Finance minister Pranab Mukherjee with ministers of state Shrinarain Meena (left) and S.S. Palanimanickam (right) in New Delhi on Sunday. Picture by Ramakant Kushwaha

Mumbai, July 5: Investors are eager to assess the impact of the budget incentives, if any, on a market where shares are already ruling at high levels.

Finance minister Pranab Mukherjee will present the budget tomorrow at 11am.

Stocks have been on a roll since mid-May, and it remains to be seen whether they will be able to retain the momentum for long.

Analysts said domestic equities already looked expensive at a time when the global economy was not out of the woods.

According to a report from Motilal Oswal Securities, the sensex has delivered a 52 per cent return in the first quarter of this fiscal – the best three months since March 1992. The index has moved up nearly 80 per cent from the lows of March 2009.

The results of the general election along with strong global cues and signs of economic recovery have triggered the rally.

On Friday, the BSE sensex rose 1.74 per cent, or 254.56 points, to 14913.05 on expectations of Mukherjee delivering a growth-oriented and investor-friendly budget.

Motilal Oswal, chairman and managing director of Motilal Oswal Financial Services Ltd, told The Telegraph that while the sensex had risen nearly 80 per cent from its lows, most of the upside had already been captured by the markets.

“If the budget is not growth-oriented, it will disappoint the market,’’ he said.

Oswal, who expects the sensex to move in a range of 13000-18000 after the budget, said the importance of a growth-oriented statement was crucial as the economy was facing many challenges.

He was particularly concerned about the performance of firms, which brokerages see will improve only from the next fiscal, and the slow progress of rains. “Therefore it is imperative that the government takes all steps to boost growth on all fronts.”

Oswal has high expectations from Mukherjee. However, an investor survey conducted by ICICI Securities on budget expectations showed that the outlook was “fairly muted’’.

The brokerage said that this implied that the probability of the budget by itself being a strong negative trigger for markets was low.

“We expect markets to be range-bound from current levels in the near term, with downside risk,” it said.

Investors expect Mukherjee to focus on infrastructure and some financial reforms.

He is also expected to announce some divestment measures and moves on 3G auction.

However, the securities transaction tax (STT) is not a major worry for investors.

“The STT is not a major concern among investors. If the STT is done away with, it will certainly be very positive. But the indices are unlikely to fall if it stays,” an analyst said.