The markets will be in 'wait and see' mode before the budget: analysts

NEW DELHI: The Union budget 2019-20, which will be presented this week, will be the decisive factor for equity markets continue and investors are likely to be in a wait and watch mode before the mega event, analysts said.

However, markets are likely witnessing some uptick following the trade truce announced by the US and China at the G-20 summit over the weekend, they added.

In addition, the participants will also follow the progress of the monsoon, rupee and crude oil movements.

"The election outcome is more of an emotional event while the Budget has more rational reactions in the market. The lackluster vibe before the Budget can be the calm before the storm and markets are expected to remain muted and sideways but there is likelihood of downward pressure," said Jimeet Modi, founder and CEO, SAMCO Securities and StockNote

The automotive sector is at the inflection point. Depending on how the government provides support, these actions will either reactivate or fall off the cliff, he added.

Mustafa Nadeem, CEO, Epic Research, said, "We have a very important event, Budget, that is about to shape the future trend of equity markets . There will be possibly an increase in volatility and may further hurt any directional trader for the very short term. Since the importance of the event is high and is able to produce large trend, we believe it is better to be on the sideline and see the outcome."

Amar Ambani, president and head of research, Yes Securities, said the Budget will be monitored for signs on the government's fiscal road map.

We expect the government to continue with reasonable levels of deficit on the fiscal front, as indicated in its previous Budget. The tranquility of FM to follow the path of fiscal prudence in the coming years will be equally important. The next on the agenda would be to be the much needed boost for economic growth, he said.

According to Vinod Nair, head of research at Geojit Financial Services Ltd, the automotive and metallurgical sectors are likely to be subdued due to the low demand and benign prices of raw materials. The government seems to have a frantic task ahead to support growth and maintain fiscal prudence that will be closely watched by the market.