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Budget Expectations Help Bulls

Budget Expectations Help Bulls

It has been a week of ups and downs, not only in India but even in the global markets. The new bank bailout plan and the passing of the stimulus bill in the U.S. Senate were not received too well by Wall Street. But later in the week, Wall Street recovered.

Back home, the Sensex closed higher on Monday (9583) and Tuesday (9647) but slumped on Wednesday (9618) and Thursday (9465). Friday the 13th proved to be lucky for the bulls and the market ended with smart gains (9634).

Weak IIP data spooked the market on Thursday. But it was expectations of the interim General Budget – stimulus measures and sector sops - that pulled the market up on Friday.

Realty stocks surged on the expectations that the Budget may announce tax sops to boost the housing sector. The top gainers this week were Anant Raj Industries, DLF, Akruti City, Ansal Properties and HDIL. The prominent losers were Parsvnath Developers and Peninsula Land.

Inflation fell sharply in the last week of January after the government cut retail price of fuels to match a sharp fall in crude oil prices. Weak IIP data and falling inflation has set the platform for another spate of rate cuts. This helped banking stocks rally at the end of the week. The top gainer in the banking space was Axis Bank. The stock surged as the scrip would be included in the Nifty, replacing Zee Entertainment. SBI, Andhra Bank, ICICI Bank and Federal Bank were the top gainers while Union Bank of India, Bank of Baroda, Bank of India, Yes Bank and Canara Bank were the top losers this week.
Auto stocks gained on hopes the government may announce some tax sops to the automobile sector. The BSE Auto Index closed higher and the top gainers in the auto space were M&M, Punjab Tractors, Maruti, Hero Honda and Bajaj Auto. The top loser was Eicher Motors.
Engineering and power sector-related shares surged on hopes the government would step up spending on infrastructure projects.
The interim Railway Budget was announced this week and in the week ahead, it will be the interim General Budget that will set the tone.