Markets To Be Glued To Global Cues Post-Budget

After all the noise in the stock market has subsided with the announcement of the Union Budget, which was preceded by back-to-back events over the last few months starting with the Interim Budget, followed by elections, monsoons and the RBI policy review meeting, investors are now keen to know which direction the markets may go. While the initial reaction to the Budget was quite negative with benchmark indices falling sharply after Finance Minister Nirmala Sitharaman’s speech, experts feel that markets would now be glued to cues of global markets now that the domestic noise has somewhat died down and the trend on the upside would continue but with sluggishness.  

Mustafa Nadeem, CEO, Epic Research, says that a lot of permutation and combination went into the events of the last few months with portfolio re-balancing and changing of allocation. 

“We believe markets are going to be glued to cues of global markets specifically since the US-China trade war has been haunting; it is now the US-India trade war. Markets will be watching this carefully since it may cause a lot of discomfort for investors,” he says.

Nadeem adds that the current market is a ranging one for the medium term – 11,400 to 12,200 to be precise. 

On the sharp fall in the market on the Budget day, he adds that it was an initial reaction and a kind of profit booking. 

“We believe the market may seem to have medium-term support around 11,400 – 11,500 where it has its long term 100 days moving average and that may bring in long term investors utilizing the dip. Hence the corrections are part and parcel of any trend and this will end when volatility stabilizes and we see improvement in breadth,” Nadeem says.

Amit Gupta, CEO and Co-founder, TradingBells, adds that there was nothing special for the market to cheer for in the near term while the surcharge on “FPIs acting as trusts was a mood spoiler.” 

“That said, the domestic market share is likely to stabilize soon and may rally from here as Fed has signaled a rate cut whereas RBI is also likely to cut rates after government shows fiscal prudence in the budget. Markets are consolidating between the election result day’s high of 12,041 and low of 11,614 for the past three months. Option writers were very active in earning the premiums of May, June and July months’ contracts. Hence the markets are likely to remain in this range for this series,” he says.