The market positioning is most important ahead of Union Budget. We have a market which is going into the budget near an all-time high. We were almost at an all-time high yesterday.

What is important is that the boarder market has started another round of hope trade and that is what I have been talking about. If you see, in the last fortnight, the Midcap Index and the Nifty Junior, both of them are up 4 percent. Why is that? Because the market is betting that this will be the growth budget.

If that is the reason the market is bullish on, the market won’t be perturbed with the fiscal deficit going to even 3.6 percent and that is the sense we are getting. Also, it is time for fiscal expansion, and it is needed right now given the economy.

The big bet is on the corporate rate tax cut, if that happens, of course, we will find out whether the government has the room to do that.

The market is also betting on the economy facing stocks. For the last 2-3 days, you have seen some rally in autos, rally in real estate so these are top of the mind. The stock to watch out for is Larsen & Toubro (L&T). A lot of people believe that is the top budget stock and whether it plays like that, that is something we'll find out.

Finally, a caution - remember what happened on the Election verdict day, there is always a probability - we are at the higher end of the range and the market is positioned for a big rally already so we are at an all-time high, the move is about near term positioning and the rally will be there if there is a growth budget. But after that what happens to earnings, what happens to monsoon these are the factors to watch out for.

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First Published:Jul 5, 2019 8:48 AM IST