Markets may decline on Budget Day

The Nifty closed almost flat before the Union Budget. It traded in a 200 points range and closed at 17662.15 with 13.20 points or 0.07 per cent gain. Only Nifty IT and Pharma indices declined by 1.18 per cent and 0.99 per cent, respectively. The PSU Bank index is the top gainer with 4.28 per cent, followed by the Media index with 2.37 per cent. The Nifty Auto and Metal indices are up by 1.89 per cent and 1.52 per cent. The other indices advanced by 0.4 per cent to 1.5 per cent. The market breadth is positive as 1513 advances and 420 declines. About 87 stocks hit a new 52-week high, and 113 stocks traded in the upper circuit. Adani Enterprises, Reliance, and ICICI Bank were the top trading counters today.

After wavering moves, the Nifty index closed with a tiny gain and closed below the opening high. As the opening level is almost a day's high, it signifies bearishness. The sentiments were positive in the end, as the Adani Enterprises FPO fully subscribed, and the market escaped from systemic risks. Technically, there is no change in trend. As we stated, yesterday's low was protected. As the Budget is scheduled, the market may witness at least 3 per cent volatility. In 2022, the Nifty gained by 4.74 per cent on Budget day was the highest in the last 20 years. In 2009, the Nifty declined by 5.84 per cent, which is the worst decline in 20 years on budget day. Outlast 17 years, Only three times the market gained post-budget. As soon as the event is over, the market generally declines. The Implied Volatility is higher due to the event risk. At the money option, premiums were very expensive, and they may collapse once the event is over. On the budget day, technicals will not work. Risk management is key. Try to trade with less position size. Watch 17800 on the upside and 17400 on the downside.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)