 "Markets keep an eye on Budget")
For the week ended February 26, the S&P BSE Sensex lost 555 points, or 2.3 per cent, to end at 23,154, while the National Stock Exchange's Nifty dropped 181 points, or 2.5 per cent, to close at 7,030.
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Investors remained cautious throughout the week, amid key events such as expiry of February futures and options contracts, the Railway Budget, and the Economic Survey. “With all eyes glued onto the Union Budget 2016-17, market participants will react strongly to it on Monday, as most are hoping for some concrete steps from the government to boost investor sentiment,” said Jayant Manglik, president, retail distribution, Religare Securities.
“While a fiscal deficit slippage from 3.5 per cent projected for FY17 seems to have been factored into the bond markets, how much the deviation works out to be will influence markets sentiments on Monday,” said Ravi Shenoy, AVP-Midcaps Research, Motilal Oswal Securities. He further said, "Next month will be the 13th month since the start of the correction and we could see some revival in March."
After a complete washout of monsoon and winter sessions of the Parliament, the Budget session of the Parliament commenced this week amid political controversies. The fate of the Goods and Services Tax (GST) Bill along with other critical Bills still remain in a limbo, with no consensus in the Rajya Sabha.
Amid a stormy session Railway Minister Suresh Prabhu unveiled the Railway Budget, which failed to cheer Dalal Street. The Budget was a crowd pleaser with no increases in freight or passenger fares, however, it banks heavy on higher investments, which could be impacted by the Seventh Pay Commission and a slowdown in the economy. Prabhu has proposed a plan size of Rs 1.21 lakh crore for the Railways for FY17.
Further, the Economic Survey 2016 was also tabled in the Parliament by the Finance Minister Arun Jaitley. The survey prepared by Chief Economic Advisor Arvind Subramanian stated that global headwinds are impacting the economy and that the growth of would remain between seven per cent and 7.5 per cent in FY17. The Survey, however, points out that the Indian economy has the potential to grow at eight per cent or higher in the next couple of years.The Survey lifted the sentiment of the Street and the markets rose nearly one per cent on Friday.
Key stocks
Sectorally, BSE Bankex index plunged nearly four per cent on caution ahead of the Union Budget. ICICI Bank was hit the most, diving nearly seven per cent, followed by State Bank of India that dropped five per cent.
After the announcement of Rail Budget, wagon makers derailed for the week. Kalindee Rail Nirman (Engineers) and Titagarh Wagons, Texmaco Rail nosedived 31 per cent, 33 per cent and 31 per cent, respectively.
Coal India shed 0.38 per cent as the railway minister didn't increase the freight charges.
The week ahead
The next immediate trigger for the markets is the Union Budget 2016-17, which will be announced by Finance Minister Arun Jaitley on Monday, February 29.
According to analysts, Jaitley could delay the medium-term fiscal consolidation road map because of the additional burden he has to face due to the Seventh Pay Commission, One Rank One Pension (OROP), maintaining capital spending and boosting allocation to rural and agriculture schemes after two consecutive years of poor rainfall.
The Budget's focus may also be on various sectors such as infrastructure, defence, and also on the flagship programmes like Make in India, Digital India, Skill India, and Startup India.
Along with the Budget, next week will also see automakers reveal their February sales numbers. Further, global trend, movement in oil and currency, macro-economic data will also set the tone for markets.