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Expectations from the Budget FY 2012 – 2013

We have all been discussing the budget and desperately waiting for it. It has been the talk of the town for now.

Especially after the UP elections, the UPA budget is what everybody right from the common man to the top-notch investors are concerned about.


Some background

With the strengthening of market by 25% this year, there is optimism in the air. In the last six weeks, there is visible growth potent enough to build our hopes.

It’s the Union Budget that can be the initiator of development this time. While it was only $ 400 million by the means of FII (Foreign Institutional Investors) that could be drawn into the equity market last year, the scenario seems to have improved already with around 4.5 billion dollars (USD) being churned out.

The market experts have also announced that there are high probabilities of the budget being in favor of the equity market as amnesty schemes, liberalizing infra-funding issues and agricultural development are some of the pivotal areas where this budget seems to focus on.


Be cautious

Though the market is visibly on the brighter side, it is surely irrefutable in nature. Though the risk- reward ratio might appear to be in correspondence, it is suggested that one ratifies the stock of one’s choice rather than investing in varied sectors and experiment. This might alleviate the losses in case there are chances of the market turning volatile.

It is generally observed that the market and all the financial sectors seem to revive themselves before the drafting of the budget as everybody anticipates a reassuring change with varied measures to be incorporated in it. The market watchers have also assured that there is likelihood that this budget might be an exception.

However, there is a need of being extra cautious without getting anxious at this eleventh hour. Getting into the equity market at this point of time can turn out to be beneficial. Having a conscientious understanding of the market with the requisite knowledge of each share is mandatory before investing.


The overall economic scenario

Domestic investors as always have been playing safe by prudentially investing in stocks that can fortify their investment and mitigate their losses.

Though the market seems to be amicable now, there are high chances of situations changing drastically in the next 6-7 months. There are high hopes from all around the world owing to India’s sustainable growth and development with an affirmative market and the immunity it has portrayed in the last few years.

The soaring prices of crude and the economic crisis that countries like France, Greece and some others have been undergoing is one factor that has been adversely affecting our GDP rates. Global liquidity surely seems to be on the advantageous side.


What can we expect

The inclusion and implementation of these government policies is capable of creating a significant impact. Also the skillfulness that the Center may depict in terms of handling the Fiscal Deficit may also act as a driving force. We can look forward to a positive scenario if the domestic policies go for some reformation and the issue regarding the crude prices is dealt proficiently.

Analyzing the market trends and investing judiciously in shares that seem to be stable without any drastic alterations are the ones to be preferred at present. Investing with the right incisiveness is recommended, as it can fetch you gains without making you susceptible to major losses.


This is a guest article by Kotak Securities. It is one of India’s leading stock broking firms offering stock trading, mutual fund and IPO investing service’s along with a research division specializing in Sectoral research and Company Specific Equity Research. Voice your opinions about the Union Budget 12’-13’ through Facebook and Twitter or you can also browse through their various videos on YouTube and Slide share.

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