Observers have a different way of looking at the markets or the events impacting the market.
The buzz on the budget day was about LTCG or STT abolition. There were noises about tax concessions for the middle class. One by one the budget proposals were unveiled and in the end it was a populist election budget. I never read too much into the praise of the budget proposals by FICCI or Experts on Business Channels. These people almost get it wrong every time. As far as the relief to the traders were concerned , there was nothing.
Well, NIFTY ended higher by 62.70 points for the day.
Let us not forget that the high point of the day was 10983.45. NIFTY lost 90 points from the high point.
The fact to note is that with the budget announced and the event out of way, we are just 35 points higher than November Expiry. With the Lok Sabha Elections around the corner, we may see high volatility but ending up at same levels as it is happening over last 2-3 months.
How the market likes a purely political budget is beyond comprehension.
And the talking heads on TV can become highly ridiculous. An Example:
” With the likely higher allocations to farm sector and benefits to farmer, Escorts and M&M stocks should gain as these are major manufacturers of tractors.”
As if with Rs. 1500 extra in their pocket every three months ( Rs. 17 per day ) the farmers will be just queuing up outside the tractor showrooms.
Yes, probably some of them did. Then they found out that Rs. 17 per day does not go a long way in buying a tractor. The stock prices came down from the highs. I agree that they closed higher than previous day but such irrational things happen from time to time. Reality returns after few days. Let us wait for that time.
If some traders made money over last 2-3 days on long side, congratulations to them.
We shall trust our method of finding out strength and weakness of individual stocks and buy our options as we have been doing over last 9 months.
Budget day or any other day are same for us. In fact they are same not only for us but for every trader who does not get carried away by the events.
On February 01, 2018 ( Last Year Budget Day ), NIFTY low was 10878.80 and the high 11017.35. The closing NIFTY was 11016.90. The close was almost at the high point of the day.
We know what happened after that. On February 22, 2018 ( February 2018 Expiry ) NIFTY had closed at 10382.70.
A year later the high on the budget day was very close to last year number but the closing at 10893.65 is about 123 points lower than last year.
In 12 months, we reached nowhere. In fact we are down by 123 points.
My conclusion is that over next few months the number of losing stocks will be more than the number of gaining stocks. I am not an expert but I earn my livelihood from trades derived from such conclusions.
Talk on TV is free. My talk is also free but I put my money where my mouth is and expect to make money from such actions.
I may prove to be wrong as I was proved wrong by the budget in 2016. But we have to trust our judgement for success in the market. Let people live with non directional trades. We keep faith in what we do and take directional calls. Fortune favors the brave.
The budget is over. We are back to normal life. As always, trade cautiously, trade profitably.
Enjoy your Sunday.
Please visit again on Monday morning for February Expiry Option Buying Series.