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Markets to remain choppy ahead of Union Budget

Markets to remain choppy ahead of Union Budget
The Sensex and the Nifty hit a 2013 low on Friday, as domestic institutions continued to press sales ahead of the Union Budget.

Foreign Institutional investors are the only set of investors that remain optimistic, as figures of Thursday and Friday indicated a net buying figure, though the amount of net purchases have reduced in comparison to the previous days.

Surprisingly lower inflation data failed to cheer the markets this week in a clear sign that fatigue has creaped into the markets.

The focus is now likely to shift to the Union Budget and all hopes of a sharp run-up prior to the Budget has died down significantly. The last set of results that have come in have been very poor with Dr Reddy's, State Bank of India and real estate major DLF disappointing this week.

With the Q3 2013 returns almost done the next trigger is the years biggest trigger - Union Budget 2013. Going into the budget markets have not risen, leaving hopes of a post budget rally, could be a big probability.

Already the Finance Minister has hinted that he plans to target a fiscal deficit of 4.8 per cent for 2013-2014 and is unlikely to provide major sops. However, it must be noted that this is the last budget ahead of General Elections next year and some form of populism could be expected. There are talks of the food Bill being pushed through which could increase the subsidy bill. This may not go down fell with the markets which could retreat if there are many populist measures.

Markets are clearly going to be choppy in the next 10 days. It's best to avoid the markets in the next few days and await the outcome of the Union Budget for further clarity.

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