Expecting A Lack Lustre Budget

For the first time in last so many years, the MEDIA has actually not as big a hype surrounding the union budget as was the trend in previous years.

The only thing in contention is that whether or not the government will withdraw the stimulus package all at once, or will phase out the exit. There is hardly any probability of any new perks for industries with which it would benefit.

Based on the railway budget, it seemed that the government is in a mood to go for more socialist causes, since despite a shrinking surplus for the Railways, Mamata di did not hiked any of the passenger fare or the freights. Hence, if Dada also goes for socialist causes the deficit situation would worsen and can cause a selling in the broader markets and banking in specific

The economic survey document released today highlights the three key issues:

• Growth coming back on track and will reach around 9% by FY12
• A "gradual rollback" of stimulus measures after assessing the impact on each sector
• Concern of high food price inflation and this spreading to general economic inflation

Thus, I believe this budget to be a non-event in general, however too much socialist expenditure to cheer the AAM ADMI or a higher than expected roll back of the excise duty and higher than 5.5% announcement of FY11 deficit could lead to a sell off in the markets.

You could use the LINK to download our research team's Consensus budget expectation report.

Happy investing.

Bye Bye Fiscal Stimulus...!!

With the Indian economic growth back on track the ministry feels that the it is the time to withdraw the duty cuts offered last year. This could have a negative effect on industries across the board, especially the likes of Steel, Automobile and Cement because of a reduction in the demand owing to an increase in the excise duty.

Moreover an increase in the excise duty would also increase the general price level in the economy which would worsen the inflation situation.

Thus, this gives one more reason for one to remain cautious and not to take euphemistic long positions in the market based on the views of the SO called experts on TV, since they will only make money if they get advertisement revenue, which in turn depends on increased number of retailers watching the business channels and retailers only watch business channels in the time of a market boom and not in the adverse times.

One can still start SIP investment in the stocks I have already mentioned many a times: Hawkins, Crest Animation, Infoedge India and Zicom and avoid chasing the rate sensitives and completely ignore the BUY ON DIPS advice.

Happy Investing.