Monsoon And Quarterly Results - New Triggers To Look At

It was expected to be a major event for the Indian equities as after a long gap of ten years a non UPA government was presenting a Union Budget. Rather the Aam Aadmi has voted for change and expecting something different from the Government. And if we go by the way the Budget was presented by the Finance Minister, it was really different. Different in the sense we mean, first time in the history of Independent India a five minute break was taken. And not to forget that he read out the second phase of budget session all the way sitting. 

Jokes apart it was surely a different as it focused on one factor that one should not spend more than his means. Considering the same the FM has not made any big bang announcement in terms of projects and nay social schemes. However it was a well balancing act where he focused on fiscal prudence and getting Indian economy back on higher growth trajectory.

His focus on fiscal prudence is clearly seen from the fact that, fiscal deficit for FY15 will be contained at 4.1%, would be then reduced to 3.6% in FY16 and eventually to 3% in FY17. Further the economic survey has put the expected GDP Growth at 54.-5.9 per cent indicating towards improvement on growth front.

Regarding the direct taxes, the finance minister has managed to provide solace to middle class by putting in more cash in their pockets. The income Tax exemption limit is been increased by Rs 50000 to Rs 2.5 lakh. In addition the deduction on interest paid on home loans is been increased to Rs 2 lakh from the earlier levels of Rs 1.5 lakh. Realty players also got another advantage as Real Estate Investment Trust (REITs) got a pass through status.

All in all, the Budget did not give any shocks to the market and hence after remaining choppy during the Budget speech, indices soared to the new high levels. However it was the bond default fears in European Markets that pulled down the indices towards the fag end of sessions. As a result, while Sensex closed at 25372 (Down 73 points) the Nifty closed at7567 (Down 17 points).

Today there are now different triggers for the market. First and the foremost would be announcement of Infosys June quarter results.  And even the June IIP would be announced in the evening after market hours. While we expect the results of Infosys to be better than the street estimates, The IIP is also likely to get some boost from improved automobile sales figures.

We are of the opinion that, as the Budget is now over markets are likely to focus on other factors like monsoon, global markets and most importantly the June quarterly results. This would provide a new direction to the markets.

While this is the story on domestic front, Stocks from US to Europe slid as increasing concern over signs of financial stress in Portugal sent investors seeking safety in Treasuries, the yen and gold. The Standard & Poor’s 500 Index fell 0.4 percent, paring an earlier drop of as much as 1 percent. The Russell 2000 Index of smaller companies declined 1 percent. The Stoxx Europe 600 Index tumbled 1.1 percent to the lowest since May. The Dow closed in red with a loss of 0.42%.

Taking the cues from US markets, Asian Indices are trading on a mixed note. Nikkei is trading in red with a loss of 0.26%. However Hang Seng is up 0.18% and Shanghai Composite is up 0.46%. SGX Nifty is trading in positive zone with gains of 16 points to trade at 7560.

We expect the Indian equities to open on a positive note today and then remain range bound. However, one should understand that, every dip in the market should be taken as a buying opportunity.