Skip to main content

Markets crash on Budget 2009

Stock markets have reacted negatively to the Budget 2009. Nifty has crashed more than 250 points to close at 4150. Why this big crash? The markets had priced in significant positives from the budget and reacted likely due to the following reasons :

1.Increase in the fiscal deficit and accompanying fears of interest rates.
2.Absence of relaxation / allowance of FDI limits.
3.Lack of concrete targets on disinvestment.
4.Increase in MAT rate to 15%, which is a clear negative.

Though the budget has done whatever needed for the sustenance in growth rates of the economy, the fiscal deficit target is higher.

Budget impact on sectors.
Positive impact - FMCG and IT.
Negatvie impact - Banking,Cement, Fertilizer, Media, Real Estate, Retail,Textiles.

Post the correction,markets is set to focus on the evolving fundamentals of the economy and the corporate sectors and factors like monsoons, quarterly results, inflation and economic growth. In the medium term, the markets lack any triggers and the direction could reflect the movement in international markets.Technically market has support around current levels, and below which, the next support is at 4000/3850.

Popular posts from this blog

NSE Trading Holidays 2024

 Trading holidays for the calendar year 2024. The National Stock Exchange of India (NSE) has notified trading holidays for the calendar year 2024 as below: Muhurat Trading:  Timings of Muhurat Trading shall be notified subsequently. 

Historical BSE Sensex returns - updated 2013

We have already seen the historical returns of the BSE Sensex, which indicated an average return of about 20%  per year, despite many yearly returns varying from -20% to +60%. The following table shows BSE Sensex historical data - open, close and the yearly returns of the sensex from 2000 to 2012. There are some interesting points to note from the above table. Post 2008 crash of about 50% and 2011 negative returns of 24%, markets have given positive returns of 81% and 25%. Also the average returns for the past years is about 20% despite the markets being down 24%. The lesson is pretty much clear - long term investing pays and one need not bother too much about the ups and downs of the markets. During the past few years, the returns from investing in individual stocks have been varied.  Despite markets being at 2 year highs, only a few stocks are at similar highs, while most of them are still languishing well below their historical highs and are down anywhere between 8