Markets to make a jubilant start of the special budget session

The Indian markets came into euphoric mood after the release of optimistic Economic Survey for the year 2014-15. Traders taking cues from the report placed higher bets on hopes of government’s reform agenda. Today, the start of the special Budget session of the markets is likely to remain jubilant, marketmen will expect the government to keep firm focus on fiscal prudence and stay the course on fiscal discipline. In the Economic Survey the government has made a strong case for further monetary easing by RBI, saying that inflation will continue to decline even though the central bank remains cautious. The survey observed that the momentum of food prices has declined even more and is at levels below overall inflation. In the budget today traders will be eyeing some guidance on the “retrospective tax.” Subsidy outlays too will be eyed, as the survey has stated that subsidies benefit the rich more than the poor and the government should link the JAM trinity - Jan Dhan Yojana, Aadhaar number and Mobile numbers - for its effective transfer to the intended beneficiaries. Common man will be expecting different exemptions and rebate in taxes, while industries like renewable energy, defence and infrastructure will be expecting major push from the budget.

The US markets closed lower in last session, though the selling pressure was relatively subdued but the sentiments were weighed down by a Commerce Department report showing a downward revision to the pace of economic growth in the fourth quarter. European markets ended higher on Friday, ahead of the launch of the European Central Bank's quantitative easing program.

Back home, Indian markets recovering from the Rail Budget blues made an emphatic bounce back on Friday. Bourses after a positive start and trading cautiously till mid of the session, suddenly gained pace after the presentation of Economic Survey for the year 2014-15 in the parliament. Economic Survey has estimated economic growth between 8.1 and 8.5 per cent in 2015-16. In FY16 real GDP growth at market prices is estimated to be above 0.6-1.1 percentage points higher vis-a-vis 2014-15 estimates of 7.5 per cent. The survey highlighted that private sector investment remains the main driver of growth engine in the long-term but in the medium and near-term the government has to step up spending. Stressing on increased role of Indian Railways, the survey stated that public investment, especially by Indian Railways will play a catalytic role till the time issues plaguing private investment don't get solved. The global cues though remained mixed, while the Asian markets recovering from some early weakness managed mostly a positive close, the European markets have extended their gains. Back home, Indian markets rallied a day ahead of the annual budget, the new F&O series of March made a jubilant start with benchmark indices Sensex and Nifty reclaiming their crucial psychological levels of 29200 and 8800 respectively. Once the details of the Economic Survey were out, markets gained momentum and stopped only with the close of the trading session. Traders took heart with the Economic Survey saying that the government remains committed to fiscal consolidation, adding that it will adhere to fiscal deficit target of 4.1% of GDP in FY15. Apart from the infra related stocks, banks which are considered proxy to the economy, gained momentum in the second half. Markets surged over one and half a percent in the one way upmove, hardly showing any sign of profit taking. On the sectoral front on the BSE, almost all sectoral indices barring FMCG posted considerable gains. It is being expected that all round reforms will be announced in the budget with special emphasis on infra and housing. Finally, the BSE Sensex surged by 473.47 points or 1.65% to 29,220.12, while the CNX Nifty ended higher by 160.75 points or 185% to 8,844.60.