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The Budget's Impact on Microcap Millionaires - Views on News from Equitymaster
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The Budget's Impact on Microcap Millionaires
Feb 1, 2017

I'm writing to you a couple of days earlier this time because a seemingly important event has occurred today. Finance minister Arun Jaitley presented the country's budget for the year 2017-18 (FY18).

And the markets are eating from his hand. As I write this to you, the BSE Sensex is up 485 points. The mid and small cap indices too are up in the region of 1.7% or so today.

Some of my colleagues are scratching their head in wonder. What was it about the budget that has stocks on fire?

I'm not surprised though. The kind of attention this routine and mundane financial exercise gets here in India, especially in stock market circles, it is only to be expected that the markets react strongly.

In fact, from personal experience I can tell you this. For many on D Street, it has become an outright excuse for speculation. The surrounding hoopla makes it difficult for investors to see it for what it is. And easy to believe that they must 'do' something in response to it.

It is at times like these that it is most important to rise above the noise. Make no mistake, it is an important exercise and does affect some businesses more than others. But these difference in most cases are marginal and incremental. And seldom of the 'make or break' variety.

All put together, the annual budget exercise is very much a part of the 'normal' business landscape of companies. The multitude of tweaks made therein either help or harm the cause of a given company ever so slightly. But so do all the incessant developments, both global and domestic, that happen through the rest of the year.

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