Now that the two big events are behind us the market is likely to consolidate. The non-populist Budget focused on fiscal consolidation is a big positive. The big allocation for rural housing will benefit all construction-related segments like cement, steel, paints etc. Another important budget takeaway is the sharp decline in bond yields consequent to the net market borrowing kept low at Rs 11.75 trillion. This is beneficial for banks.
Global cues are better since the mother market US is appreciating the favourable trends in the US economy after the brief disappointment with the cautious Fed message. It is evident that the US is heading for a soft landing and rate cuts are coming. Correction in the dollar index to 103 and the US 10-year falling to 3.88% may restrain the FIIs from selling.
The near-term risk in the market is the high valuation which can trigger corrections on some negative news. Expect high volatility in the near-term.
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