Budget Expectations: Budget to be positive for cap goods, power says Dimensions

With less than a week for the Budget, the market is eagerly for positive triggers for another rally. Though there are not much strong expectations from it, there are sectors which may get special attention in the Budget.

Ajay Srivastava, CEO, Dimensions Consulting is hoping that the Budget will bring in good news for the capital goods and power sectors. He is positive on BHEL but negative on L&T at current levels.

Srivastava, however, warns that there excise duty may be hike to 14% in this Budget.

Meanwhile, according to him the RBI is unlikely to cut rates in its monetary policy review on March 15, which may just turn out to be a non-event.

In a bid to pump liquidity into the banking system, the Reserve Bank of India has cut the cash reserve ratio (CRR) by 75 basis points to 4.75%, effective March 10. The move is expected to inject Rs 48,000 crore into the system.

The CRR is the percentage of the deposits that a bank must not lend, but keep as cash with the Reserve Bank.

India's economic growth

India's economic growth is seen slowing to about 7% in the current fiscal year, but the government is confident of steering the economy back to a high growth trajectory of 8-9% soon, President Pratibha Devisingh Patil said on Monday.

"The long-term fundamentals of the Indian economy remain robust," Patil told lawmakers, adding the government was targeting to achieve a 9% annual growth in the five-year plan period ending on March 31, 2017.

Finance Minister Pranab Mukherjee, who will present the budget on Friday, is expected to set a target of 7.5% to 8% economic growth for the 2012-13 fiscal year beginning on April 1

Brent crude falls to $125 as China data spur demand worry

Oil fell on Monday for the first time in four sessions, with Brent slipping towards USD 125 as weak Chinese exports raised fears about global demand and offset the support provided by a better outlook for the US economy and Middle East supply concerns.

Traders took profit on oil after last week's gains as China posted its largest trade deficit in at least a decade, fanning concerns that slowing exports from the world's second largest economy will lead to lower fuel demand.

While the deficit raised questions over the global economy's appetite for its goods, China's crude imports and implied oil demand reached record levels in February.

Brent crude fell 51 cents to USD 125.47 a barrel by 0732 GMT and U.S. crude was down 57 cents at USD 106.83. Brent's premium to U.S. crude was at USD 18.64 after settling at USD 18.58 on Friday.

"It's hard for prices to rise sharply higher, although they are well supported because of the Iran situation and better economic data from the United States," said Ken Hasegawa, a Tokyo-based commodity sales manager at brokerage Newedge Japan.

"After the two big events last week, we can see some profit taking."

Speculators cut their net long positions in U.S. crude oil futures and options positions in the week to March 6 for the first time in five weeks as prices fell, data from the US Commodity Futures Trading Commission (CFTC) showed on Friday.

Brent rose 1.88% last week in its sixth weekly rise in seven, after Greece averted an immediate default while employment data improved in the United States, strengthening prospects of better fuel demand in the world's largest oil user.

"Western Europe seems to be swinging into a positive trend, with Greek austerity measures in place and the largest sovereign debt swap in history being all but finalized," Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.

He added that the Brent-WTI spread may test the 2012 low of minus USD 20.70 a barrel if the market sees encouraging data this week from Germany's economic sentiment survey and UK jobless claims this week.

EYES ON SUPPLY

Investors are still spooked by supply concerns stemming from Iran's dispute with the West over its nuclear program, on top of lower output from Syria, South Sudan and Yemen.

Iranian President Mahmoud Ahmadinejad has launched a fresh tirade against the West, saying the Islamic Republic does not fear military action.

The chairman of the US Senate Armed Services Committee said on Friday an international naval blockade of Iranian oil exports should be considered before any resort to air strikes against the country's disputed nuclear program.

In Syria, U.N.-Arab League envoy Kofi Annan has ended talks with President Bashar al-Assad and left the country with little sign of progress on halting its growing political bloodshed.

OPEC lowered on Friday production by non-OPEC countries in its monthly oil report by 130,000 barrels per day (bpd) from the previous month to a rise of 600,000 bpd this year, due to revisions in forecasts from Syria, the former Sudan and Yemen.

OPEC pumped the most oil in more than three years in February to make up for some of these losses, yet oil prices have surged more than 8 percent this year, raising concerns that expensive oil could hurt global economic growth.

Kuwait's oil minister expressed similar worries on Sunday, saying that current world oil prices are not justified.

"Everyone worries about expensive gasoline in the United States which might hurt economic growth," Newedge's Hasegawa said, adding that prices were unsustainable and could correct in the next few months.

Gasoline prices could peak soon on relatively soft consumer demand and as output will rise after refineries return to operation from seasonal maintenance if crude does not jump soon, a survey of gasoline retailers in the continental United States showed

Jan IIP @6.8% Vs 1.8%

January IIP data: Manufacturing sector growth has come in at 8.5% versus 8.1% (YoY), mining sector growth at (-)2.7% versus 1.7% (YoY) while consumer durable sector growth is at (-)6.8 versus 12.5% (YoY)