Active Stocks
Fri Apr 12 2024 15:57:45
  1. Tata Steel share price
  2. 163.50 -1.00%
  1. NTPC share price
  2. 362.00 -0.32%
  1. ITC share price
  2. 430.10 -1.56%
  1. HDFC Bank share price
  2. 1,518.90 -1.10%
  1. State Bank Of India share price
  2. 766.75 -1.57%
Business News/ Markets / Stock Markets/  Budget 2024: What should your trading strategy be ahead of FM Nirmala Sitharaman's announcements?
BackBack

Budget 2024: What should your trading strategy be ahead of FM Nirmala Sitharaman's announcements?

This Budget is likely to focus on capex, manufacturing push and macro stability. The announcements of the Union Budget have direct implications on the stock market as the government's policies and financial plans decide the upcoming trends in different sectors.

This Budget is likely to focus on capex, manufacturing push and macro stability. The announcements of the Union Budget have direct implications on the stock market as the government's policies and financial plans decide the upcoming trends in different sectors.Premium
This Budget is likely to focus on capex, manufacturing push and macro stability. The announcements of the Union Budget have direct implications on the stock market as the government's policies and financial plans decide the upcoming trends in different sectors.

Despite the Nifty hitting multiple peaks in the current month, touching the 22,000 mark, and the Sensex hitting 73,000 mark for the first time ever, the Indian market has lost a little less than a percent in January so far. 

While the focus currently is on the December quarter earnings, the market may turn volatile ahead of the interim Budget.

The Budget will be announced on February 1, 2024. Since the general elections will be held in May, this will be the Interim Budget and a new Budget will be presented in July.

This Budget is likely to focus on capex, manufacturing push and macro stability. The announcements of the Union Budget have direct implications on the stock market as the government's policies and financial plans decide the upcoming trends in different sectors.

Read here: Interim Budget 2024: Here's real estate industry stakeholders' wish list

"I anticipate that the government's primary emphasis will persist in fostering economic growth through increased capital investment and infrastructure development. It seems likely that sectors such as manufacturing and renewable energy will receive additional stimulus. In the lead-up to the upcoming general election, we can anticipate announcements tailored to benefit salary classes and rural populations. The capital market is currently experiencing robust momentum, and I express the hope that the government refrains from implementing policies that might disrupt the positive market sentiment. Simultaneously, I advocate for a reconsideration of the removal of either Long-Term Capital Gains (LTCG) or Securities Transaction Tax (STT) to provide further support to the equity culture in India," said Sunil Nyati, Managing Director, Swastika Investmart.

The Union Budget has always been one of the major trendsetters for the Indian market. Budget day is usually synonymous with market volatility. In 2023, the Indian market fell 0.26 percent on the Budget day. It also rose 1.4 percent each on the day after the Budget announcement and was flat (up 0.07 percent) on the day before the Budget.

Read here: Budget 2024: When do investors pay long term capital gains tax on shares, mutual funds?

Analysts anticipate that the market will be more volatile before the Budget than after.

But what should be one's trading strategy ahead of the Budget? Let's find out:

Vinit Bolinjkar - Head of Research - Ventura Securities

Bolinjkar advises that traders should hedge their trades as volatility is expected to increase for the next 15 days.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities

“We have witnessed 16 Budgets (14 full and 2 interim) from 2010 to 2023 and the returns haven’t been attractive on the budget day all these years. The average budget day returns in Nifty is 0.23 percent. Nifty's average returns one week prior to the budget is -0.58 percent and one week after the budget is 1.37 percent," said Sheth.

Read here: Union Budget 2024: How FM Sitharaman can streamline IPO processes

It’s obvious from the above data that on average Nifty normally trades lower ahead of the Budget. The main reason behind that is fear and uncertainty ahead of the event. The moment the Budget event is over, the market quickly discounts it and starts trending higher. So if the Budget is not favourable then prices discount it immediately and make an intermediate low on the Budget day. If there is a positive surprise in the Budget, even then it trends higher, as per Sheth.

“Since this is going to be an interim budget, we don’t expect any major shocks or surprises. Markets had reacted to the last two interim budgets (2014 & 2019) on a positive note. Traders can look for long opportunities after the budget if their trading conditions are met," added Sheth.

Read here: Private sector investments key to India’s ambitions, economists say

Suman Bannerjee, CIO, Hedonova

“We anticipate that the Interim Budget 2024 might not bring significant shifts in the stock market or investor portfolios, but it's crucial to closely analyze any key announcements for their market impact. This year, market dynamics are expected to be shaped by political and economic factors, with a clear focus on capital expenditure rather than short-term populist measures. This continuation of last year's strategy, emphasizing long-term infrastructural investment, reflects a commitment to sustainable economic growth. Understanding this government approach is vital for investors as they navigate the financial markets in the upcoming year," said Bannerjee.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 18 Jan 2024, 01:58 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App