Markets recovered about half of what they lost in the previous week but are not yet out of danger. They need to continue to recover and gain further ground. The only significant thing that has happened is they have for the time being made a bottom at significant lows. Their holding (bottom) would depend upon events in the coming 7-10 days when the railway and union budgets are presented.
The Union Budget would be presented on the last day of February which happens to be a leap year and hence would be on 29th February. There are hardly any major expectations from the budget and hence no build up in open interest on account of budget has happened. Secondly the present series of February futures would be expiring on Thursday the 25th of February. Currently February series is down by about 211 points or 2.85% in a super volatile month. Things could go in either direction over the next four days but I believe that bears should win this round.
The Finance Minister would have his fiscal arithmetic in place as falling crude prices have been a big bounty for the nation. A year ago there was a subsidy of Rs 5 per litre of diesel while this time around there is additional excise duty of Rs 17 per litre translating into a gain of Rs 22 per litre. Even considering the fact that the entire amount is not available for the whole year it still means he has a kitty to kick start the economy.
If a concerted effort is made to do so, we have the resources and this is the best time to do so. On yet another front it appears that GST could see the light of day. The appointment of Amit Mitraas the chairman of the Finance Ministers committee of GST is an important pointer. TMC would vote in favour of the bill as would many other state parties who have realised the importance and benefit of GST. The largest opposition would therefore be left with little option of either supporting the same or in a face saving measure stage a walk out.
One needs to keep one’s fingers crossed and hope for the best on GST. While the possibility has increased substantially one never knows. Over the last ten days there has been talk of Long term Capital Gains Tax being reintroduced. If something like this was to happen then March 2016 would be a disastrous month and would cause panic as people rush to book profits where available.
One is sure that the FM is a sane person and intends good for the country. Let’s hope we all come smiling after the budget is presented exactly a week from now.
