What is your view on the stock markets for Friday 28th January and what do you expect for markets from the Union Budget on 01-Feb?

On Thursday, the day of F&O expiry, the Nifty and Sensex staged a smart recovery in the second half from lower levels. In the morning there was a sharp reaction to the US Fed policy statement, that was extremely hawkish. However, Nifty still closed 168 points lower while the Sensex closed with losses of 581 points at the close on Thursday.

Nifty closed with an advance decline ratio of 15:35 and a slightly lower VIX at 21.07 levels. Axis Bank, SBI and Maruti were among the big gainers while IT stocks ended on the losing side. The Friday trading is just 2 days ahead of the Union Budget and also the last day of the week so traders may be cautious and you see some unwinding on Friday.

Foreign investors were net sellers of Rs.6,267 crore while domestic funds and LIC bought stocks worth Rs.2,881 crore on Thursday. Only the NASDAQ closed with losses of 189 points while other markets like Dow was flat and Europe was in the positive. The SGX Nifty is down about 10 bps and not giving clear direction in early trades on Friday. Rather be cautious.

Not much is expected of this budget, although there is a possibility that the government may dole out tax sops to individuals. That could be some way of compensating the masses for all the pain of the last 2 years. However, it is not clear if the government would want to attempt any such thing when revenues are still tight and expenses substantial.