Union Budget to play vital role in deciding market direction, say experts

The market is likely to remain highly volatile amid Union Budget and the ongoing earning season, say experts. If the Budget fails to meet expectations, which are running high, markets can slide further.

February 01, 2021 / 07:40 AM IST
Sensex
The market witnessed selling pressure for six consecutive sessions, with the benchmark indices losing over a percent each in the week gone by. The BSE Sensex slipped 2,592.77 points, or 5.3 percent, to end at 46,285.77 and the Nifty50 fell 737.3 points or 5 percent to finish at 13,634.60. Here is what experts have to say about the market for the coming week:
Nagaraj Shetti, Technical Research Analyst, HDFC Securities | The short term trend of Nifty continues to be weak. The negation of upside bounce attempt and the downside break of weekly support could signal more declines ahead for the Nifty. The key economic event of Union Budget could play vital role to show the direction for the market. Any rise from here could encounter resistance around 13750-13800 levels. The near term downside targets to be watched for Nifty around 13050 (20 week EMA) for the next few weeks.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities | The short term trend of Nifty continues to be weak. The negation of the upside bounce attempt and the downside break of weekly support signals more declines for the Nifty. The Union Budget could play a vital role to show the direction to the market. Any rise from here can face resistance at around 13,750-13,800. The near- term downside targets to be watched for is around 13,050 (20-week EMA).
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities | The crucial supports would be at 13570/46100, 13440/45700 and 13250/45000 levels. On the higher side, 14000/47200 and 14200/47800 would be major hurdles. In the best-case scenario, we could see 14500/49000 levels and trend would turn extremely bullish if Nifty crosses 14800/50200. The strategy should be to reduce weak long positions between 14200/47200 and 14500/49000 levels. Buying is advisable if Nifty drops to 13500/46000 with a final stop loss at 13200/45000 levels. The focus should be specifically on Financials, Pharmaceuticals and Commercial Vehicles.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities | Crucial supports would be at 13570/46100, 13440/45700 and 13250/45000 levels. On the higher side, 14000/47200 and 14200/47800 would be major hurdles. In the best-case scenario, we could see 14500/49000 levels and the trend would turn extremely bullish if the Nifty crosses 14800/50200. The strategy should be to reduce weak long positions between 14200/47200 and 14500/49000 levels. Buying is advisable if the Nifty drops to 13500/46000 with a final stop loss at 13200/45000 levels. The focus will be on financials, pharmaceuticals and commercial vehicles.
Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities | The weak closing of Nifty-50 below 14,000 mark on expiry day portrays there could be more weakness in the market if the budget disappoints. The 50 DMA of Nifty-50 placed at 13,743 is very crucial for Nifty-50. If it sustains below 13,743 after budget then probability of it going to 13,000 level is very high. We need to wait and see how Nifty-50 closes on Monday post the budget event to get the next directional move. On the upside the recent peak of ~ 14,645 could be the major resistance for Nifty-50 going forward.
Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities | The weak closing of Nifty-50 below 14,000-mark on the expiry day suggests more weakness in the market if the budget disappoints. The 50-DMA placed at 13,743 is crucial for the Nifty. If the index sustains below 13,743 after the budget then the probability of it slipping 13,000 is very high. We need to wait and see how the Nifty closes on February 1 after the Budget to get the next directional move. On the upside, the recent peak of around 14,645 could be the major resistance.
Markets - Image: Reuters
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | Going ahead, markets may continue to remain highly volatile amid the ongoing earning season and the Union Budget. Expectations from the Budget are high. However, the government’s fiscal response in 2020 indicates certain inflexibility and lack of resources to stimulate the economy. We would suggest investors to take the opportunity of this fall and accumulate quality stocks on dips, while traders should be cautious with stock-specific action. The market would also track RBI’s monetary policy during the week along with BoE’s monetary policy for further cues.
Ajit Mishra, VP - Research, Religare Broking | The economic survey failed to trigger the rebound in the markets and now all eyes would be on the Union Budget scheduled on Monday i.e. Feb 1. We believe that the budget would focus on reviving growth and any disappointment on that front would lead to further correction in the markets. We reiterate our view to prefer hedged bets before the event unfolds and avoid jumping into a trade until the market stabilises.
Ajit Mishra, VP - Research, Religare Broking | The economic survey failed to trigger the rebound in the markets and now all eyes are on the Union Budget. We believe that the Budget will focus on reviving growth and any disappointment on that front will lead to a further correction in the markets. We reiterate our view to prefer hedged bets before the event unfolds and avoid jumping into a trade until the market stabilises.
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investment | The markets were successful in breaking 13700 and has closed below it too. We could slide further to 13,400 and thereafter to 13,200. Any rally up can now be utilised to short the Nifty for lower targets. The resistance is now at 14,000 and until that is not crossed, we will remain in the grip of the bears.
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investment | The markets were successful in breaking 13,700 and closed below it too. It can slide further to 13,400 and 13,200. Any rally up can be utilised to short the Nifty for lower targets. The resistance is now at 14,000 and until that is not crossed, we will remain in the grip of the bears.
Vinod Nair, Head of Research at Geojit Financial Services | Union budget will be the key to add strength in the domestic market to perform better compared to the rest of the world. The risk is that expectations are high that the government will find a balance between populism, reform and growth under a weak fiscal position. Auto stocks can remain in focus as investors will keep an eye on sales in the month of January post a strong December. The global market will be watchful on any regulatory actions which may be taken given the recent speculation issue, doubting the efficient working of the market system.
Vinod Nair, Head of Research at Geojit Financial Services | The Budget will be the key to adding strength in the domestic market. The risk is that expectations are high and the government will have to find a balance between populism, reform and growth under a weak fiscal position. Auto stocks will remain in focus as investors will keep an eye on January sales after a strong December. The global market will be watchful on any regulatory actions, which may be taken given the recent speculation issue, doubting the efficient working of the market system.
Rakesh Patil
first published: Feb 1, 2021 07:40 am

stay updated

Get Daily News on your Browser
Sections