A morning walk down Dalal Street | Nifty may slip towards 10,600 if it fails to clear resistance of 10,987

The Nifty50 not only reclaimed 10,700-10,850 but also closed just a shade below 10,900 on February 1. For the week, the index closed with gains of over 1 percent.

Markets reacted positively to the budget, as the headline fiscal deficit did not signal major slippage. Moreover, there are hopes that giveaways will aid both rural and urban consumption. 

Despite the fiscal stimulus of close to Rs 1 lakh crore (works to 35-40 bps of GDP), the fiscal deficit slippage is projected to be limited at 3.4 percent of the gross domestic product (GDP) which is slightly higher than estimates of 3.3 percent.

“The bond market's reaction supports our concern over ambitious revenue assumptions and risk of further fiscal slippage. The budget may help consumption growth, but sustainable macro growth depends more on capex, so the deceleration in capex growth is worrying, especially as it could be cut even more if revenues disappoint,” UBS said in a report.