Markets Have High Hopes From Jaitley's Budget 2017. Nifty At 9,000 Or A Big Correction?

The Union Budget 2017-18 will be presented by the Finance Minister Arun Jaitley on Wednesday and markets are hoping for some big announcements - from tax cuts for individuals and corporates to measures to support the demonetisation-hit economy. The Sensex and Nifty have rallied sharply ahead of the Budget. Spending on social sector is also likely to see an increase which analysts say would also be closely watched.

Market participants on the Dalal Street are divided as to where the market is headed post the Union Budget. There are hopes that Nifty may go above its all-time high of 9,000 and at the same time some warn of a correction.

Sajiv Dhawan of JV Capital Services says that feel good factor post demonetisation is still not there and Finance Minister Arun Jaitley will take this opportunity reignite the investor sentiment.

"I think the feel good factor is still not there across the board after demonetisation and this is an opportunity for the finance minister to reignite the sentiment by giving us some infrastructural push," he said. "He has to come out with some big reforms on tax cuts."

That does not mean hiking the exemption limit by Rs 50,000 or a token cut in corporate tax rate, he added. "But if he (Mr Jaitley) does anything substantial which is way beyond the common expectations, it will take the markets substantially higher and even above levels of 9,000 on Nifty. And if he does not, then there can be some profit-taking."

AK Prabhakar, head of research at IDBI Capital Markets & Securities, says markets have very high hopes from the upcoming Budget and it will be difficult for Mr Jaitley to fulfill them.  

If there is a slight disappointment, markets could see a big correction, he added. 

 "It is very difficult to predict the market movement as there are a lot of noises on the Street and fundamentally nothing has improved. Investors need to be stock specific instead of being market specific."

With events like upcoming state elections and Fed meeting (scheduled for January 31- February 1) lined up, there could be plenty of volatility on the Street and all-time highs could be a tough task for the market in the near term, Mr Prabhakar added. 

Whenever, expectations are so high, there are higher chances of a correction, he said. If Nifty corrects below 8,300, then the correction would get deeper, he added.