The volatile files

Turbulence is the name of the game as Budget day nears. Do not press any panic buttons though

The week has started and it could be termed as the mother of all in terms of volatility and expectations. We have the Budget on Saturday when a special session of the market would be held, preceded by the Economic Survey on Friday and the Railway Budget coinciding with February series futures expiring on Thursday.

Prime Minister Narendra Modi with Finance Minister Arun Jaitley and other Members of Parliament during the President’s address in the Joint Session of both Houses of Parliament at the beginning of the Budget session in New Delhi, yesterday. Pic/PTI / TV Grab
Prime Minister Narendra Modi with Finance Minister Arun Jaitley and other Members of Parliament during the President’s address in the Joint Session of both Houses of Parliament at the beginning of the Budget session in New Delhi, yesterday. Pic/PTI / TV Grab

In terms of volatility, one just could not ask for more and this being the first full Budget of the NDA government, would have expectations which may be difficult if not impossible to meet.

Wipe out
The four day trading week saw markets rise for the first three days last week before profit taking saw a large portion of the gains wiped out on Friday. Sensex gained 136.48 points or 0.47 per cent to close at 29,231.41 points while Nifty gained 28.10 points or 0.32 per cent to close at 8,833.60 points.

Finance Minister Yanis Varoufakis attends a cabinet meeting in the Greek Parliament in Athens pic/AFP
Finance Minister Yanis Varoufakis attends a cabinet meeting in the Greek Parliament in Athens Pic/AFP

The broader indices BSE100, BSE200 and BSE500 gained 0.32 per cent, 0.33 per cent and 0.44per cent respectively. BSE MIDCAP gained 0.89 per cent while BSE SMALLCAP was up an impressive 1.66 per cent. The top sectoral gainer was BSEPOWER up 2.93 per cent followed by BSECAPGOOD 2.68 per cent and BSEMETAL 2.65 per cent.

President Pranab Mukherjee arrives in a buggy to address the Joint session of Parliament on the first day of Budget session in New Delhi, yesterday. By the way, the columnist just said, hold your horses, in the piece below. We do not think he meant the horses pulling the Prez’s buggy! Pic/PTI
President Pranab Mukherjee arrives in a buggy to address the Joint session of Parliament on the first day of Budget session in New Delhi, yesterday. By the way, the columnist just said, hold your horses, in the piece below. We do not think he meant the horses pulling the Prez’s buggy! Pic/PTI

The top loser was BSEOIL&GAS down 3.01per cent followed by BSEBANKEX 1.50per cent and BSEHEALTHCARE 0.31 per cent. In individual stocks, the top gainer was BHEL up 6.03 per cent followed by TCS 5.37 per cent, HDFC 5.04 per cent, Mah&Mah 4.78 per cent and ITC 4.72 per cent.

In other stocks, Jindal Steel & Power gained a massive 27.61 per cent after it won back the coal mine in the e-auction. Oil PSU IOC was another big gainer up 7.16 per cent. The losers were led by Hero Motocorp down 6.76 per cent after promoters sold some of their holding. Other losers, included Reliance Industries 4.80 per cent and HPCL 4.07 per cent.

Budget
The Budget will be interesting as the government has benefited significantly from falling crude prices and currently diesel too is sold at market prices. To safeguard falling, revenue and crude price increase in future, the excise duty on petro products has been raised over a couple of occasions providing a safety factor for future.

Further, the coal auction where only the first round of blocks has been completed there would be a receipt of over R 83,500 crores. This if extrapolated for the remaining blocks would put the CAG figure of 1.76 lakh crores to be a substantially poor number compared to the actual and of course ridicule the former FM who said there was zero loss.

Very clearly the nation’s resources were looted by people concerned. Add to the coal money is the amount likely to be received from spectrum sale and one would be sure that ample of resources would be raised for infrastructure development in the budget and this would be the stepping stone of the success of ‘Make in India’ campaign.

Open interest at the end of Friday’s trading was at 1.08 lakh crore which means that with a mere four days of trading in the February series left there is ample of interest in the market and the Budget. What would be really interesting is to see what amount of this gets rolled over and how much expires. Even more important would be the premium to be paid for rolling over and whether it increases or decreases from here.

The present value of Nifty is lower by 118.75 points or 1.33 per cent compared to the close of the previous January series. Readers would also recall that the correction began from that day and lasted about two weeks before the smart recovery. Global cues saw Greece again in a crisis over their debt issues and there is no resolution so far.

Dow Jones gained 121.09 points or 0.67 per cent to close at 18,140.44 points. The Indian rupee lost 3 paisa or 0.05 per cent to close at Rs 62.22. FII’S returned to their buying ways after a period of about two weeks and were net buyers of R 4,650 crore while domestic institutions were buyers of Rs 460 crore.

Expectations
What does the common man expect from the Budget? In simple terms that living his life be made easier. Inflation has eased off and the general expectation or demand this time around is that there be more disposable income in his hand.

If Finance Minister Arun Jaitley is able to achieve this he would have secured the confidence of the voter and the common man. The overseas investors want clarity on laws and the assurance that there would be no retrospective amendment of laws, something which has already been clarified and would be implemented in the Budget.

The days ahead will be choppy, super volatile and the extended day of trading on Saturday on account of the Budget would see swings similar to what one experiences in an amusement park. Hold your horses, tighten your seat belts, keep your fingers crossed and whatever else you are superstitious about and hope that the FM delivers. Just one piece of advice: Do not panic.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website http://ak57.in

Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions.

Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.

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