Sensex, Nifty may be cautious as countdown to Budget begins

Moneycontrol Bureau The final countdown to the Budget begins and all eyes are on how Finance Minister Arun Jaitley projects taxes and spending post demonetisation. Most analysts feel the Budget 2017 is likely to have a pro-poor focus. The market will watch for govt's FY18 fiscal deficit target, divestment plans, announcement on the taxation front among others. The market expects govt to relax its FY18 fiscal deficit target of 3 percent.

Commentary on strategic divestment to be closely eyed. The market will closely monitor any tinkering to capital gains tax or an incremental increase in securities transaction tax. ITC will benefit if excise duty on cigarettes is hiked by 8-10 percent and halving of cess to 8-10 percent can increase ONGC’s EPS by 16-17 percent. The FM may announce universal basic income scheme which plans to directly transfer money to eligible individuals.

Consumption stocks like Dabur, ITC, SBI, Bharti Airtel and Hero MotoCorp. Meanwhile, the S&P 500 fell on Tuesday for a fourth consecutive session, weighed by sectors sensitive to economic growth amid disappointing earnings and lingering concern over the priorities of the Trump administration.

Technology and financials were the sectors that weighed the most on the S&P 500, while healthcare helped cut losses and the index closed far from its session low. Advancing issues outnumbered decliners on both the Nasdaq and the New York Stock Exchange.

US President Donald Trump met with top executives from some of the biggest drugmakers in a move seen as lowering tensions that have kept drug stocks in check since the presidential election.

Asian shares were mixed as investors parsed through economic data out of Asia ahead of the FOMC meeting announcements.

Japan's Nikkei 225 recovered from earlier losses of more than 0.5 percent to trade down 0.08 percent, breaking away from the correlation of a weaker yen hurting the benchmark index.