Markets to get a cautious start of the big day of Budget

The Indian markets made a good bounce back in the last session after the Economic Survey of the government gave encouraging signals for the economy, despite gloomy global outlook. Today, the big day of the markets is likely to get a cautious start, with all eyes on the Union Budget for 2016-17. Finance Minister Arun Jaitley while presenting his third and challenging Budget will have to give equal importance to the farm sector as well as the industry, amid back-to-back droughts and high industry expectation. Jaitley will be announcing details of the gradual reduction of corporate tax from 30 per cent to 25 per cent over four years. The budget may also look into retrospective taxation and may have some provisions for the legacy issues. Meanwhile, Chief Economic Adviser Arvind Subramanian has said that government is open to the idea of going in for higher fiscal deficit to propel growth in the upcoming Budget and will take a balanced view after considering various factors. Markets may get some support with the report that foreign direct investment (FDI) into the country increased by 40 percent to $29.44 billion during April-December in the current fiscal. Power sector stocks will be in action, as the Prime Minister Narendra Modi has asked the Power Ministry to target electrification of around 200 villages every week by holding regular follow ups with the state implementing agencies.

The US markets made a mixed closing in last session, after failing to sustain an initial upward move. Traders reacted to largely upbeat US economic data. While the reports eased concerns about the possibility of a recession, the data also led to renewed worries about the outlook for interest rates. The Asian markets have made a mixed start, with some indices trading in red led by Chinese market, which is down by over three percent after Group of 20 finance chiefs made only vague commitments to spur growth after talks in Shanghai. The Japanese market though was in green despite the yen rebounding from a three-day drop.

Back home, Indian equity benchmarks snapped three-day losing streak as investors opted to buy beaten down but fundamentally strong stocks amid positive global cues. Sentiments got a boost after the Economic Survey said the government will likely meet its FY16 fiscal deficit target of 3.9 percent, while at the same time it also indicated that India's long run potential GDP growth is substantial, about 8 to 10 per cent. Presenting an optimistic picture of Indian economy, Chief Economic Adviser Arvind Subramanian's Economic Survey 2015-16 said that amidst the gloomy landscape of unusual volatility in the international economic environment, India stands as a haven of stability and an outpost of opportunity. The Economic Survey also talked about India's exports, which are in the negative zone since December 2014, and are expected to start picking up from the next fiscal. On the flipside, the survey enumerated three downside risks - turmoil in global economy could worsen the outlook of exports, contrary to expectations oil price rise would increase the drag from consumption and the most serious risk is the combination of these two factors. The survey also expressed concern over approval of GST Bill being elusive so far and the disinvestment programme falling short of targets. Meanwhile, market participants remained cautious on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1466 crore on February 25, 2016. On the global front, Asian stocks rose on Friday, while European stocks too climbed in early trade. Back home, the benchmark started the day on an optimistic note tracking the Asian peers which traded mostly in the green following the upbeat overnight cues from the Wall Street, while recovery in global crude oil prices also aided sentiment. The key indices remained choppy through the morning trades but saw a sudden spurt in buying in early afternoon trades post the Economic Survey 2016 tabled in the Parliament, reinstated confidence in the growth of Indian economy for the next two years. Finally, the BSE Sensex gained 178.30 points or 0.78% to 23154.30, while the CNX Nifty added 59.15 points or 0.85% to 7,029.75.