How Sensex, Nifty are likely to move in run-up to Budget 2019

With just three days to go before finance minister Nirmala Sitharaman presents her maiden Budget in Parliament, market has turned buoyant over hopes from the Union Budget 2019. Benchmark indices Sensex and Nifty closed higher in trade today. While Sensex rose 291 points to end at 39,686, Nifty gained 76 points to 11,865.

Sensex has risen 8.82% compared to the 36,469 level  on February 1 when last Budget was presented by former FM Arun Jaitley. Similarly, Nifty has gained 8.92% during the same period.

With Budget to be presented on Friday, here's a look at how  Sensex and Nifty are likely to move this week.

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"The market is now driven by the tailwinds of dovish central banks, particularly the Fed, and hope of a pro- growth market - friendly budget. Low bond yields are positive from the market perspective. But there is no valuation comfort in the market now. Fear of a below normal monsoon is another concern. Hope and liquidity may help keep the market momentum till the Budget. But a sharp correction cannot be ruled out, if the budget disappoints," said VK Vijayakumar, chief investment strategist at Geojit.

While Sensex has gained 10.03% since the beginning of this year, Nifty has risen 9.23% during the same period.

Sahaj Agrawal, Head of Derivatives at Kotak Securities said, "Nifty strong up move is expected to play out in the near term. We believe Nifty is in a structural uptrend. Recent behavioural parameters have affirmed the positive outlook. We expect the index to scale new highs in the near term and test 12,300-12,400 odd levels. A budget rally could be in the offing and aggressive long positions can be initiated. Support for the index is seen at 11,500. A bull call spread can be initiated at current levels."

Rahul Agarwal, Director at Wealth Discovery/EZ Wealth said, "In addition to the Union Budget that is scheduled to be unveiled on the 5th of July there are several other factors that will influence the Indian equity markets. Geo-political developments regarding US-China trade talks, the tensions in the Middle east would continue to have a major bearing on the global equity markets including India. The markets are expected to be extremely volatile in the run up to the big day. However, any major movement on either side is highly unlikely.

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Big moves can only be expected in specific stocks if there is some new development around the stock. All stakeholders have a wishlist from the Government but for the equity markets specific catalysts such as the lowering of Securities Transaction Tax (STT), reduction or withdrawal of the LTCG have the potential to really swing the markets on the upside. For investors, it is advisable to stay on the sidelines for now, any major investment decision should only be made after the unveiling of the budget. We expect that the budget will be more or less in continuity with the interim budget and as such we do not anticipate any major announcements. Easing of the fiscal deficit target is one line item that we would be following very closely."

Romesh Tiwari, Head of Research at CapitalAim said, "Market is looking exhausted and may trade in a range of 300 points between 11,650 to 11,950, before union budget. Any move breaching these levels will accelerate the movement in that direction. Overall, market needs time to consolidate before taking any substantial move which can take place around Union budget."

Edited by Aseem Thapliyal