The week ahead – 26/02/2007 to 2/03/2007
Posted by dipanksaha on February 25, 2007
For years, in India, people try to predict budget. Various lobbies express their wishes for the budget and common people keep waiting – just to know the commodities whose price will be affected by the budget, every year. It is one of the very few economic events that draw attention of common population through out the India. For last one or two years our Finance Minister is trying to make the budget a non-event. So many people expect budget this year will be mere collection of policy changes and some basic structured allocation of fiscal expenditures, major decisions regarding tax structure will be taken latter. I have no quality to or intention to decode what’s going on in FM’s brain. But this week budget will remain market driver. In the first half market will remain preoccupied with the thought of what’s coming and last two days will be spent in analysis.
Last week market was volatile of considerable degree and often kept me wondering, in a nutshell quite perplexed. Nifty50 got downsized by couple of hundreds points. People have many explanations for such fall but definitely market valuation got better especially after December quarter result. Corporate India’s future is still looking bright. Only spoilsport can be inflation. But as primary goods, vegetables and edible oils mainly induced this inflation, it seems cyclical. And sooner the harvest time comes price will get back to their own level. So from here, inflation is looking more like a short-term threat.
Stock market player are also concerned regarding STT. They are expecting another rate hike in this budget also. So by simple rule of market we can say this news of hike has got discounted; what remains is the concern regarding the degree of hike.
To sum up, we can expect budget rally to start from Tuesday with some buying simply because of better valuation. Situation is not much alarming, so we should not expect any horrific announcement from FM. Following FM, if he wants to make budget a non-event he has to make it more inline. And if thing goes inline market have to react positively. No specific level for this week.
