The Finance Minister will present the Union Budget for 2016-17 on February 29th. As part of the speech, he will give a detailed analysis of the Indian economy’s performance as well as the government’s finances. This usually moves the stock markets. This is why it is important to be ready for the Budget. Here’s how:
Also read: Union Budget
News Updates: Always keep track of the statements made by the finance minister and other big names ahead of the budget day. It may give you hints on the government’s financial plans. Reading up on budget news is the best way to stay updated. You can also personalize your browser’s newsfeed and set the keyword ’budget’. This might increase your sense of trading opportunities that might be available.
Check The Current Economic Scenario: The government will set its policy on the basis of the current economic conditions. So check for fiscal deficit, interest rate, inflation and growth data. This will also decide the market’s reaction to the Budget. Knowing about it can help you be prepared and trade wisely.
Expect Market Volatility: The stock market often witnesses high volatility around the budget. The demand and supply of stocks keep changing every day. But, expectations may be riding high on the Budget day. So, disappointed investors could sell while buoyed traders could buy in droves. As a result, the market movement could be larger than normal on that day. Don’t be surprised by the sharp swings in the market, anticipate and trade accordingly.
Understand The Basics, Impact Of Tax Proposals: Politics and economics are greatly connected. One move from the government could have many repercussions. Read up on the basics – what is fiscal deficit and when is it good? Can budget affect your interest rates and investments? Read up about likely tax proposals too. It could lead to changes in prices of goods and services as well as your own income and spending.
Cash Will Be Handy: You may want to ensure that along with stocks you expect to rise and have invested into, there could be opportunities lurking to buy as the budget is announced. It would be a good idea to keep some portion of the portfolio in cash ahead of the budget. In volatile phases of the market, cash comes in handy to seize opportunities to buy at lower prices and sell higher.
Read up news and finance minister’s statements ahead of Budget.
Check for fiscal deficit, interest rate, inflation and growth data.
Understand the basics and impact of various policies, reforms.
Also read: Highlights of Union Budget 2019
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