NEW DELHI: The S&P BSE Sensex surged over 800 points in morning trade on Tuesday, a day after the finance minister unveiled the Union Budget for financial year 2016-17. The rally in the index was led by heavyweights such as ITC, Infosys, ICICI Bank, RIL and L&T.The Nifty50 managed to reclaim its crucial resistance level at 7,250, supported by gains in IT, oil & gas, metals, capital goods, banks and auto stocks.If the prognosis of Dalal Street analysts is anything to go by, here are the three key reasons moving the index higher.Finance Minister Arun Jaitley in his Budget 2016 focussed on fiscal prudence by sticking to the fiscal deficit target of 3.9 per cent of GDP for this year and pegging it at 3.5 per cent for the next has which has boosted investor hopes that the central bank can no longer postpone an interest rate reduction.“The ball is now in RBI's court, and I almost expect a 50 bps rate cut in the next 48 hours,” said Rashesh Shah, Chairman, Edelweiss. “While there has been a lower-than-expected allocation for the recapitalisation of public sector banks, I feel it's positive to push the banks to be proactive in cleaning their balance sheet,” he said.Rana Kapoor, MD& CEO, Yes Bank said: “With fiscal consolidation firmly in place, I expect RBI to oblige with a repo rate cut of 75 bps by end 2016.”The S&P BSE Sensex corrected by over 3,000 points while Nifty50 saw a cut of almost 1000 points ahead of the Union Budget 2016, hence a bounce back was on the cards. The S&P BSE Sensex managed to reclaim its crucial level of 7150, but experts are of the view that 7250 is the level which investors should watch out for.If the index manages to surge past this level further gains can be expected until that time remains cautious as the current level could well just be a short squeeze."If our readings of wave count, on daily charts are correct, then Nifty50 made a new low on the Budget day. Our bearish view, based on short term wave counts, shall get negated if Nifty gets past 7,252 levels and we shall revisit our wave counts on lower time frame charts once again," said Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in.The Finance Minister proposed a near three-fold hike in Securities transaction tax (STT) which could increase the impact cost for the average trader. The STT was increased on options sellers to 0.05% from 0.017% from June 1.However, traders said the hike would not amount to much, given that options premiums are much lower than their notional turnover."The increase in STT from 0.017% to 0.05% seems to have caused a ripple in the market, but traders should understand that this does not make any material difference for active traders as STT is calculated on the sell value of the premium," said Nithin Kamath, Founder & CEO - Zerodha.For example, if you were to buy 4 lots Nifty Options at Rs.100, and sold the same back at Rs.100, then the break even on this trade would now be 100.05 instead of 100.017. But the fact that STT has been increased does now send the right signal to the market participants.