FACT:
In last 19 years, since 1991 the Indian Stock Markets have ended negative (down) on 15 ocassions in the month after the budget.
Indian Economic growth as the MEDIA says is back on track with the December IIP surging over a record 16%.
Despite the this record breaking IIP performance the stock markets did not performed the way it used to perform in the past. The key reason I believe is that the street by seeing the sprinting economy is factoring in that the government will withdraw the fiscal stimulus crutches it had given the country when it was on its knees.
Moreover, the government is facing an acute problem of rising fiscal deficit and thus it has to take stern actions to reduce the same. Hence, instead of providing any further perks that could help the corporates it will take back the ones which are already being provided.
Thus, I strongly believe that one should remain extremely cautious and should not go long now expecting a pre budget rally, since its just a MEDIA and BROKER's jargon to get retail investors into the market and distribute the stocks they are still holding. The rally may be there, just to entice the investors and should lead to a sell off after the actuals are out.
Happy Investing..!!
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