The last week's budget proposals of 10 per cent long-term capital gains (LTCG) tax on equities and overshooting of fiscal deficit target quashed investor optimism, leading to a massive rout on bourses.
"Higher than expected fiscal deficit target for FY19, rising inflation and yield may push the RBI to be more hawkish on interest rate in the upcoming monetary policy. Introduction of LTCG will have a short-term impact...but history points out that the budget-led volatility may not extend for long and focus will change to earnings and other macro developments," said Vinod Nair, Head of Research, Geojit Financial Services.
"Markets were trading at rich valuations for the last couple of months and thus have corrected post Budget. Market correction is likely to reduce the excesses that were happening where risk aversion was difficult to find," said Arun Thukral, MD & CEO, Axis Securities.
Among major earnings this week are from Tata Motors, Hero MotoCorp, Lupin, PNB, Cipla, Andhra Bank, BHEL and SAIL.
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"Investors were disappointed with LTCG coming in over and above STT. However, Budget is aimed at spurring demand from rural India and masses going forward to take care of India growth story. Execution and implementation will be the key ahead," said Anita Gandhi, Whole Time Director, Arihant Capital Markets.
Over the last week, the Sensex declined 983.69 points, or 2.72 per cent, while the Nifty fell 309.05 points, or 2.79 per cent.
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