Markets to see Budget overhang this week; IIP, inflation data eyed: Analysts

New Delhi: The overhang of the Union Budget will persist in the equity market this week, while investors may also shift their focus to macroeconomic data and global cues, analysts said.

Benchmark indices had snapped their four-session rising streak and closed with sharp losses on Friday after the Budget proposal to raise public shareholding threshold fanned fears of oversupply of new papers in an already overbought market.

In her Budget speech, Finance Minister Nirmala Sitharaman said it was the right time to consider increasing minimum public shareholding from 25 per cent to 35 per cent.

As many as 1,174 listed firms, including giants like TCS, Wipro and DMart, will have to off-load promoter stakes worth about Rs 3.87 lakh crore, a Centrum Broking report said.

"With the most awaited event finally over, its overhang will continue this week as the offshoots of certain implementations will be visible in the capital markets," said Jimeet Modi, Founder and CEO, SAMCO Securities & StockNote.

According to Jayant Manglik, President - Retail Distribution, Religare Broking, "We might see the overhang of the Union budget on Monday as well. The sharp plunge in the index indicates more pain ahead and decline below 11,800 in Nifty would trigger further fall."

Analysts said that now that the much-awaited Budget is over, focus will shift to first quarter earnings starting mid-July.

Apart from this, industrial production and inflation data, movement of rupee, crude oil and investment trend by overseas investors would be driving the markets this week.

"Fed Chairman Jerome Powell's upcoming semi annual testimony should keep rupee tentative against the US dollar this week," said Anand James, Chief Market Strategist, Geojit Financial Services.

Vishal Kampani, Managing Director, JM Financial Group, said, "The first budget of the NDA 2.0 has clearly demonstrated the intent towards the ambitious target of becoming a USD 5-trillion economy, with some concrete and decisive proposals."

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, "The proposal to raise public stake in listed companies is desirable but will face practical constraints in implementation in the case of some large-cap companies."

The Budget also proposed easing KYC norms for foreign portfolio investors and allowing the listing of social enterprises and voluntary organisations to enhance participation in the capital markets.

It also gave relief in levy of Securities Transaction Tax (STT) by restricting it only to the difference between settlement and strike price in case of exercise of options.

In order to discourage the practice of avoiding Dividend Distribution Tax (DDT) through buy back of shares by listed companies, the Budget said listed companies shall also be liable to pay additional tax at 20 per cent in case of buy back of share, as is the case currently for unlisted companies.

Over the last week, the BSE Sensex gained Rs 118.75 points to close at 39,513.39 on Friday.