What to do on the budget day?
Below market view relevant only for traders. Investors should be looking to buy over the next 5-7 trading sessions as prices have corrected enough to start buying.
On the trading front - my guess is as good as yours but budget days usually have a broader range - upto 5%. I think average would be 3%+ over the last 10 years. This budget is much anticipated and would be keenly watched so I expect nothing less. 14050 - 13350 range expected.
Leading upto the budget, especially the last 2 trading days, Bank Nifty was the outperformer, boosted by solid earnings (or expectations of solid earnings). I would favour financials on the long side tomorrow. I already have some positions on that front.
Additionally, given the weak global backdrop, I am tempted to go for a tactical short trade on a rip higher (2-3% intra-day gain on Nifty). We obviously need to see the budget fine print and levels before making such a move. I would look to short Nifty, Nifty IT stocks etc.
Overall, don't be surprised with an intra-day market reversal around 1230-1300 hrs tomorrow. I see a rally followed by a dip. It could very well turn out to be opposite.
I have prepared myself by carrying limited positions and raising a lot of cash. Trust you are doing the same.
Good luck! Reduce your position size tomorrow and follow stop loss!