Imagine you are reading your newspaper on Sunday the 1st of March post the presentation of the budget on Saturday the 28th of February and want to know how the market reacted to the budget. There would be no news as the markets would be shut. Don’t get surprised or shocked. The super regulator SEBI believes that the budget and markets have nothing in common and are not related and therefore there is no need to have a special session on Saturday, the day the budget is presented.
One is not quite clear whether it is trading on a holiday that is the concern or the budget that is on a holiday that is a concern. It’s a separate issue that each time one of the two exchanges sets up a disaster recovery centre or a new location for the trading server which is a minimum twice a year we have trading on Saturday which is live for two hours. How that is different I wish the regulator would explain. Further I would not be surprised if Muhurat trading on Diwali day would see brokers only opening their offices and doing their Puja and markets not having any trading if one extends the present yardstick of there being no relation between markets and budget.
For time immemorial we have been told that the stock market is the barometer of the economy and in India till today budget is virtually a presentation of the year ahead. Key policy initiatives are announced in the same and it is customary that the Finance Minister post his presentation visits the various chambers of Commerce like CII and FICCI and presents his views and answers questions raised by captains of industry.
In yester years Union Budget was presented in the evening to coincide with noon in London where parliament could hear the budget being presented. This practice was changed since budget of 2001 and the budget is now presented at around 11 am when Parliament is convened.
What is the idea of abolishing not only a practice or a custom is baffling. The markets build in optimism based on expectations from the budget and there is a huge build-up of open interest in the month of the budget. With there being no trading on Saturday the 28th of February, it makes no sense for a trader to carry forward or roll over the position from February to March. This would therefore lead to a squaring off or simply put people exiting their positions on expiry day if not earlier. There could therefore be a sell-off on expiry day and the regulator may therefore be wanting to set up a probe on who brought down the markets on the eve of the first full budget of the NDA government in 2015.
What will happen will now be determined by the regulator or by the people who matter in Delhi become aware of this and decide otherwise?
Hail the regulator and the strange things that happen in a democratic country. So be it.