Finance Minister presents non-eventful budget - IIFL

The Finance Minister presented a rather non-eventful budget given that fiscal deficit targets were vocally communicated earlier. Market was disappointed with evident populism in the budget through higher social scheme allocations despite limited headroom. The math for achieving 4.8% fiscal deficit in FY14 looks vulnerable to slippage. Further, it was also not a budget which can really revive the sagging economy. Absence of key reform measures such as GST implementation was also dejecting.

The fall in the stock market post Budget can be partly blamed on the market's own irrational expectation from Mr. Chidambaram. The market was also spooked off on confusion regarding treatment of Tax Residency Certificate (TRC) as a necessary but not enough proof to benefit from Double Tax Avoidance Agreement. Later, government clarified on TRC issue, however it failed to cheer the market. Quarterly GDP of 4.5%, released post market hours on Thursday also contributed to some nervousness. Markets have corrected ~6% over the past month on back of deteriorating domestic macro scenario. A global risk-off may further accentuate selling pressure in near term. However, with indices at oversold levels, a lot of beaten down large-caps may attract investors.

Markets for the week crashed heavily on disappointment from union budget and closed well below 5800. The only ray of hope aroused on Friday after Nifty rebounded back above 200 WtMA and held Nov low of 5550. We expect Nifty to attempt levels of 5800 which turns out to be the make or break levels and move past same would confirm trend reversal from two months of downtrend. Till then we expect Nifty to remain in range of 5650-5800 with expectation of broad base recovery in mid caps and small cap stocks.

Nifty seems to has taken support near 5700. The VWAP for Nifty is at 5820 and Bank nifty is at 11880. The VIX is likely to trade in 13.5-17.6 in short term. Bank Nifty is likely to trade in a range of around 11300-11800.Highest OI is in 5700 put, while call is at 6000. Huge call writing is seen at 5800, while some put writing was seen at 5700 implies Nifty is likely to be in this range of 5650-5850 in short term.

Source : Equity Bulls

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