Nifty index made low of 7118 on 30 May 2014 and gained 7% to close at 7751 on 4 Jul 2014.
Budget is on 10th July and the gainers and losers from our CNX500 constituents can give us insights into budget expectations.
Also it will tell us what is powering the current rally.
1. From Top 50, Textile sector has 6 stocks with Welspun, Alok Ind, Trident gaining about 45%. Textile stocks as a whole gained around 27%.
Textile stocks always gain before Budget but this time the gain is unusually high as are expectations.
2. Construction and Automobile stocks are second highest gainers with 5 stocks each. Worth noticing is that Auto sector gainers are ancillary component manufactures. TVS is major gainers with 31% gain. For Construction sector the stocks have good fundamentals like D/E like Orbit and HCC.
3. Financial Services sector has 4 stocks which are NBFC. Worth noticing is that SREI and PTC are top gainers which are Infra sector lenders. MOSL a brokerage has a lot of plans as it intend to enter Housing sector lending. No major Bank is top 10 Financial sector gainer. Have they rallied too much?
4. Industrial Manufacturing stocks have also gained considerably with 4 stocks.
5. Last major sector is Chemicals with 3 stocks. There are some major expectations from Budget for this sector.
Worth noticing is there are no IT, FMCG and Pharma stocks. Also missing are large Banks which have powered rally till now.
So there seems to be high expectations from Textiles, Construction, Auto and Manufacturing sector and all of them are domestic and manpower intensive sectors.
Its good to note that there are no major expectations from Banks, IT and Pharma sector. These heavy weights if gain anything from budget then the rally can continue further.
