Higher opening seen on optimism ahead of Budget

Markets are likely to open higher on expectations of big bang reforms expected from the Union Budget which will be tabled by the Finance Minister later today.

At 8:45AM, the early indicator SGX Nifty was up 65 points at 8,959.

Foreign institutional investors were net buyers in equities to the tune of Rs 1,957 crore on Friday, as per provisional stock exchange data.

"FY16 budget could be more relevant for the market than usual as over the past year it has run up 45% (Nifty) in anticipation that the new government will enable a V-shaped recovery in earnings of 17-20%; actual at 6% has been much weaker. Hence, there is little scope for the budget to disappoint," said Dhananjay Sinha, head - Institutional Research,  Emkay Global Financial Services in a note.
 

"The test for the budget is to deliver a prudent budget, solidifying the path of fiscal consolidation and yet be palatable for both corporates and households. Compounding the constraint is the BJPs recent political debacles and farm sector resentment over the Land Acquisition amendments. Hence, given this context and the upcoming Bihar election, the scope for the government to take tough economic measures can be inhibited," he adds.

European shares surged to fresh seven-year highs ahead of the European Central Bank's monetary easing measures. Further, encouraging corporate earnings also boosted sentiment. The FTSE 100 ended flat with negative bias while CAC-40 and DAX ended up 0.7-0.8% each.

Major US share indices ended lower on Friday after economic growth was slower than expected during the fourth quarter. However, the broader S&P 500 recorded its best monthly gain since October 2011. The Dow Jones ended down 82 points at 18,133, S&P 500 ended down 6 points at 2,104 and Nasdaq ended down 24 points at 4,964.

Banking shares are likely to extend gains after the Economic Survey 2014-15 tabled in the parliament today forecasted FY16 GDP growth between 8.1% and 8.5%.

Shares of real estate and infrastructure companies are likely to firm up further on hopes the forthcoming budget may include sops to the housing and infrastructure sector.

L&T and Tata Power may extend gains as both companies were shortlisted for Battlefield Management System by Ministry of Defence.

Rolta India and Bharat Electronics may rally further after the ministry of defence had selected their consortium as a development agency for the battlefield management system (BMS) project worth over Rs 50,000 crore.

DLF may be under pressure as the real estate major plant to reduce its debt and generate cash flow. According to reports, DLF plans to raise Rs 3,000 crore through divestment or joint ventures in certain projects.

Telecom stocks will be in action after aggressive bidding is seen in the upcoming spectrum auction from March 4.

Tata Motors will be in action after the auto major said it plans to offering a voluntary retirement scheme (VRS) to its employees to “enhance competitiveness”. The scheme, the second in 13 months, has been extended to all categories of employees, including workmen and managerial cadres, against only to ‘white-collar’ employees the last time.