Budget 2018 and its Possible Impact on Stock Market

The future movements in the markets over the next month or so will be decided by the contents of the Budget 2018.

Lately both the major indices in India has scaled record heights, the Sensex has crossed the 36000 mark whereas the Nifty has also breached the 11000 level.The future movements in the markets over the next month or so will be decided by the contents of the Budget 2018. Although in the period leading up to the Budget utmost secrecy is observed but some information does filter through, other than that rumours and informed speculations are also what that drives the sentiments of the markets. Generally there are negative sentiments and expectations attached to the Budget thus investors usually postpone buying decisions before the Budget is tabled. Thus in the past mostly the benchmark index has fallen in the month leading up to the Budget and the markets both Sensex and Nifty have seen gains after the Budget has been delivered. This has been the trend in six out of the last nine Budgets. But the said trend has now been broken with the markets touching new heights just before the Budget 2018. Few numbers in the Budget 2018 such as that of fiscal deficit and disinvestment targets will have a major impact on the direction of the bourses. Experts believe that the days leading up to the Budget the markets will see a rally due to various anticipations and right after the Budget profit booking in the stock market may be seen. However, there will be opportunities for investment in select sectors also.

Expected Impact of Budget 2018 on Stock Market

It is largely expected that the Budget 2018 will be neutral for the stock markets thus no sharp surge or dip in Indian indices is being expected. As the said Budget is the last full budget before the Lok Sabha elections in 2019 and before multiple assembly elections in 2018 no major reforms are expected to be undertaken. Experts believe that in the near future with record FII inflows, soaring investments in mutual fund, low interest rates and a strong rupee against the dollar the outlook in the markets is expected to remain positive. Although on the day of the Budget 2018 and the 48 to 72 hours period after the same the markets are expected to remain extremely volatile. In the Budget 2018 the markets would like to see a bump up in Government’s revenues to tackle fiscal deficit but most likely the fiscal deficit target of 3.2% of the GDP would be missed by the Government.