X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Markets: The cat is out of the bag... - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Mar 1, 2006

    Markets: The cat is out of the bag...

    The much-awaited event of the year got over yesterday, as the FM 'performed his rituals' and announced a rather bland Union Budget for 2006-07. Although, there were no major reforms introduced on the tax front, which were largely kept unchanged, there was only some tweaking done resulting in no major surprises. This was unlike last year wherein the implications (of issues like FBT) were understood much later. During the day, like every year the indices showed immense volatility but finally ended in the positive.

    We had recently conducted a poll on our website asking people if they were waiting for the budget to make their investment decisions and the results were quite skewed. Around 62% voted that they were waiting for the budget and 32% indicated not doing so.

    Sensex as onů
      12th Feb 28th Feb Change 1st March 15th March Change
    2000 5,924 5,741 -3.1% 5,642 5,250 -7.0%
    2001 4,406 4,247 -3.6% 4,272 3,820 -10.6%
    2002 3,498 3,562 1.8% 3,679 3,618 -1.7%
    2003 3,248 3,284 1.1% 3,277 3,108 -5.2%
    2004 5,937 5,668 -4.5% 5,742 5,521 -3.9%
    2005 6,679 6,714 0.5% 6,651 6,752 1.5%
    2006 10,173 10,370 1.9% - - -

    As can be seen from the above table, the past trend indicates that post the budget, in five out of the six years under review, the indices have corrected and in some cases, the correction was quite sharp. It must be noted here that history has a habit of repeating itself and hence considering the recent run up of the indices, in our view, 2006 might be no different and thus not be spared.

    Also, what seems apparent is the fact that investors seem to have already factored in the little positives of the budget. Investors were looking for more concrete measures that would boosts investments in the country, which did come through in the budget announcements. For once the markets seemed to have been factoring in more of long-term fundamentals than just short-term stopgap measures. Although, growth in some sectors like infrastructure and engineering is visible due to the projects initiated by the Central government, other sectors like cement and steel shall also benefit indirectly.

    The post-budget equity strategy
    While the short-term traders may not be happy about the 25% increase in STT (securities transaction tax), for a long-term investor i.e., one with a three to five year view, nothing has changed. Equities still remain a high-risk asset class and rewarding in the long-term. Provided there is a decent stock selection process and more importantly, there are promising long-term stories available at reasonable valuations even in this market. Buy those stocks and hold for the long-term and you do not have to worry about yearly budget announcements.

     

     

    Equitymaster requests your view! Post a comment on "Markets: The cat is out of the bag...". Click here!

      
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Which Gods Will Bring Down the US Empire? (Vivek Kaul's Diary)

    Aug 17, 2017

    Mr Trump is in the White House and the gods are in their heavens; what's not to like?

    Will They Haul Off Trump's Statue, Too? (Vivek Kaul's Diary)

    Aug 16, 2017

    All across the country, the old gods become devils. New, gluten-free gods take their places...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Aug 17, 2017 (Close)

    MARKET STATS