Wait with bated breath

Mumbai, March 2: The stock markets this week will be swayed more by the trends in the global markets than by the proposals in the budget.

According to Amitabh Chakraborty, president, equity, Religare Enterprises, “The budget has not done any damage to the markets, which will have to look for fundamentals now to move ahead.

“As the US markets ended in the red on Friday, the Asian markets are expected to be badly hit tomorrow, and this include India,” he said.

On Friday, the Dow Jones industrial average index lost 2.51 per cent, the Nasdaq, 2.58 per cent, and the S&P 500, 2.71 per cent, as fears of a recession took deeper roots with the disappointing results of insurance giant AIG and computer maker Dell. While AIG announced a $5.29 billion quarterly loss, Dell reported a 6 per cent decline in its quarterly profit.

Hitesh Agrawal, head of research, Angel Stock Broking said, “The valuations look to be decent at the moment. Overall, we do not see the market to record any drastic movement in the near future.”

He said investors were expected to hold on to their positions until there was a clarity on the mode of financing the Rs 60,000-crore loan waiver to farmers.

“There is an uncertainty about the proposed waiver in the budget. The amount accounts for about 1.5 per cent of India’s gross domestic product. We wonder how this money will be garnered by the government without harming the fiscal deficit.”

In the coming weeks, Chakraborty said, the proposals on the security transaction tax and the capital gains tax would impact the profitability of the traders by 30-40 per cent, leading to a fall in the volumes of trade.

“Even the fourth quarter results are not expected to be so good. As the quarterly results season ends, we may expect some stability in the market,” he said.

The absence of any proposals on company taxes and surcharge in the budget will make the Indian markets move more to global cues, the analyst said.

On Friday, the proposed excise duty cut pushed auto stocks up 1.2 per cent. Banking stocks, which initially fell because of the loan waiver, later recouped and ended with marginal gains.