Thursday, November 21

Budget 2018: Last 10 Years’ Figures Show Nifty Rising in the Month Following Budget

If you are waiting for a dip to invest fresh capital in the market, especially after a strong rally seen in the equity market so far, then is this the right time for you?

Let’s have a look what history has to say. If you are waiting for a dip, then chances of happening that are very low. Have a look at the data shown below:

As you can see, the market declined only 3 times out of 10 years(i.e. 2009, 2012, 2015). The Nifty raised 7% in both 2010 and 2011 and considerably 9% in 2016 in the following month of budget.

It is also evident from the data that the scenario is just opposite in the month prior to the Budget release.There’s a dip in the market 6 out 10 times and remained unchanged for the remaining 2 times.

The Economic Survey that was released on Monday highlighted some risks for the equity markets. Market volatility in the pre-budget period is lowest this year. This indicates that unless the event springs up a huge surprise, we do not envisage market volatility will increase post budget, ICICI Secuities told the source MoneyControl.

 

This Year’s Scenario

However in the year 2017, Nifty rose by 11% prior to the Budget and even rose by 3% in the following month, but the analysts predict for 2018 that some profit can be booked in the post month.

“There has been a possibility of some profit booking since the last couple of months. But it seems that the market is in no mood to give any respect to recent hurdles,” Sameet Chavan, Chief Analyst, Technicals & Derivatives at Angel Broking told Moneycontrol.

“However, the important event is around the corner now and the index has reached the important level of 11100 (161% Price Extension of the rally seen in 2008-2010). This level needs some attention and hence, a possibility of ‘Exit on News’ kind of scenario cannot be ruled out post the budget,” he said.

 

How to leverage this opportunity?

Investors are advised to get hold of some cash and release them at every dip. Short and medium term investors can take some money off the table in this rally.

“We see Nifty at 12,000 levels by December 2018. The last rally was led by small and midcap stocks but this time it can be largecaps which will contribute to the new highs in the market,” Ritesh Ashar – Chief Strategy Officer (CSO) at KIFS Trade Capital.

“Yes, profit booking can be there in March. Investors can adopt buy on dips strategy. The current rally is the part of strong Q3 earning and expectations from upcoming Budget. Investors should remain invested in quality stocks and quality management,” he said.

 

(With inputs from MoneyControl)