Tag Archives: Budget

NDA’s Interim Budget for India – Big Bonanza for every Indian! #BUdget2019

NDA’s Interim Budget for India – Big Bonanza for every Indian! 

It was on the 1st of February 2019, the stand-in union Finance Minister Piyush Goyal’s tabled the interim budget, which is the final budget for the country goes for polls. So many expected that it would be a lame duck budget. But the perceptions of those critics would have surely taken a backward leap after a highly rated budget presentation by the Finance Minister. 

It really had to be nothing less than a 5 star budget for the people to regain the confidence in the Govt and bring back belief in the minds of the Indians which was otherwise slowly going down on the back of unapproved Jobs Data reported by Business Standard, the Ram Mandir issue and other issues relating to the Govt. People on the left were upfront talking about a potential ‘Election Budget’ by Fin Minister Piyush Goyal, which would hurt the Indian economy but just win the voters for the NDA in the upcoming elections 2019. 

It was not a surprise to many people like me, who were thinking and expecting that the big ticket announcements will be with a connection to Farmers and Middle class of India. That’s exactly what the FM did this budget. NDA planned it in such a way that the economy is not at all hurt by the promises made in the budget, which is what is Right with the ‘Right’. 

Source: ANI – FM Piyush Goyal with the Budget Briefcase

Firstly, the highlights of Budget 2019:

1. No tax on individuals having income up to Rs.5 lac.
2. Under PM Kissan Yojana, every farmer will receive direct bank transfer of 6,000 ₹ for owning farmland 2 hectares. 
3. A Standard deduction for Salaried employees raised from Rs. 40,000 to Rs. 50,000.
4. Threshold limit for TDS on rent increased from Rs.180000 to Rs.240000.
5. Record 3 Lakh crore budget for the Indian Defence. 
6. Raising the threshold limit for earnings through investments/savings for retired/homemakers to 40,000 from 10,000. 
7. Pension scheme for the unorganized workforce of India which will give 3,000 per month after the person attains 60 years. 

My View on the interim budget presented by Finance Minister:

Firstly, Finance Minister, Piyush Goyal has given his best. This was expected to be a really different budget and Piyush Goyal’s oratory skills and presentation of the budget was really very impressive. Not to forget Piyush Goyal is the Chartered Accountant and scored 3rd rank as a student. 

The two big schemes or announcements for this budget will surely be the Income Tax rebate till 5 lakhs and the 6,000 rupees benefit to the farmers. But if asked, I would rate the tax rebate as the bigger announcement. 

With the standard deductions getting increased and with all the other available deductions one doesn’t have to pay any tax even if his income goes up to 7 lakh. Apart from this, the scheme which raised the tax rebate from earnings for non-working women/retired personnel is a welcome move. People will now don’t have to bother much till their earnings are 40,000. Finally, the defence budget has been promised at 3 lakh crore rupees which are the all-time record for the defence ministry. These are some of the real big winners from the budget! 

But how will the Govt earn revenue when he raised the tax rebate level to 5 lakh and how will they fund the other schemes like PM Kissan Yojana and 3 Lakh Finance Budget?

Source: Press Bureau of India

This is the Govt which has the studied economics well. If we think a little bit the logic is easy to understand. With a little effort, even an intermediate student whom I posed this question was able to answer. 

This Govt believes in Consumption as the key factor to drive and grow the economy. Let’s say there is an individual who earns 5,00,000 rupees, till last year he would pay the tax of amount ranging between 5000 to 10,000. But now with the rebate coming in, he doesn’t have to pay any tax. 

So what he would do is either save, consume or invest. If he invests in any kind of financial instrument he would pay either Long term capital gains tax or short term capital gains tax. If he wishes to save, then the Bank will make the tax payment to Govt for showing higher deposits. If he wishes to purchase a product or render any service he would be paying GST. This is how the Govt has well worked on the plan of raising the Tax rebate to 5,00,000. It may look so simple today, only the time will tell how will this work and how much it has really gone into the heads of Indians!

Market Trade Setup 4th February #Nifty

Market Setup 4th February

The February series had started on 1st Feb but little attention was paid on it as that was a big budget day and everyone was taken over by that big fundamental event. The budget came, the market liked it and we had a big rally of over 100 points for Nifty and it closed close to 10900 mark. Now the action is back on February series and if we look at the last four years February is negative in 3 out of the 4 years. 2015, 2016 and 2018 saw declines in February while only 2017 saw February month going up. Last year was very bad with an 800 point fall. There was always a post-budget sell-off seen and last year it was on the LTCG while this year it could be other factors.

If we look at the events this month, we have a lot of political events taking place and West Bengal already in a mini-crisis, many such events can be expected. Apart from that, the Q3 results will continue for another 10 days with many important companies like SBI coming up with numbers. We also have the first monetary policy of the new RBI Governor scheduled for 6th February, which will be closely watched by the market. Then we also have the IIP and CPI inflation data for December and January that comes will throw further light on how Q3 GDP is going to be. Then we have the Q3 GDP numbers coming on 28th of February that will be on the expiry day of February series. 

How is the February series placed?

February series has started on Friday with just 41% long positions on Nifty futures. But the positivity of the budget had led to a lot of buying on Nifty futures and now the overall long positions for Feb series is at 45%. These 45% positions are open positions on Nifty futures which were not closed. On the options side also, the series started a bit heavy with a lot of rollovers and the put-call ratio was 1.65 which eventually decreased to 1.63 by the end of the trade on Friday. The 10700 put has the highest open interest followed by 10400 and then 10500. On the call side 11000has the highest open interest followed by 11200. 

So, one view is Nifty will remain in a narrow range of 10700-11000 throughout this month and if 10700 is broken on downside then we can test the 10400-10500 range which is bearish and can happen if things go wrong politically. On the other hand 11000 is very strong resistance and a very positive political event if at all occurs can break this and in that case, Nifty might go to 11200. So, safely 10700-11000 is the range for this month with a 40% chance of Nifty doing down to 10400-10500 levels and 20% chance of Nifty breaking 11000 mark and going towards 11200 levels. Only political events can break this 10700 and 11000 mark on either sides

What is the Nifty call for the day?

On Friday, you had a profitable day and now we are starting the new week with new cues. A mixed Asian market means we will also open flat between 10870-10900 mark and we are going to see the resistance again at 10920-10940 zone and on the downside, support will come at 10850 levels and another at 10800-10820 levels. We are at the top end of the range and this is just a 300 point range so trading is tough. Wait for a fall and if Nifty falls to 10850 mark and takes support there then go long at 10850 with a 10900 as the target coming today, tomorrow or day after. If Nifty breaks 10820 and goes down, don’t take any positions and just wait for Nifty to find the base. If Nifty doesn’t go to 10850 then also, don’t trade. So, today’s trade opportunity is very specific and it comes only when Nifty goes to 10850 mark and finds support there and doesn’t fall below 10820.

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Market Trade Setup 1st February #BudgetDay #Nifty

Market Setup 1st February 

The month of February is here and 2019 is not a new year anymore! What February kicks in is a very important event of Budget and for the last 3 years, Govt has kicked in the practice of presenting the budget on the first day of the month instead of the last day of the month, which was a practice till 2015. Today is the budget day but this year will have two budgets one now and another in the month of July. This is going to be an interim budget which will be applicable for the first 5 months of this fiscal. Interim finance minister Piyush Goyal will present this interim budget which is likely to bring in a lot of sops for every segment of the population in India.

What are the challenges in today’s budget?

This budget is coming at the back of a dismal jobs data of NSSO that got leaked to a Business standard that has put the unemployment rate at 6.1% which is the highest since 1974. This was countered by Govt which said that this data is incomplete but that’s too little too late. The CMIE which is a private body that the measured unemployment in households has come up with a data that in the year 2018 we lost 1.8 Crore jobs and that will add to unemployment and they put the unemployment at 5.5%. Another big problem that Govt needs to look at is the fiscal deficit targets that Govt has been missing. Govt, when it took over in 2014 had a fiscal deficit of 4.9% of GDP and they brought it down to 3.5% by 2017 but after that the road has been rough.

What might go wrong for Govt?

The Demonetization which served no purpose, GST which hit the MSME sector very strongly has affected the economy as well as the fiscal deficit. The fiscal deficit for 2017 and 2018 remained at 3.5% and for 2019 Govt has aimed 3.3% fiscal deficit but looks like this target will not be met. Govt also has the practice of presenting annual economic survey one day budget but this year Govt has done away with that practice. All this will cast a shadow and the behaviour of the opposition also will be a crucial factor in presenting the budget. The opposition is very vocal and any attempts by the Govt to announce any sops will be met with a lot of noise and disruption and the Govt’s ability to manage the floor also will be a crucial factor to observe in today’s budget.

What to expect from the budget?

This is an election year and every Govt has the practice of presenting something for the poor and marginalised. In 2014 Chidambaram also brought in food security bill just before the elections but that simply did not work. This time Govt will be much wider in the spectrum as well as spending with big announcements expected on the tax front. A huge relief is expected to be given to the middle class and working class. Apart from that farm loan waiver or direct cash transfers in line with Rythu Bandhu scheme of Telangana and KALIA scheme of Orissa is likely to be announced. Added to this some sops for the business class which is the core voter for BJP is also expected. All this might put pressure on fiscal targets and market might not like them.

Budget 2019!
What is the Nifty call for the day?

We have closed our positions yesterday at 10750 and today we are expected to open around 10840-10870 range and that is a situation where we will encounter with the resistance zone of 10950. This is a macro event and only macro events can make markets to break the resistance. If the budget has the strength it will take the market above 10950 and will make it touch 11000. If it is bad then we might break 10700 and might go below that. This is a binary event and involves a lot of risks. Today my strategy is going to be different. I advise you to go long as soon as the market opens at 10840-10870 levels with 10950-11000 as the target. Keep watching the budget moves carefully and try to exit if that range is reached. If there is a fall then keep 10800 as stop loss and exit if things start to get adverse. Budget trading is a professional trading and you need to do it carefully and professionally.

Market Trade Setup 28th January #Nifty

Market Setup 28th January

The 5th week and the expiry week has begun and we are where we were at the beginning of the series. We have not moved anywhere during these 4 weeks and these last 4 days might not be much of a difference. US markets are on positive territory with Dow gaining for the 5th straight week and on Friday it closed up 180 plus points in green. The promise of an end to the shut down seems to have added a positive trigger to the US markets. Today Asian markets are in green, except Japan and most of them are trading with a 0.5% gain with Hong Kong up by 170 points and Japan is the only market which is down 60 points. Brent Crude has settled itself and its trading at 61.5 dollars. 

On the domestic front, there are problems with ICICI. CBI has raided Chanda Kochhar and her husband along with the Videocon offices and that will have a negative impact on ICICI. The main problem is even the present management of ICICI is named in the scandal of giving undue loans to Videocon for them helping Chanda Kochhar. Apart from that Zee also has some problems as Subash chandra is trying to find a majority stake holder to offload his stake in Zee. Q3 results continue to pour in and so far its mixed bag. Following are the Q3 results expected today: Bank of India, Canara bank, Chennai petro, Godrej properties, Escorts, Radio city, RBL bank, Tata power, TTK, Wockhardt pharma. 

On the derivatives front, the action has now firmly shifted to options from Futures. The Nifty put call ratio fell further to 1.37 from the 1.43 mark where it began on Friday. The turnover in the Index options market was 5.53 lakh crore and that takes the overall F&O turnover to 7.24 lakh crore. On Friday, every strike on put side has unwinding of open interest and we saw 4.1 lakh shares unwinding, followed by 10800 put which unwound 3.3 lakh contracts. Still 10800 put has the highest open interest followed by 10700 put. On the call side 10800 call added 8.2 lakh positions while 10900 call added 7.2 lakh positions. 11000 has the highest open interest followed by 10900 call

What is the Nifty call for the day?

Today, I caution you from trading and I know Monday morning not trading is not a great thing to do. Nifty is at 10780 and its likely to open in that band only between 10780-10800 zone and 10820-10840 is the 20 and 200dma and crossing that is going to be very tough. The downside is also not opening up with 10720-10740 offering a great support for Nifty. In such a scenario I would ask you to wait and watch and if during the course of the day any possibility of an options strategy opens up, I would tweet the same. We need to see if 10820-10840 will be taken out or not easily. Till then no point in going long or short.

Market Setup 1st February

Markets, News and Budget!

February is here and its a month which economics wise is the most important month. We are going to start today with Budget. Everything takes a back seat when budget is in the forefront. This is one of the biggest fundamental of the year and none of the other factors should be taken seriously when it comes to budget. Finance minister will be presenting this year’s budget which technically will be the last budget for the Govt before 2019 elections. It is because next year Feb Govt will not present full budget but will present vote on account budget only as elections are scheduled in May. But now there is a rumor doing rounds that 2019 elections will be preponed by 5 months to December 2018 and if that happens then by Feb 1st we will have a Govt in place and we will have another full budget. But this year’s budget will turn out to be different.

How different will that budget be?

If Govt has any plans of advancing the Lok Sabha polls to Nov-Dec then expect a very populist budget. The focus will be agriculture sector and a lot of sops and even farm waivers can be announced. There will be packages to give a feel good factor to trader community who are very upset with the GST. Now, the question is why does Govt wants to advance the elections?

It is because of the following factors:

1. Gujarat election was very tough and fighting 3 tough elections in Rajasthan, MP and Chattisgarh, all BJP ruled states will be tougher. Any loss in any state means opposition unity and Rahul Gandhi gaining credibility just 6 months before Loksabha elections, which Govt might not want.

2. There is a warning about agro production given by the govt in its annual economic survey. What the survey did not talk about is the fear of El nino in 2018 which might affect the monsoon. If 2018 also turns out be a drought year like 2014 and 2015 then agricuture will suffer and farm distress will further increase. The impact on rabi crop will be much more than khariff crop and Govt wants to avoid that tough situation and go to polls with lot of sops to the farmers before khariff crop comes up for sale in December.

All this is a mere speculation and there is just a 20% possibility of that happening. Govt will weigh all the pros and cons before taking any concrete steps. We should not forget the fact that in 2004 Vajpayee Govt advanced the elections to April-May 2004 from Oct-Nov 2004 when they were originally scheduled to cash in on the feel good factor and India shining and they lost the elections very badly. Modi Govt will keep that in mind before taking any such decision. So observe this budget carefully to see it Govt gives any hints.

What to expect from this budget?

For many days there are so many speculations about the budget and finally everything is coming to its climax. Bond yields are going up due to global factors but also contributing are the local factors where there is a big worry of fiscal deficit being missed by 0.3-0.4% of GDP. If the figure is even a fraction above 0.3% then the bond markets will react violently. The equities market has a different worry. They are more concerned about the introduction of LTCG or Long Term Capital Gains Tax. There are two thoughts among the investors.
One section believes that it wont be introduced now and the other group which believes that the time period could be 2 years or more. Both of them will be positive for the market. But if LTCG is imposed immediately or retrospectively then there will be a big crash. Apart from the LTCG the rate of LTCG is also important. Anything upto 5% will be a welcome sign and markets will not react. But a 10% or 15% would be catastrophic and there will be a big reaction to it.

What is the NIFTY strategy for the day?

If you have followed my advise and if you have taken a long position in Nifty at 10980 then you can expect 11200 to be reached today and you can make a 220 point profit and you should exit as soon as 11200 is reached. This is not a time to speculate as there are many factors weighing in this budget. There is plenty of green in Asia and that would mean we will open flat to positive around 11050 level. After that it is the budget that will move the market and wait for the cues. If the target of 11200 is not reached and if there is a crash then keep a deep stop loss of 10850 and wait. There will be a rally post budget also.

What is the bank nifty strategy for the day?

I have also given a call to enter a long position in bank nifty around 27200 and if you had taken that position you will be sitting on a profit of almost 200 points and now the target of 27500 is just 100 points away. We might hit that that target before the budget itself. If that happens, exit take profits and wait. Bank Nifty is even more volatile than Nifty and taking fresh positions is possible only after digesting budget. But in case you dont reach 27500 then keep a stop loss of 27000 as stop loss and wait for post budget rally like in Nifty.