.7 per cent in the current trading week ended on Friday, January 24, 2020. NTPC , Kotak Mahindra Bank and ONGC were the top losers in the BSE-30 Index, while Bharti Airtel , Power Grid and Infosys were the top gainers.

Sanjeev Zarbade, VP PCG Research, Kotak Securities said, “Major global indices in the US and China were also in the red. Market participants were perturbed by the weaker-than-expected performance of major private banks, risks to global trade from the outbreak of a new coronavirus and a mixed set of results in 3QFY20”.

On the economy front, December exports at $27.4 billion implied a negative growth of 1.8 per cent, while imports witnessed a negative growth of 8.8 per cent to $38.6 billion. FPIs bought equities worth $1.6 billion over the past five trading sessions while DIIs sold $385 million worth of equities in the same period.

Vinod Nair, Head of Research at Geojit Financial Services said, “Q3 result had solid expectations but actual results are marginal below expectation for sectors like IT and Banks, leading to cautiousness in the market. We feel that this cautious trend will be maintained in the near-term since a lot has been factored in the market about budget wish list and expectation of revival in earnings growth, but the actual Q3 results being below par. Going ahead, market direction will depend on the actual budget announcements & the performance of Q3 result”.

The firm trend in Mid and small caps continued on the expectation of revival in growth and liquidity from institutional investors. The broader markets also posted strong gains today. The BSE midcap index rose 0.8 per cent while BSE Small cap was up 0.6 per cent.

Having said that the broader market still looks solid as it is in expectation of re-rating of valuation supported by revamp in earnings growth in the future.

“Week ahead is eventful with Union budget, US Fed and BoE policy meets, consensus expects US FED & BoE to maintain the status quo”, Nair added.

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Union Budget 2020: Litmus Test For The Market Wishlist

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