Currently, we have below questions in mind regarding Budget 2013;
- Will Budget 2013 match your predictions?
- Will Budget 2013 a healthier one?
- Will Chidambaram announce an investor-friendly budget this year?
Are you estimating that the forthcoming Budget – government’s statement of policy for the next financial year- will bridge the gap between all that the government spends for the revival of economic conditions and the revenue it really racks in? However, going by the past experiences, the country’s budget has always made it sure that the government is spending as fast as it was doing earlier, but it is finding it tougher to bring in funds.
Now, what we are concerned about is will the ensuing Union Budget again disturb the Stock Market or will it bring in some fresh air for it. What normally happens is the stock market always remains more or less volatile on budget days. This can be largely attributed to the high positive/negative expectations prior to the budget days. It would be a great scene to see how the market behaves post Union Budget.
Budget announcements affect the stock prices of those companies who will be impacted favorably or otherwise by the proposed changes in the policies. Listed companies, either directly or indirectly gets benefit or get hurt by provisions of the budget. Many a times during the budget days, it seems like there is no trade at all. If at all one wish to trade at budget times, options traders can take on buying/selling both put and call options. However, these options get really expensive near the budget.
Last year, Finance Minister Pranab Mukherjee did not impress all with his budgetary announcement. He laid down five broad objectives that need to be addressed: Domestic demand, high growth in private investments, addressing supply-side bottlenecks, problem of malnutrition, governance and transparency, but it vain. What is to be speculated what Mr P Chidambaram would do in his forthcoming budget to boost the sagging economy.
Given the fact that the government has never been kind to the tobacco industry, ITC is likely to underperform. On the other hand, the tech sector benefits from anything that involves lower direct taxes, subsidies to semi-govt companies etc., and there is a massive rise in these stocks in the last few years, just after the budget, as taxes were slashed and flattened.
When we look at infrastructure sector, the government is spending massively in this sector. There are all possibilities that infrastructure companies get benefited from it. Government spending impacts infrastructure, so stocks of companies belonging to sectors such as reality, transportation, communication, warehousing, power generation etc. are expected to react positively.
As a layman, we would like to hear few big-bang policy announcements this budget on controlling fiscal deficit years ago. India’s subsidies – on food, fertilizer and fuels – are often seen to be the main culprits of the spurt in spending.
Now what we have to do is wait and watch what the ensuing budget brings with it. Will it cheer various industries in the country and the investors’ community?
Written By Divya Nair