Markets likely to get a cautious start on the budget day

The Indian markets went for a sharp pre-budget correction and the benchmarks lost about one and half a percent in the last session. The rate sensitives’ were disappointed as the Reserve Bank of India left interest rates unchanged and warned of resurgent inflation risks. Though, it stated that its future actions will be towards lowering rates. The Economic survey too was unable to bring any cheer as it predicted the Indian economy growth to dip to a 3-year low of 6.9%. Today is the big day for the markets with the announcement of Union Budget 2012-13.The mood is likely to remain cautious in the start, though some buying too is expected after last session’s fall. But the main action will start with the unveiling of the budget and its impact on different sectors. The main sectors that are likely to be buzzing or having expectations from the budget are Power, Aviation, Hotels, Auto and Retail. Also based on the announcements there will be lots of scrip specific movements to keep the markets buzzing.

The US markets surged on Thursday with the S&P 500 finishing above 1400 mark for the first time since June 2008. Investors were enthused with the good jobs report. Labor Department reported that initial jobless claims, for the week ended March 10 fell 14,000 to 351,000, hovering near a four-year low. Also, the producer price index rose 0.4% in February, about in line with expectations for a 0.5% rise, after a 0.1% gain in the prior month. The Asian markets are once again trading mixed in early hours. Though, the Chinese market is trading higher the Japanese market has lost stem on strengthening yen despite a better outlook of US economy. However, exporters in the region are in buoyed mood.

Thursday’s session turned out to be a tumultuous one for Indian stock markets which got thrashed for the first time in last five sessions on a day filled with several imperative events like the outcome of RBI’s mid quarter policy review and announcement of Economic survey for financial 2011-12. The frontline indices got bludgeoned by around one and half a percent a day ahead of the tabling of much awaited Union Budget 2012-13 and drifted below the psychological 17,700 (Sensex) and 5,400 (Nifty) levels. Largely across the board selling was evident in the session and investors ruthlessly butchered the rate sensitive counters like Realty and Banking as Indian central bank after a major action last week, took a cautious stance and abstained from resorting to liquidity easing measures in its policy review. Shares from the Reliance ADA group got pummeled in the session on reports that RCom and Reliance Power will move out of the National Stock Exchange's 50-share Nifty index with effect from April 27 and would be replaced by Asian Paints and Bank of Baroda. Also the finance ministry’s economic survey proved to be a non-event, failing to spur optimism and lift domestic sentiments. The survey stated that India’s economy is likely to pick up pace in 2012-13 and grow 7.6% while the growth rate is estimated to accelerate in the next fiscal year at 8.6%. It could not give any significant upside triggers to the markets as the government is expected to miss this fiscal year's deficit target of 4.6 percent of GDP by a wide margin, and it faces a difficult task to cut a soaring subsidy bill and revive slowing growth. In the meantime, some gains in information technology bellwethers like Wipro and TCS propelled the IT index on BSE into the positive terrain by the end. While shares like Kingfisher, Jet Airways and Spicejet from the beleaguered Airline counter skyrocketed in late trade amid hopes of some pleasant surprise wrapped in Union Budget 2012-13. Moreover, the broader markets too settled on a pessimistic note as they succumbed to the selling pressure that was being exerted on their larger peers and plunged around a percent. Finally, the BSE Sensex shaved off 243.45 points or 1.36% to settle at 17,675.85, while the S&P CNX Nifty plunged by 83.40 points or 1.53% to close at 5,380.50.