Till a few years ago, dealing rooms used to bustle with activity on the day the Union Budget was presented. Dealers and analysts had to report to work early and those who were part of the institutional desk were flooded with calls from Hong Kong and Singapore-based deep pocketed clients.
Things have changed now. The Budget is still an important event, but few on the street are waiting eagerly for B-day. The primary reason is that the government no longer waits for the Budget to make big bang announcements.
Kaushal Aggarwal, managing director, Avendus, feels the market would be “largely neutral” to the Budget that has seen its importance dwindle in a gradual manner. “The finance ministry in recent years has started using the Budget as one of the messaging platforms rather than the only annual messaging platform,” explains Aggarwal. So most of the investors don’t have huge expectations from the Budget, he says.
Another key reason the market is giving the Budget non-event status is that virtually nobody has high expectations from the finance minister.
Madhusudan Kela, CIO, Reliance Mutual Fund, says the “markets have not built up too many expectations with the Budget this year since the government’s focus would be on fiscal deficit”.
He feels that the government is likely to maintain its current momentum in policy initiatives and that there would be no negative surprises.
However, the coming months would see the market reacting more to global cues and not on Budget announcements, adds Kela.
It is not difficult to find experts this year who subscribe to similar views. With reports that the government will have a tough time balancing growth and the fiscal deficit, the Budget is likely to have large positives in store for the stock market. There has already been a lot of speculation regarding a partial rollback of the stimulus package.
Andrew Holland, CEO - Institutional Equities, Ambit Capital, is confident that "there won't be any big-ticket sops for markets this year as the government battles the fiscal deficit".
"The government is walking a tight rope between growth and fiscal deficit," he adds. But Holland does add that the market will keep a close watch on what the government does for the infrastructure sector.
Samir Arora, fund manager, Helios Capital Management, goes one step further and says that the "The Budget is not likely to have any major impact on the stock markets this year. The government has limited resources this year to come out with any market- friendly measures."
An institutional dealer of a domestic brokerage says the Budget’s dwindling importance can be gauged from the fact that most of the brokreage heads would not even be in office on B-day.
"It’s become more of a public relations exercise rather than a time when their presence in the dealing room was a must. They would rather be in industry forums and electronic media-backed panel discussions," he says.
Some experts, however, do not rule out at least some Budget impact on the market. “Stock markets in India could remain weak after the budget and track only global cues. However, it is likely that markets may witness some action if there is any major change on the global front," says Singapore-based Arora.
