Your 2021 Budget Trading Blueprint

Hi, this is Vijay Bhambwani. I hope you're enjoying my videos, and you're taking away a lot of learnings and profitable trading tactics from these videos.

Now, in this video, I'm gonna talk about a potential, a few rather, potential money-making investment strategies and trading strategies for very a predictable, cyclical, and periodic exercise, which is annual in nature, which we call the budget. The union budget.

Now I have talked about the cyclicality of the market and how markets move in somewhat predictable manner and how trader should basically ride the coat tails of these predictable events and make trading and therefore earning profits relatively easier. Of course, it pays to get profits faster and the quantum, the magnitude of the profit itself, is also higher.

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So I am going to talk about the budget and which particular sectors it can potentially reward and therefore favour. Remember, we are not talking about individual stocks, but the sectors and, as usual, a caveat here we are talking about probabilities, not certainties. We can only conjecture that probably this event will help so in so sector in such and such manner. So let's dive in and get into our topic which I have chosen for the day.

The first and foremost sector that I feel will get help by the budget is the real estate and construction sector, the infrastructure sector. The reasons are not very far to see.

Remember my video about vested interest in the market, about how Napoleon would chose his generals who were known to be plunderers of small villages as long as they plundered a little bit and made money on the side. Napoleon don't really care because he was interested in conquering the country itself.

So, looking in the larger picture, you will see, ask any banker worth his salt as to where the maximum loan book exposure of the Indian banking space is, and you will realise that it is in the real estate sector.

You can't really have the real estate sector going down and defaulting on all these bank loans. So I believe that low cost housing, real estate sector infrastructure, for the very simple reason that if you Google search and go to the centre for monitoring the Indian economy, you will realise that the largest employment generator is the infrastructure sector in India. So these sectors, the real estate, construction, infrastructure, and heavy engineering sectors will receive a favourable treatment from the budget and I am bullish on these sectors.

The second one I have chosen is the automobile cum commercial vehicle sector. Now you can't really have an economy which is moving well and smoothly, moving like as if its wheels are greased well, unless you have the commercial, i.e. the heavy and medium commercial vehicle sector rarely booming.

These a proxy plays. By proxy plays, you can basically get to gauge the health of the economy by seeing the sales of the commercial vehicles. My gut feel and my reading of the market based on charts and a 360 degree view, empirical evidence from 34 years of trading, is that the commercial vehicle sector is in for some relief in the budget and therefore, these sectoral stocks should also do well.

Now the third sector is a sector which is now established as a place where the retail rank and file consumer and borrower gets his money supply from. I'm, talking of micro finance institutions, NBFCs, and loan giving institutions.

This segment is critically growing at pace which is far faster than many other sectors that are jostling for our mind space and eyeballs to invest money there. My feeling is that the NBFCs and micro finance institutions are likely to receive favourable treatment, low cost loans, and their cost of funding is going to go down.

Remember that on 11th of January 2021, a new index call the Financial Sector Services Index, is being launched in the derivatives space in options and futures, which will comprise of banking and NBFC stocks. There is a reason why things happen in the financial markets and the reason, if you actually were to observe under a microscope, are invariably financial itself in nature.

So it's not really a coincidence that on 11th of June 2021 you have this index being launched and the budget coming in three weeks or so.

The fourth sector, I believe, should receive favourable treatment is the EOUs. Export Oriented Units. Our exports are coming down. The reasons are not far to see. The global slowdown due to the pandemic, sluggish economies worldwide, and a whole lot of other reasons.

We need to pull up our socks, spruce up our act, and basically give a big steroid shot to our forex income. So my gut fell is, export oriented industries are likely to receive a steroid shot, a shot in the arm, a booster dose, call it whatever you want, in the budget and I would bet my money on this sector.

Renewable energy space. I made a video about why silver in India, in kilo terms and in denominated in rupees per kilo on the Indian exchanges, should hit an all-time high in 2021, even if the price does not hit an all-time high in US dollar terms.

Remember the giant renewable energy park being made in Kutch, Gujarat? Renewable energy is going to take us off our dependence on fossil fuels and two thirds of all our imports in India, which cost us foreign exchange our fossil fuels.

So the faster we move away from fossil fuels, the more foreign exchange we will save. We have no shortage of some light and wind in our country. So renewable energy is a green source of energy, environmentally friendly, plus commercially viable, and extremely critical, where forex reserves are concerned, and therefore I feel, stocks in this segment are likely to all perform the broader market.

The sixth one is a sector, not really a sector but it's more of a category of stocks which I have talked about a lot in the last 2 to 3 months and many people may or may not agree, hey, the choice is yours. I am talking of public sector units, stocks of government owned companies.

Like it or not, PSU stocks are likely to jostle for mind space of both traders and investors, and especially those companies which have been slated, which have been earmarked, for divestment. Wherever the government is likely to try and off load its shareholding and dilute its shareholding in favour of the public.

A basic reality checked of what is happening before the public issue, especially of those companies where the stocks are already listed. We traders are brain warriors. We win or lose our battles in financial markets with our ideas and with our heads, with our brains. Just think, if you were to sell shares in your existing listed company, would you like to sell them at a higher price or would you like to sell them at a lower price?

So the companies that are due for divestment, those stocks should ideally fare well. Let us not forget the granddaddy of all LIC, the Life Insurance Corporation of India and it is slated for a gigantic public issue of, hold your breath, 80 to 90,000 crore rupees. In its portfolio are a huge number, millions and millions of shares of public sector units.

So if not the divestment of these public sector units itself, but to raise the NAV and the portfolio value of LIC before its public issue where its books are going to be spruced up and brought to order, I think the public sector unit stocks are going to do extremely well and you have the government of India ensuring that this game plan succeeds. Nobody is more powerful than the government. I call the government be brother. Now these are stocks that big brother is going to push up and hey, I always follow big brother. It's profitable.

This is a gigantic space. There are a lot of companies available for you to take. The only thing I would tell you is choose those stocks where the relative strength comparative, do not mistake it with relative strength Index, I am talking of RSC, you can go to a technical analysis website where charting is free investing.com or chartview.com, and plot a relative strength comparative oscillator.

Basically, what we are trying to do is shortlist those stocks which falls less in a falling market and rise more in a rising market, which means we're relatively speaking, it outperforms the stock it is being compared to. I choose the Nifty as one benchmark and the stock to be benchmarked against it, whether it is higher or lower on the relative strength comparative vis-a-vis, the Nifty.

So go ahead and choose the best possible stocks. Remember, this is not too early to start placing your bets ahead of the budget. The wise guys come out and get positioned in their stocks many weeks before the budget is due for announcement, and they're also equally quick and nimble footed in getting out of these stocks. Remember the early bird catches the worm. Be an early bird. Position yourself well.

I wish you a Merry Christmas in advance. I hope you have a very, very profitable trade from this video. If you're watching this video on YouTube, don't forget to click like on this video. Subscribe to my YouTube channel if you haven't already done so. Click on the bell icon to receive alerts for future videos, and in the comments section, do let me know what you think of this video and what you want me to record in my next.

Take very good care of health, your investments, your trades, your family, and friends. Have a very profitable day. Thank you for watching my video. Vijay Bhambwani signing off for now.