Doom & Boom Forecast As Budget Draws Near

Even as the Budget day draws near, anxiety in the capital markets continues to infuse volatility on the bourses.

Leading players feel the market will oscillate between 3200-3600 in the next 15 days prior to the Budget. It has been observed in the past that the Sensex has always risen prior to the announcement of the Budget.(See graph)

B G Daga, chief general manager in charge of secondary market operations, feels expectation levels are good because of the positive announcements made by the prime minister and the finance minister.

The market will fluctuate between 3200-3600. The government is likely to announce sops like removal of double taxation of dividend, concessions in MAT and so on which should encourage a lot of buying interest in the market. However, a clear direction of the market movement will be visible only after the Budget, Daga said.

Not all subscribe to the view that expectation levels from the market are high. In my opinion, the market may witness a fall by around 200-300 points before the budgetary announcements are made. The sentiment will remain subdued due to lack of institutional participation which will come in only after the Budget, says Milind Karmarkar, head of research at the Mumbai-based brokerage Dalal & Broacha.

However, not all agree. Anand Jhaveri of Birla Marlin Securities feels the market could just fluctuate by 200 points either ways. There are not too many expectations from the Budget. Every year, prior to the Budget the sentiment is full of expectations. However, this year there are no expectation at all. Anything that is announced for the capital market will be a bonus, he said. Sanjiv Sanghvi of James Capel B&K says that even as the market undertones are bullish, the Sensex is not expected to come up sharply prior to the Budget. In fact, every time the Sensex touches the 3600-level, institutions turn sellers for profit booking, he observed.

In Sanghvis opinion, the Sensex would oscillate between 3400-3600.

Brokers agree that active institutional interest will remain absent till announcements are made. People are hopeful and scared at the same time and FIIs, who had pumped in a lot of funds last year, are not willing to play a pre-Budget gamble this time, Sanghvi added.

Senior Jardine Fleming officials, on conditions of anonymity, said the Sensex could move up by 200 points from its present levels (the Sensex yesterday closed at 3443.55) on the higher side.

Domestic players, however, seem to be more cautious. The Sensex is presently reflecting a 3400-level. However, only a few volatile heavyweight stocks are moving up, leaving all others at low levels, said Vijay Pandya of Classic Shares & Stockbrokers.

He warned that speculators could drive the Sensex up to the 3800-level just prior to the Budget.