The mother of all weeks in terms of volatility is here. SEBI has seen merit in keeping markets open on all important budget day and Saturday will see trading as a normal day from 9.15pm to 3.30pm. What FM Arun Jaitley has in store for us will be known only on Saturday while what PM has on his agenda, one would get glimpses in the railway budget on Thursday 26th February when February series expires and on Friday 27th February when the economic survey is presented.
The open interest at the end of Friday is 1.08 lac crs which is higher by about 15% compared to the levels when the February series began. The markets rose for the first three days of the week and then Friday saw a correction where a substantial portion of the gains of the week were lost. The week closed positive with gains of between 1/3rd and ½ %.
The first round of e-auction of coal locks has been completed and estimates for the remaining coal blocks to be auctioned put the CAG figure of 1.76 lakh crs as an understatement. The CAG Vinod Rai when stating this figure was ridiculed by the then senior ministers of the UPA government with claims of ZERO loss and so on. This auction proves a major point for the NDA government and the expected revenue from Spectrum sale would help in reducing fiscal deficit and raising resources for the infrastructure needs of the government.
The present value of NIFTY is lower by 118.75 points or 1.33% compared to the close of the previous January series. Readers would also recall that the correction began from that day and lasted about two weeks before the smart recovery. Global cues saw Greece again in a crisis over their debt issues and there is no resolution so far. Dow Jones gained 121.09 points or 0.67% to close at 18,140.44 points. The Indian Rupee lost 3 paisa or 0.05% to close at Rs 62.22. FII”S returned to their buying ways after a period of about two weeks and were net buyers of Rs 4,650 crs while domestic institutions were buyers of Rs 460 crs.
The budget will be interesting as the government has benefited significantly from falling crude prices and currently diesel too is sold at market prices. To safeguard falling revenue and crude price increase in future, the excise duty on petro products has been raised over 3-4 occasions providing a safety factor for future.
What does the common man expect from the budget? In simple terms that living his life e made easier. Inflation has eased off and the general expectation or demand this time around is that there be more disposable income in his hand. If Arun Jaitley the FM is able to achieve this he would have secured the confidence of the voter and the common man. The overseas investor wants clarity on law and the assurance that there would be no retrospective amendments of law, something which has already been clarified and would be implemented in the budget.
The expectations from this budget are on the higher side and in the short term they may not be met. One should not be surprised that budget day sees the markets closing weak but not necessarily weak or in the red for the week. One note of caution is that the markets are here to stay and will be there even on Monday. Simply don’t buy because one person on TV whether it be a guest or the anchor believes the particular sector will benefit, but buy if you understand what the implications would be. Many a times one finds that there is a benefit under one section or head and a corresponding loss or disadvantage on another which is announced in the latter part of the budget. Don’t trade impulsively for short.