Notwithstanding the disappointment of the swadeshi supporters with the Exim policy, there are still optimists in the market about the maiden budget of the new government.

In fact, Sensex had fallen by 210 points in the last week as bears tightened their grip on the markets. ``Nobody was keen to make any commitments under the present circumstances. Same is the case with FIIs,'' said a dealer of the National Stock Exchange, adding, ``nobody talks about a post-budget rally now.''

Will Yashwant Sinha's budget create the same kind of euphoria as Chidambaram's dream budget which sent the market zooming 177 points? The excitement over the nuclear tests and lowering ofthe nation's credit ratings notwithstanding, the markets have still set their sights on the budget to be unveiled on June 1. While some feel that there may not be much to it, others are optimistic that the finance minister might pull out some rabbits from his hat, leading to a bull rally in the coming days.

``We expect the budget to be a relative non-event for the market. The market should trade in a narrow range of 3,800-4,200 over the next few weeks. We, however, maintain our year-end target of 4,250-4,500,'' said DSP Merrill Lynch in its pre-budget study. FIIs have already started pulling out funds -- they pulled out $ 155 million in May -- from the market.

Bombay Stock Exchange president JC Parekh said that the exchange is all geared up for a `swadeshi' budget. According to him, there is a strong feeling among members that the finance minister will make efforts to make domestic financial institutions more aggressive towards investment in the secondary markets. ``Both primary and secondarymarkets should be revived... only then will the economy pick up,'' said another expert.

Parekh felt that the market expects certain tax concessions, permission for insurance companies to invest 10 per cent of their corpus in secondary markets through UTI and total freedom to UTI, enabling it to make its own investment decisions rather than be driven by the government's whims.

Allowing buy back of shares is another area which has generated a lot of debate and led to fluctuations in the Sensex. Parekh, however, was of the opinion that the government must ensure that only good corporate entities with a strong reserve base should be allowed to buy back their own shares.

According to a Jardine Fleming official, the government should address the huge lack of demand in the economy. The government will need to raise enough money, and for that it will aggressively try to privatise further. Thus, a renewed thrust on disinvestment as well as opening up of the insurance sector to combat the impact of the USsanctions is expected.

There is a demand to bring FIIs on par with mutual funds in terms of the capital gains tax structure. Another section wants a level playing field in the case of long-term capital gains tax. While FIIs pay only 10 per cent long-term capital gains tax, NRIs and others have to pay a higher tax. Brokers expect a pragmatic budget rather than a popular one. There will be no sops and, instead, the budget will see many subsidies removed and money diverted towards the growth of the economy.

"Pension funds may be allowed to invest in equities through mutual funds," said a mutual fund manager, adding, ``decisions will have to be taken across the year and I do not pin too much on the budget alone.'' There is a feeling that the thrust would have to be on opening up the infrastructure, insurance and real estate sectors.x