The week ahead: all eyes on budget 2017.

The Indian stock market benchmarks – the Sensex and the Nifty – closed at 3.1% and 3.5% higher at 27,882 and 8641 respectively signalling optimism that the finance minister will deliver a good budget on February 1. The entire market movement this week is likely to be influenced by this single event. This budget also happens to be the first one after demonetization and hence, to compensate the damage caused, big bang reforms are expected by the market participants. The sharp close last week was the result of pre-budget buying. The rally was led by banking stocks.

Going ahead, apart from the budget there are a lot of other events lined up – Q3 results from many companies, announcement of US home sales data, Outcome of bank of japan meeting, the results of FOMC meeting and the BOE meeting. So far the global cues are positive with the Dow and Nikkei closing higher and the foreign portfolio investors showing high interest in Indian markets.

Both the benchmark indices are hovering above the 50 day and 200 day moving averages and hence, we can assume that it a little in the overbought zone given the present market scenario. Profit booking is likely to happen above 8700 and 28,000 – which are also key resistances. Alternatively, if the budget doesn’t meet the expectations, there could be a correction towards 8400 / 27000 levels. So investors need to be prepared for the swing. For the week ahead , we expect the markets to trade in a range of 27250-28250 for the Sensex and 8400-8800 for the Nifty.

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