Economic Survey fails to pop fireworks; all eyes on Budget

Economic Survey failed to lift D-Street to a breakout as indices witnessed selling pressure at higher levels a day ahead of the Budget, but held on to crucial support, which is a positive sign. The market witnessed gains for the fourth straight day.

Nifty closed just a shade below 11,950 while Sensex rose above 39,900 on July 4. The final tally on D-Street – Sensex rose 68 points to 39,908 while Nifty closed 30 points higher at 11,946.

The broader market underperformed as the S&P BSE Midcap index fell 0.19 percent while the S&P BSE Smallcap index rose marginally by 0.12 percent. Most of the sectoral indices traded in line with the benchmark index and failed to show any major directional move.

After a volatile session, all eyes are on Budget 2019 on July 5. The index is likely to face stiff resistance around 12,000-12,100 but a pro-growth Budget could lead to a breakout on an intraday basis. Investors are advised to hedge their positions and use dips to buy as strong support is seen at 11,800.

“Markets will react to the Union Budget tomorrow and that could result in a volatile move across the board. Since Nifty is trading closer to its crucial hurdle of 12,000, we suggest being extra cautious in long trades,” Jayant Manglik, President – Retail Distribution, Religare Broking Ltd told Moneycontrol.

“Also, we advise keeping leveraged positions hedged before the event. In case of decline, 11,800 would act as a strong cushion,” he said.

The market expects a roadmap for various sectors to get reflected in the Budget. Sectors like agriculture, rural market, banks, infrastructure, and water resources are likely to be the focus areas.

“The Economic Survey 2019 outlines vision to achieve $ 5 trillion economy by 2025, emphasis on increasing the investments rate, which will aid growth in demand, jobs, exports and productivity and thrust upon increasing the Investment as a percentage of GDP to more than 30 percent,” Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas told Moneycontrol.

“The need of the hour is to bring further reforms in ease of doing business by reducing policy uncertainties. The Street would watch out for actual government policy and reforms programs in the Budget 2019, to provide further direction to the market sentiments,” he said.

Top Nifty gainers include UPL, Bharti Airtel, Indiabulls Housing Finance, and UltraTech Cements. Whereas, Titan Company, Tata Steel, and Yes Bank lost 2-3 percent.

Stocks in news:

Shares of Kolte-Patil Developers rose 6 percent after the company signed three new projects in Pune.

Share price of Cox & Kings were locked at 5 percent lower circuit as company defaulted on payment of interest on NCD due on June 30.

Titan Company shares declined 3 percent after foreign brokerage house Morgan Stanley downgraded the stock to the equal-weight from overweight.

Mcleod Russel India shares fell 5 percent after ICRA downgraded credit rating of borrowings worth Rs 1,031.09 crore to default.

Shares of Tata Motors gained nearly 2 percent after luxury carmaker JLR showed improvement in UK sales.

Global update:

European markets were trading subdued on the back of weaker-than-expected US economic data.

Asian markets ended mixed amid weak US economic data that raised expectations among investors that the US Federal Reserve could cut interest rates at its upcoming meeting.

Nikkei rose 0.3 percent at 21,702.45, Kospi rose 0.61 percent at 2,108.73, while Shanghai Composite shed 0.33 percent at 3,005.2.

India Union Budget 2019: What does Finance Minister Nirmala Sitharaman have up her sleeve? Click here for top and latest Budget news, views and analyses.