Equity benchmarks managed to sustain positive momentum for yet another session today but the upside gap narrowed down as market participants avoided taking risky positions just two days before the finance minister Nirmala Sitharaman presents her first Budget for 2019-20 on Friday. Nevertheless, focus seems to be already shifting on stocks in infrastructure, consumer durables and consumption segments as most experts feel the government, in order to revive economic growth via job creation, would announce preferential allocations for these sectors. State-run banks have also emerged as favourites as markets expect the recapitalization programme to continue for the next few years until these lenders turn fiscally viable but also start showing robust profitability coupled with jump in credit growth.

The 30-scrip Sensex ended at 39,839.25 (+22.77) points, up 0.06 per cent with 14 share ending up and 16 down. The Nifty closed at 11,916.75 (+6.45) points, a rise of 0.05 per cent as 24 stocks advanced, 25 declined and one remained unchanged. Nifty PSU Bank settled at 3,255.65 (+55.05) points, up 1.72 per cent. Gainers in BSE benchmark included IndusInd Bank at Rs 1,474.70, up 4.11 per cent; ITC at Rs 276.85, up 1.13 per cent and L&T at Rs 1,578.40, up 0.96 per cent. Dalal Street looks forward to a boost to infrastructure sector and revival of capex (capital expenditure) as well as investment cycle which is almost dormant. “Reserve Bank of India has already moved ahead by changing its policy stance (from neutral to accommodative) and took measures to address liquidity issues to support the economy. The government is expected to back RBI’s monetary efforts by providing fiscal stimulus and other bold remedial measures,” said Sharekhan’s Mr Sanjeev Hota. Mr Nalin Shah of Kotak expects the government to set aside at least 1 per cent of the GDP for infrastructure. The markets seem to have already factored in the excess RBI cash ~ the limit of which would be recommended by the Bimal Jalan panel set up a few months ago.

Karvy Stock Broking expects the government to take a balanced approach to tackle growth revival without compromising on fiscal math. Most brokerages see stocks such as Larsen and Toubro, Mahindra and Mahindra (tractors) and those of infra companies to rise post 5 July once the Budget is presented to Parliament.

Another sector that awaits a big boost is afordable housing. The stock that is likely to rise is that of LIC Housing Finance, a government undertaking. The prime minister Narendra Modi has ambitious plans to provide homes to all by 2022. The contraction in India’s key purchasing managers index or PMI for services sector in June to 49. 6 from 51.7 in May only confirmed the market’s concern that slowdown in consumption and slump in demand have been the top reasons for economic slowdown.

The IHS Nikkei’s PMI Service Sector data released today by economist Pollyanna De Lima confirmed contraction for the first time since May 2018. The dividing line that separates expansion from contraction is 50. Even the composite PMI for June had slowed to 50.8 from 51.7.