No one knows!
There is one famous Chinese story.Here it goes:-
Once upon a time there was a farmer X in small village.He had a single horse.That horse also ran away one fine night.All villagers came to give condolences and said to farmer X that it was sheer stroke of bad luck.Farmer X replied-Who knows?I will Keep moving as before.Soon after there was some disease broke put which affected working potential of all other farmers' horses.All villagers said to farmer X-Good luck.Farmer X replied-Who knows? I will Keep moving as before.Soon after some more days farmer X's horse returned and he was disease free.All villagers said to farmer X-Good luck.Farmer X replied-Who knows?I will keep moving as before.After some more days batallion came to village and took farmer X's horse as it was disease free.All villagers said to farmer X-Bad luck.Farmer X replied-Who knows?I will keep moving as before.
Who knows??
On same lines is unfolding of budget- a mega economic event.High amount of speculations on new policies being roll out,ammendments in old policies etc. and markets keep moving in tandem with these speculations till actual budget is rolled out.
Ultimate loser is trader who tries to ride this tide by trading on every speculation!!He ultimately just becomes a puppet in hands of speculators!
Like this year also the speculation is that Finance minister will be able to chart out the path for 8% GDP growth.But pulling out on stimulus,scrapping off the oil and fertilizer subsidies' partially,stringent policies to tackle fiscal deficit,rise in excise duty are all on cards. So growth of GDP at 8% seems questionable.
But then other school of thought is that after China only India can become big time feeder for western economy post downturn.So budget will consist of policies to leverage on this very opportunity.This may include positive surprises on 3G,MNP,GST,PE-VC funding etc.
So finally markets are heading to...no one knows.
So plain vanilla advice given by big time analysts' are:-
1)Markets do tank on uncertainty as humans do.
2)Resist the temptation of trading before any big event.When in doubt stay out!
3)In case of mega event like budget be Reactive and not Pro-active.
4)Hold your nerves and Never sing until you win!
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