How to trade in stock markets ahead of Budget 2021


Indian markets fell for the third day in a row on Monday, with analysts attributing the selloff to “pre-Budget nervousness” and high valuations. The Sensex fell over 500 points to 48,347 on Monday, taking its 3-day fall to about 1450 points. The NSE Nifty 50 index ended 0.93% lower at 14,238 on Monday. India’s stock markets are closed today for a public holiday. The markets will resume trading on Wednesday.

“Going ahead, markets may continue to remain highly volatile ahead of monthly derivative expiry and Union Budget 2021. The ongoing earning season further adds to the volatility. The Fed monetary policy is also due this week which would be the first one post newly inaugurated US President and thus would hold lot more significance,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.

“Technically, Nifty has started to form lower top, lower bottom and is witnessing profit booking declines from three sessions. It also formed a Bearish candle on the daily scale. Now, till it remains below 14400, weakness could be seen towards 14100-14000 levels while on the upside key hurdle exists at 14500-14600 levels,” he added.

Sameet Chavan, chief analyst for technical and derivatives at Angel Broking, advises traders to stay light on positions.

“We continue with our cautious stance on the market. Generally, market does not give any major trend reversal ahead of the mega event; but this time, it looks like we are going to witness yet another unprecedented behaviour of the market. Next couple of days would be quite crucial and would be interesting to see whether markets correct further or it shows some resilience to protect it’s crucial supports,” he said.

“Nifty is placed at crucial swing low of 14222, which remained unbroken on a closing basis. However, the way charts are shaped up, the possibility of sliding below this level is quite high to test 14100 – 14000 levels. On the flipside, 14360 – 14500 are likely to act as immediate hurdles,” he added.

Nagaraj Shetti, technical research analyst at HDFC Securities, also remains cautious on markets. “The short-term trend of Nifty continues to be weak. The consistent decline of the last three sessions could be hinting at the possibility of reversal in the market. A sustainable move below 14200 is expected to drag Nifty down to 13800 levels in the near term. Any upside towards 14360-14400 could be a sell on rise opportunity,” he said.

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Asian markets fell today on concerns over possible delay in the planned US fiscal-relief package. S&P 500 futures also slipped. Global stocks have retreated from a record as investors look for fresh catalysts to push them higher or at least justify current valuations.

US President Joe Biden said he’s open to negotiation on his $1.9 trillion Covid-19 relief proposal, and is hopeful to bring Republicans behind it, though didn’t rule out pursuing a Democrat-only route.

Meanwhile, the Federal Open Market Committee monetary policy decision and briefing by Chair Jerome Powell are scheduled for Wednesday. (With Agency Inputs)

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