Indian market entered the Budget day on a cautious note as both Sensex and Nifty50 broke below crucial support levels on day when the Finance Minister tabled the Economic Survey 2020.
The government on January 31 revised downwards the economic growth rate for 2018-19 to 6.1 percent from 6.8 percent estimated earlier, mainly due to deceleration in mining, manufacturing and farm sectors.
From markets standpoint, the S&P BSE Sensex is down nearly 4 percent from its record high of 42,273 while the Nifty50 is down by about 500 points from its record high of 12,430 recorded earlier in the month of January.
The Nifty50 slipped below 12,000 levels while the S&P BSE Sensex broke below 41,000. Both Sensex and Nifty50 are down by about 2 percent so far in the week. Experts feel that dips, if any, on the Budget Day should be used to get into quality stocks.
“Markets run into the Budget with caution with the absence of any rally. Broader markets, too, witnessed profit booking ahead of the event. 11,800-11,900 is the near term support zone,” Manav Chopra, CMT, Head Research - Equity, Indiabulls Ventures Ltd told Moneycontrol.
“Expect strong directional move post the Budget which could be easily 400-500 points on the Nifty. Any positive trigger in the Budget is likely to trigger a rally as no expectations are built-in,” he said.
Chopra further added that it is best to trade on intraday basis in the current scenario on the index. 12,250 is likely to act as a resistance zone on the upside.
Let’s look at the final tally on D-Street on January 31 – the S&P BSE Sensex dropped 190 points to 40,723 while the Nifty50 closed 73 points lower at 11,962 on Friday.
Sectorally, action was seen in the S&P BSE Telecom index, followed by Realty, Consumer Durables, Bankex, and Finance. Profit-taking was visible in BSE CPSE, Oil & Gas, Energy, and Metal indices.
On the macro front, the growth of eight core industries recovered to 1.3 percent in December 2019 after remaining in the negative zone in the previous four months helped by expansion in the production of coal, fertiliser and refinery products.
The Indian rupee on Friday appreciated by 25 paise to end at 71.33 against the US dollar on Friday after the Economic Survey 2019-20 predicted bullish growth figures for the next financial year.
On the institutional front, FPIs were net sellers in Indian markets for Rs 4179 cr while the DIIs were net buyers to the tune of Rs 3816 cr, provisional data showed.
Trends on SGX Nifty indicate a negative opening for the broader index in India, with a 52 points loss or 0.43 percent. The Nifty futures were trading around 11,987-level on the Singaporean Exchange.
Key Expectations from Budget:
Removal of LTCG as well as DDT
Increase in budget allocation for infrastructure projects and PMAY
Scrappage policy for the auto sector| Sops for EV
Income Tax Rate cuts / Slab Changes for individual tax payers
Technical View:
Nifty formed a bearish candle or a bearish belt hold kind of pattern on the daily charts
The index slipped below its crucial 50-Days EMA placed at 12085
We are heading towards the penultimate session before major economic event Budget 2020 – volatility will remain high
On the upside 12150-12200 is likely to act as a crucial hurdle for the index
Traders are advised to remain neutral on the long side whereas intraday shorting can be considered if Nifty trades below 11990 for a target of 11930
Three levels: 12010, 12150, 12200
Stocks in the news:
Birlasoft, a part of the $2 billion diversified C K Birla Group, on Friday reported a 76.7 percent jump in consolidated net profit to Rs 72.7 crore for the December quarter.
Cigarette-hotel-to-FMCG major ITC on January 31 registered a massive 29.07 percent year-on-year growth in Q3FY20 profit, largely driven by lower tax cost, beating analyst expectations.
Bank of India on Friday reported a net profit of Rs 106 crore for the third quarter ended December as against a net loss of Rs 4,738 crore, helped by better recoveries and stable asset quality.
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