After initial range-bound movement, expect volatility as Union Budget unwinds

Indian equity benchmarks are expected to make a muted start on Thursday, and until the Union Budget proposals start rolling in, we expect range-bound movement and lots of volatility would be seen with the progress of the session. The SGX Nifty indicates that the Nifty may open at 11,012 with a loss of 54 points. Today, Finance Minister Arun Jaitely will present the Union Budget, which will be NDA government's last full budget before the Lok Sabha 2019 elections. The big question is whether the FM would maintain the reformist fervour or he would prefer to add a tinge of populism to the budget. The Lok Sabha election in 2019 and the some crucial state elections coming up this year could see the budget tilting more towards populism.  

The core sector growth for the month of December turned in at 4% as against 7.4% in the previous month.  

Ashok Leyland, Bajaj Finserv, Bajaj Finance, CCL, Ceat, Cera, Cummins, MRF, Redingtion, Titan and Zee Media are some of the key companies to announce their results today.  

Equity market in Asia are lacking direction on Wednesday, though Japan's Nikkei 225 has surged 1.26% helped by banks rallying on strong financial results and a lower yen. Hong Kong’s benchmark Hang Seng has added 0.12%, while China’s Shanghai Composite has lost 0.29%.  

Back home, markets edged lower for a second straight session on Wednesday as market participants awaited cues from Thursday’s budget. Nifty and BSE Sensex closed the day at 11,028 and 35,965, down by 0.20% and 0.19%, respectively. The broader indices continued to disappoint as they underperformed the benchmark indices as Nifty Mid-cap and Small-cap dropped 1.50% and 1.19%, respectively.     

In the US, benchmarks eked out modest gains on Wednesday, rebounding from a strong two-day sell-off. As expected, the Federal Reserve left interest rates unchanged. The central bank reiterated that it expects economic conditions to evolve in a manner that will warrant further gradual increase. This was read as an indication that a rate hike may be on the cards in March. The Dow Jones rose 73 points to close at 26,149, the Nasdaq added 9 points to finish at 7,412 and the S&P 500 crept up 1 point to settle at 2,824.    

A majority of the European indices ended Wednesday’s session with losses. After a positive start, the markets turned volatile and pared their gains. Germany’s DAX slipped 0.06% and FTSE 100 of the UK declined 0.72%. while CAC 40 of France added 0.15%.