Sunday, February 20, 2011

Budget: Whats in store?

The Union Budget is round the corner. Its the usually stuff, where the TV channels will go crazy over analyzing the statements of the Finance Minister. I did a statistical analysis of the budgets since 2001 and markets. I have also tried factoring in what could influence Pranab Babu as he goes about making the Union Budget.

1. There are elections in 5 States including Tamil Nadu, West Bengal, Kerala, Assam and Puducherry. Expect a populist budget with tax breaks for the middle class and no harsh measures.

2. ONGC may be a beneficiary of some form of largesse from the government in the form of subsidy burden being eased, or the royalty issue being settled with Cairn. The way Oil Prices are going up and unrest in Middle East, ONGC and Cairn look like best buys in current market.

3. Gold is holding steady at 1393 dollars. This is just 30 dollars from from its all time high. Good time to accumulate.

4. Last 11 years, Markets have rallied 4 times post budget and fallen 6 times. This is assuming all budgets happened on 28th Feb. I remember in 2009 and 2004, they happened in June.

5. March has historically been a negative month or a month with small gains. Advance tax payments and the budget expectations not being met are some of the usual things.

6. February usually has been a lackluster month in terms of percentage change. This year has been no different.

7. I did a check on the Bollinger Bands and they touched the upper end and coming down now. This means we are headed to 5223 or lower.

The strategy remains simple. Stay light on equities. Keep adding Gold and Debt Funds.

1 comment:

  1. bollinger bands 2 sd and 15 days ... >>


    21 days and 2.5 sd is what i use and trade with ...> > but each one to his taste . I think India is in a soup .
    Nice analysis ..