Pre Market Report, February 29, 2016 | Stocks and Commodities

February 29, 2016
Time: 8.30 am

Pre Market Report:

1. Asian markets are generally positive though marginally after G20 meet.
2. But as usual China is a party spoiler, China has fallen more than 4%.
3. That has dragged Hong Kong markets also.
4. But one good thing is that other markets are not following China.
5. In fact the same thing has happened last week also, China fell 6.5% but none of the Asian markets reacted.
6. Due to the China's fall, SGX Nifty is trading cautiously around 7030.
7. So we are going to start with negative bias. (Tis is the view as of now).
8. We have talked enough about budget.
9. Let me give point by point expectation:

• Fiscal deficit should not be beyond 3.9%, otherwise International Rating Agencies will look to downgrade our rating. Markets will be disappointed.  A figure of 3.6 or 3.7 seems to be very good.
• Clarification regarding Retro Tax is welcome as still Income Tax is slapping tax notices in billions.
• Any change in long term capital gains tax is surely not welcome, even if there is any, it shoud be properly compensated by way of STT and Stamp Duty.
• Reduction in corporate tax by 2% will be a very positive. If it is 1% then it is just OK. No tax cut is surely very negative for markets.
• Recapitalisation figure of PSU Banks is very important. Any figure less than Rs 35,000 crore is not going to make markets happy.
• Any increase in direct or indirect tax like higher tax to tobacco products (ITC will fall), additional tax for super rich, tax on dividend income beyond a limit, etc will surely be very negative for the markets.
• High Divestment target will be a dampener, anyway they could not meet even 25% of the target last year.

So be ready for a roller coaster ride.

Nifty is expected to move between 6900 to 7250.

Breach of 6900 will create more panic and breach of 7250 will invite more short covering in the next few days.