Likely to remain a liquidity driven market

The Union Budget for 2012-13 has turned out to be nearly a non-event as far as equity markets are concerned. The policy statement does not have any significant provision to bring back buoyancy in the Economy. Moreover it certainly falls short of bringing back confidence amongst investors on progress of reform or any progressive policy action by the government. No mention of any timeline for implementation of GST as well as DTC are amongst the major disappointments from the policy document. On the positive side though there are no populist announcements as was widely feared by the markets after the adverse results from the recent assembly elections. There are no major increases in subsidies and no fresh announcement of any scheme which would drain government resources. Hence the projected fiscal deficit of 5.2% is likely to be achieved this time.

The focus of the budget has been to revive agriculture growth. Sectors and stocks dealing with Rural demand may benefit out of this direction of the policy. Also Power is one sector where lots of benefits have been doled out. Hence beaten down companies in this sector may finally see some buying interest comeback.

On the whole it is likely to remain a liquidity driven market with no major improvement in fundamentals in the near future. Stock specific interest likely to dominate proceedings