Did the Budget Give Any Clear Direction to the Markets ?
- Fortunately or unfortunately, the last post was given a title: ' Markets Waiting for Direction from the Budget !'. Now this author is forced to do a budget analysis since he himself raised the issue in the previous post.
- But a bit of background information first. ( 1 ) Most experts, commentators, industrialists etc seen on the TV channels and who write or express their opinions in the news papers do not normally speak the real truth, as they have to be politically correct. ( 2 ) Most readers might have already heard about the budget proposals and come to their own conclusions. That makes this budget analysis difficult and of not much significance. So let's limit the scope of the analysis to a very narrow area. We will start the analysis by asking some questions. OK, here they are ....!
- Name the stock which gained the maximum after the budget. Answer : ITC.
- Did ITC get any benefits out of the budget ? Ans. : No.
- Then why did the ITC stock rally hard after the budget ? Ans. : Yeah, everybody and their uncles were expecting some more taxes on tobacco. But no new taxes were proposed in the budget.
- I see, so the reason for the stock bounces were not the budget proposals but the absence of any higher taxes, right ?
- Yeah, you are perfectly on the target.
- Now let's see what other expected raises were not there in the budget ! Here they are ! No raise of excises duty and service tax to the pre-bear market rates of 12 %, no raising of the dreaded STT or capital gains tax, no new taxes on the corporates and the rich etc.
- Will the absence of these dreaded increases make a budget a better budget ? Ans : No.
- Is there anything in the budget to reduce the high inflation, which actually is the biggest tax on the poor ? Ans. : No.
- Does it talk about the oil price problem and the heavy subsidies ? No. Apart from a promise to disburse some subsidies directly to the poor, there is nothing in the budget. The budget doesn't even acknowledge the problem of rising oil prices and deficit of the oil marketing companies. Even the expectations of a cut of the customs duty on the crude oil were belied.
- So, after all, what is your opinion about the union budget ? Ans. : It's a budget of no consequences because it implies just the continuation of the present. Just a status quo budget sprinkled with some added masala of make-believe populism. That's all.
Nifty Futures - Intra-day Chart
