Nitin Rakesh, president, Americas - Syntel Inc says that the market is expecting measures to ensure fiscal discipline and the provision of a reform roadmap in the Budget.
"There should be increased domestic institutional investor (DII) participation to support the market at current levels and the markets will struggle to move higher if the Budget disappoints," he told CNBC-TV18
Below is the edited transcript of the analysis on CNBC-TV18
Q: Do you expect the Budget to turn things around for the market?
A: There is a lot of hope that the Budget will ensure fiscal discipline and provide a roadmap of the reform-process over the next 12 months. However, what needs to be kept in perspective is that in the last six months saw record flows and the market touched three-year highs. So it is not a negative if the market pulls back a bit.
Q: What do you think is causing this selling which seems to be much more accentuated in the midcaps than the frontliners? Have FIIs have completely stopped buying?
A: It is a combination of a few factors. Domestic institutional investors (DII) have not been buying at all. There were a few trading positions that were built-in, others that were partly margin-funded that obviously bore the brunt when the midcaps started to fall and caused the increased selling in the midcaps. The global environment turning fairly vicious over the last week on events in Europe also added to the fall as India is a high-beta market and would be considerably affected whenever there was a risk-off globally.