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Budget Fuels Market Rally

Union Budget has set the equity markets on fire. Both Sensex and Nifty touched their all-time high on March 4, 2005. However, it's time to be very selective and careful in stock picking

Union Budget has set the equity markets on fire. The satisfaction and confidence instilled by the Finance Minister among the investors, both foreign and domestic, created an euphoria that was seen across all the sectors throughout the week.

The 30-stock BSE Sensex breached its all-time high of 6,864.62 mark on Friday before ending up 279.76 points or 4.26 per cent at 6,849.48 mark. The broader 50-share NSE S&P CNX Nifty index also touched its all-time high of 2,152.75 points in the intra-day trades on Friday before settling at 2,148.15 mark, up 87.25 points or 4.23 per cent over its previous week's close.

Strong buying activity was witnessed in mid-cap segment also with BSE-100, BSE-200, BSE-500 posting smart gains over the week.

Sectoral indices like BSE Bankex gained over 6.7 per cent, while BSE-Auto went up by 5.1 per cent, outperforming the Sensex by more than one per cent.

Expectations of the banking sector reforms attracted a lot of buying in the frontline stocks like SBI, PNB, IOB, BOI, ICICI Bank and HDFC Bank. Besides, select auto counters like Bajaj, Hero Honda, Maruti and TVS clocked smart gains.

BSE FMCG index gained 4.7 per cent. Also in the same league were BSE-Oil & Gas and BSE Metals. Both went up by 4.4 per cent. In other sector specific indices, BSE-PSU grew by 3.5 per cent, while BSE-IT gained 2.5 per cent over the week.

Sectors like tea, sugar, tyre, infrastructure and construction were in the limelight on the back of the sops announces in the Budget. Certain stocks like Harrisons Malayalam, Warren Tea, Jayshree Tea, Parry Agro, Tata Tea and Goodricke Group in the tea sector and Dwarikesh Sugar, Oudh Sugar, Dhampur Sugar, Bajaj Hindustan, Bannari Amman Sugar, Upper Ganges Sugar and Balrampur Chini in the sugar sector were among the significant gainers.

Construction stocks like Nagarjuna Construction, Hindustan Construction, Gammon India, IVRCL Infrastructure, Simplex Concrete Piles, Patel Engineering, Madhucom Projects, Jaiprakash Associates and Unitech rose to their lifetime highs during the week on the back of positive announcements for the infrastructure sector in the Budget.

Though markets are exhibiting strength on the back of favourable budget and strong fundamentals, but as the markets are at their all time highs, it would take no time for a phase of profit booking to set in. Markets look in a mood of cautious optimism. One needs to follow a fundamental approach and be very selective and careful in stock picking at this juncture.