Pre-budget jitters sent the S&P BSE Sensex down 2.3 per cent last week. Worries that the government may overshoot its fiscal consolidation target caused nervousness. So did speculation that the Finance Minister may raise the period of holding of equity instruments to three years to qualify as long-term capital gain. Also, the monthly derivatives expiry on Thursday and the Railway Budget that showed many missed financial targets did not help.

The fall in the Sensex would have been worse but for the relief rally on Friday — this was aided by some positive commentary in the Economic Survey about benign inflation and prospects of improved economic growth after two years.

All said, it’s been a tough calendar so far for the market with the Sensex shedding 11.3 per cent.

While the country’s macro-economic indicators do look better compared with many emerging market peers, there are concerns about weak corporate earnings and anaemic private sector capital investment.

Whether today’s Budget has measures to bring much-needed cheer will be keenly watched.

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