Union Budget 2013 to decide market course ahead: Experts

The stock market is likely to witness high volatility this week as investors are treading the cautious path ahead of the Union Budget 2013-14, experts say. Market players said the short-term momentum is clearly negative for the market as market participants are cautious ahead of the Union Budget and are not increasing their positions amid expiry of derivatives next Thursday.

The Budget Session of Parliament that began on February 21 would conclude on May 10, 2013.

The Railway Budget for this fiscal would be presented to the Lok Sabha on February 26 and the economic survey would be laid in Parliament on February 27, 2013, followed by the Union Budget on February 28.

"The coming week is likely to trade with high volatility on account of February month derivative expiry and the Union Budget. Thus, we advise traders to trade with strict stop losses," Angel Broking said in a research report.

Volatility is likely to remain high as investors are anxious to see what policies are in the offing. Implementation of Goods and Services Tax and disinvestment target for the ensuing fiscal are some of the key things among many that markets are eyeing on.

"The broad theme in the budget would continue to be fiscal prudence and effective implementation of government flagship programmes (Sarva Shiksha Abhiyan, JNNURM). The Finance Minister may touch upon issues related to reforms in pension, insurance and GST," Kotak Securities Vice President - Private Client Group Research Sanjeev Zarbade said.

"Some of the risks for the markets would be rise in crude prices and slowdown in foreign fund flows," Zarbade added.

Sector-wise auto and cement stocks are likely to be in focus as companies from these two sector would unveil their monthly sales volume data for February from March 1, 2013. With the interest rates drifting lower, market players are betting on interest sensitive sectors like the financials sector - banks and the non-banking finance companies.

The Sensex ended at 19,325, down 317 points on Friday and for the week, the 30-share index closed 1 per cent down.

As regard to budget wishlist for the capital markets, traders said a cut in Security Transaction tax (STT) as delivery volumes have nearly dropped to 3 per cent and some simplification to the Rajiv Gandhi Equity Saving Scheme which was announced last year.