With Nifty being back to where it was at the end of December 2023, investors and traders are looking for cues from the forthcoming Union Budget, which would be an interim one in a pre-election year. Additional volatility on Budget day would come in from the outcome of the US Fed meeting on Wednesday night as well as the weekly derivative expiry of Nifty.

“The domestic market will be focused on the interim Budget, particularly on any proposals regarding taxation of investments relating to the capital market. The fiscal deficit and its glide path also are important since growth with stability is hugely important from the market perspective. Stock-specific movements are likely in response to sectoral allocations in the Budget,” said Dr V K Vijayakumar, chief investment strategist, Geojit Financial Services.

From a Nifty trader’s perspective, while the higher timeframe charts continue to look attractive, the cycle of higher-highs – higher-lows is certainly visible on the daily time frame with in-between time-wise correction phases, analysts maintained.

“If you are trading intraday or taking positions in the derivatives market, you should consider stopping losses at reasonable distances such that they provide sufficient protection, while at the same time not so close that they are triggered by the exaggerated intraday movements,” said Puneet Sharma, CEO of Whitespace Alpha.

Nifty Trading Strategy on Budget Day
Nifty has been stuck within the range of 21,100 to 21,800 for the past nine trading sessions. “21,200-21,000 zone is to be treated as immediate support and a slide below could disrupt the ongoing move for another 500-600 odd points of correction. If this happens, investors/traders are advised to start nibbling into quality propositions,” AngelOne said.On the flip side, the 22,000-mark is likely to be seen as an intermediate hurdle before Nifty reclaims its high of 22,125 and continues its northward journey into uncharted territory in near future.After Tuesday’s dark cloud cover pattern, a piercing line candle was noticed on the daily chart on Wednesday.Nifty Bank Trading Strategy on Budget Day
Nifty Bank, which ended January 4.8% weaker, now looks positioned at an attractive zone very close to its 200-DMA and any positive development for the sector in the Budget could provide impetus for further impulsive move higher. However, analysts say it is too early to consider 200-DMA as a short-term bottom for the index.

“At present, 44,800 is to be seen as a make or break level. Any further disappointment in this space would challenge this support to test the crucial support zone of 43,500 – 42,000. On the flipside, 46,500 – 47,500 are to be treated as near-term hurdles. As far as broader projections are concerned, whenever the uncertainty or short-term pain subsides in this space, we would see Nifty Bank retesting recent highs around 48,600 first and then a magical figure of 50,000 in months to come,” Angel One said.

Which stocks to buy on Budget day?
The play around Budget day is usually around stocks that could benefit from favourable announcements, but with the February one being only a vote-on-account Budget, opportunities may be limited. “Yet, we are okay with playing the renewable energy theme as well as railway theme via Borosil Renewables and RVNL, respectively, despite them having registered substantial gains recently,” Anand James of Geojit Financial said.

Besides renewables and rail, defence and other infra-related stocks would be on investor radar when Sitharaman lays out her plan for FY25.

On a technical level, Choice Broking has picked Voltas with a target price of Rs 1,175 and Rs 1,250. “The stock has recently formed a rounding bottom pattern and is consolidating near a resistance level, accompanied by significant trading volume. There are expectations of further upward momentum, with potential targets at Rs 1,175 and Rs 1,250. On the downside, substantial support is observed around Rs 990,” Choice said.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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