RTTNews - With investors expectations running high on the eve of union budget announcement scheduled for today, the Indian market may show extreme volatility on Monday amid alternate bouts of buying and selling. This time, expectations are high than ever as the government is free to the pulls and pressure from various regional allies and coalition partners.

Analysts expect the government to focus mainly on infrastructure, social issues and PSU disinvestment. A comprehensive review of the subsidy regime, change in FDI laws in insurance and banking, reforms in labor law, education reforms and the introduction of GST by April 2010 are also expected to be announced in the budget. Given the fiscal deficit constraints, the government has to strike a balance between growth and populist measures to provide a long-term direction in the economic policies.

Considering the fact that there is no excuse for the UPA leadership to drop the ball on economic reforms and initiatives this time, any negative outcome could trigger a market correction. Recent U.S. June unemployment data signified that recovery is far from over globally and with Infosys flagging off the June quarter's earnings of top companies on Friday, investors may pare their long positions amid stretched valuations following a 22% rally since May 16.

Last week, the benchmark indexes, the Sensex and the Nifty, ended modestly higher by over 1% each after huge volatility due to the expiry of June series derivatives contracts. The market seemed directionless ahead of the budget, but stock-specific buying in sectors like oil/gas and construction helped the market end on a positive note.

Stocks to Watch

State-owned oil firms could be in the spotlight on hopes the government will announce a road-map for deregulation of petrol and diesel prices. Construction and infrastructure stocks could be in focus on hopes of increased infrastructure spending.

Reliance has made the government a party while filing a petition to the Supreme Court challenging a High Court order to supply natural gas to RNRL at a discount to the government- approved price, reports suggest.

Jaiprakash Hydro Power said that its board has approved the amalgamation of Jaiprakash Power Ventures (JPVL) (the Transferor Company) with Jaiprakash Hydro Power (JHPL) (the Transferee Company), with effect from April 01, 2009.

State-run Dredging Corp. of India could pay Rs483 crore more than originally intended for buying three dredgers because of delayed decision by the government, media said.

Hero Group has reportedly shelved plans to enter the commercial vehicle (CV )segment, for which it had partnered German firm Daimler to produce trucks.

TCS said that Tata Sons, one of its promoters, revoked its 56 lakh shares from the lenders reducing the total stake pledged by the entity to 12.05 per cent amounting 23.57 crore shares.

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