Sunday, February 24, 2013

All eyes on the Budget

The markets drifted down further by 0.6 pc to close at the critical level of 5850. The Budget is upon us. The next week has the Railway Budget, the Economic Survey and the Union Budget. Along with this we also have the Expiry on Thursday after the budget. Let us try and examine how the things will pan out.

1. The Budget going by Chidambaram track record should have something to excite the markets. This is because the Government needs a strong market to offload the PSU shares.The 1997 dream budget is a reminder how old wine can be packaged in a new bottle.

2. This is the last budget before the country goes into election mode. For all the talk of early elections, going by the Congress track record I do not believe elections will happen before April 2014. There are 3 windows to have the elections, Sept 2013, Dec 2013 and April 2014.

3. Looking at the range defined for February, it was 5850 - 6200. A further dip this month will mean that the statistical probability has been overturned which is usually very rare.

4. The announcement of a definite time frame for banking licenses means that the Government is going ahead with reforms. Ever since the change in Finance Minister in July, we have further evidence that the government is working on reforms. We have had the further Oil reforms, then banking licenses, FDI in retail and aviation. Also, the FM has confidently stated that he will meet the fiscal deficit target of 5.3 %.

5. Coming to the markets, the markets are entering a strong support zone. The markets if they break 5750-5830 will go straight to 5630. If they cross 5940-5970, they will re-test previous highs.

I am working on a few Option Strategies for the Budget Day and will upload a day before or before the Budget.

Wait and watch for the budget.

Anyone interested in Stock Picks, this is the last week they are open.

No comments:

Post a Comment