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
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.
More Views on News
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.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
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.
Aug 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Aug 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 4, 2017
The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407