Trading in Asian markets commenced on a strong note in March, with key indices closing higher on Monday after US banking major JPMorgan Chase upgraded its ratings on Japanese banks.
While benchmark indices in Australia, Malaysia and Singapore closed the day with marginal gains, Hong Kongs Hang Seng, Taiwan Weighted Index and Shanghai Composite gained around 2% at close.
Back home, analysts expect the market to open firm on Tuesday, as Budget-related uncertainties have passed with no negative conclusions. They are of the view that the reduction in income tax rates will directly and indirectly benefit a large number of consumer-related industries, including banks.
Governments emphasis on infrastructure projects, especially in road and power sectors, will help construction and cement companies by a good measure. Large engineering firms like BHEL and L&T will see an increase in government orders. Financial sector reforms will benefit companies in the NBFC and capital market broking space, say experts.
According to technical analysts, the Sensex is finding a stiff resistance at 17,000 levels and it may take a broad market rally to cross that hurdle. The 200 DMA at 15,910 is the critical support that most market participants would be watching in the event of a decline. The index could get back to a lacklustre state in the week ahead and decline to 16,280 or 16,040. Resistances for the week would be at 16,670, 16,800 and 17,000, respectively.
Bank shares, which were the top gainers on Friday after the Budget proposed to provide Rs 16,500 crore for recapitalisation of state-owned banks, could see some profit-taking this week. The BSEs Bankex rose 2.3% to 9,828.68 on Friday, partly led by short-covering.
Market participants are optimistic on stocks in the infrastructure sector, which includes engineering, power equipment and construction companies, on a governments budget proposal to invest Rs 1.73 lakh crore on infrastructure in 2010-11. Though stock valuations in these categories are considered pricey now, increased business prospects will give more room for upsides, they said.