Market pins hopes on Interim Budget

The market is likely to remain upbeat at least for the first half of the coming week as the government is expected to announce a slew of measures in its interim budget to woo voters ahead of the general election due by May. However, a huge fiscal deficit could hold the government back from announcing any big-bang spending plans. Previous governments have refrained from changing the rates of direct taxes -- such as personal income and corporate taxes -- in interim budgets. But speculation is rife that this may change after Home Minister P Chidambaram said earlier this month that the budget may include some changes in the tax structure and further stimulus measures. “After the upmove seen on Friday, it looks like the market will continue the good work going into next week. However, this pre-budget rally may remain only till Tuesday. In fact, sector specific action -- especially in realty and auto & auto ancillaries -- is more likely next week as the government is expected to unveil certain stimulus packages to revive demand," said independent analyst Dilip Davada. He expects the 30-share Sensex to touch the 10,000 mark on Budget day. According to analysts, the Indian economy could do with another cut in interest rates as growth remains weak. Ahead of the interim budget on Monday, the government said it would continue to stimulate demand in an economy expected to grow at 7.1 percent in the 2008/09 fiscal year ending March, its slowest pace in six years. “The market has already factored in everything that the government may offer by way of stimulus measures. Also, the government has already given various sops by way of excise duty cut and relaxation of FDI norms, which the market has digested. Now, maybe an interest rate cut could help boost sentiment," said Anita Gandhi, head-institutional business at Arihant Capital.