All eyes were on budget for the week. Everyone had some expectation with budget and hopes that FM will fulfil their wish. Stock specific action was seen ahead of the years most important event. Markets were choppy and volatile for the whole week..which were also backed by F&O settlement week. Overall volumes were lower as investor remained cautious.

Sensex gained 1.3% for the week. Gains were registered by Bhel +10.26%, Cipla +3.60%, HDFC +9.16%, Hind Liver +5.45%, Hindalco +5.73%, Mah & Mah +10.53%, Ranbaxy +7.79%, Maruti +13.62%. Losses were led by DLC -5.91%, Infosys +3.04%, ICICI Bank +2.12%, TCS +3.39%.

People who expected much more from the budget were dissatisfied by it but overall it was a good budget. Mr. Chidambaram delivered some good aspect as well as some negative aspect from its last Budget in his small stint as an FM. Everybody expected a popular budget as the FM could gain some confidence as the Election nears.

The FM took a big step towards populism as he announced the waiver off farm loans worth Rs. 60000 cr for the small and medium farmers while it also announced 25% rebate through one time settlement scheme for other farmers. Its good news for the farmers specially those who are suffereing. However the ones who have been repaying the loans will feel the pinch and this will set a wrong precedence and bring in indiscipline.

Government estimates that about three crore small and marginal farmers and about one crore other farmers will benefit from the scheme. The total value of overdue loans being waived is estimated at Rs.50,000 crore and the OTS relief on the overdue loans is estimated at Rs.10,000 crore.

The waiver off such large amounts would hit the commercial banks. Quite a bit of this has been written off and may not impact much. Also its not clear on who will take the hit yet. Will the Government pay for this is not clear Largely given that its the Governments plan then they should. What probably would happen is that the Government may compensate them to the extent which has not been written off yet.

On the excise side, the general Central Value Added Tax (Cenvat) rate on all goods has been reduced from 16% to 14% and thats a poitive in terms of lower prices for the economy. Sports goods , exports of gems and jewellery, helicopter simulators, domestic fertiliser production will get customs duty sops so that is positive.

Cut in Excise Duty of Buses & Chassis, Small cars, Two-wheelers and the Three-wheelers from 16% to 12% is a big benefit. Thats a big relief against the high input costs. This is positive for Maruti, Hero Honda, Bajaj Auto and somewhat for Ashok Leyland and Tata Motors. The problem remains for the two wheeler industry is the demand and credit availability. The impetus in the form of lower income tax, higher disposable income could stimulate demand. .

The government will invest around 3300 cr over a period of 3 years to connect rural areas. Positive for Tulip IT, BSNL, Net4India, HCL connect, etc.

Textile companies will see the benefits continuing for TUFs

Cement companies had some negatives in store with higher excise duties. Also they have to face the pressure of new capacities which are expected to come on later this year.

The focus on creating a debt market tradable we believe is a significant step and that will set the ball rolling for lower interest rates.

The big gift awaited tax payers and that was a big cut in income tax rates. Surely we believe that we have not seen the small print yet but certainly it adds significant positives into the hands of investors.

There were a couple of disappointments.

No changes have been made in the corporate income tax rates and also the surcharge and that was a disappointment as everyone was hoping that with collections what they are the Government could have been a bit generous here..

Short-term capital gains tax has been increased from 10% to 15%. Some negative for the capital markets as and also the security Transaction Tax offet for Busines income is disallowed.

The deficits seem quite under control but the 6th pay commission recommendations are not included and nor the 60000 cr bonanza write off for the banks.

All in all a decent budget which cant be called a non event. The FM has "Gambled" that growth will get a kicker with higher disposable income with tax payers and also the Farmers. Its also brownie points ahead of the elections. Does that mean that we can have elections soon. .. ! Well thats something to ponder over the week end !

Markets reacted negatively but the fine print will be known over the weekend. We believe that the budget has delivered more against the expectations which were almost none. There were implict hopes and that was what the markets reacted to as that was not met. Technically: Sensex have turned into a very narrow range for sometime now. 18300 is the major resistance on the upside and 17200 is the major support on the downside.

The global factors will continue to dominate but this budget we believe is one of stimulation and there is good reason for the markets to react positively on their own. Unless there are some big negatives in the fine print expect a positive market starting next week.