Budget overhang, RBI policy, Q3 earnings to decide market course this week: Analysts

Mumbai: Budget overhang is likely to dominate trading pattern in the equity market this week, while participants will also keenly watch other developments like RBI policy, release of key macro data and quarterly earnings, according to analysts.

Giving a thumbs down to the Budget, the market benchmark Sensex logged its biggest single-day plunge in more than a decade on Saturday after Budget presentation.

Analysts said investors were disappointed as the Budget failed to live up to market expectations of growth-boosting measures and fiscal discipline.

"The lack of major growth boosting measures in itself is negative for the equity market. The new income tax regime would also be negative for tax exempt equity savings schemes," Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares & Stock Brokers said.

Finance Minister Nirmala Sitharaman on Saturday slashed income tax for individuals, abolished dividend tax for companies and announced some measures for agriculture and infrastructure sectors.

"Recasting of dividend taxation norms also seem to be on the balance negative for most domestic equity investors. Overall, the budget seems to be negative for the equity market," Hajra said.

Further, income tax slab rejigs also stoked fears of declining inflows in tax-saving investment avenues.

"Income tax changes announced has come with riders of giving up exemptions which disappointed the markets, with insurance sector being impacted the most," Geojit Financial Services Ltd Head of Research Vinod Nair said.

He further said that the flexibility shown in FY20 fiscal deficit is positive, but extending the same to FY21 would have provided more confidence to the market.

"Since the event is over, the focus will now turn to ongoing Q3 announcements and how global events unfolds in the near term," Nair added.

The Reserve Bank will on Thursday announce its first bi-monthly monetary policy post-Budget.

PMI data for manufacturing and services sector are also due this week.

On corporate earnings front, Bharti Airtel, Lupin, Sun Pharma and Mahindra & Mahindra are among the major companies scheduled to declare their October-December results this week.

Concerns related to coronavirus may also dictate sentiments in the global as well as domestic market.

On Budget day, the BSE Sensex ended 987.96 points, or 2.43 per cent lower, at 39,735.53.

Over the last week, it plummeted 1,877.66 points to close below the key 40,000-mark.