Don't panic if markets fall post-Budget

Don't panic if markets fall post-Budget

Use the opportunity to increase equity exposure because these are short-term blips

Even before the Union Budget has been announced, stock markets fell steeply on Tuesday after the announcement of the Railway Budget. With the hype being built around the Union Budget one should not be surprised if the market fall on Thursday as well. But instead of panicking or rushing to sell, retail investors should use this opportunity to enter the market or increase their exposure.

Rahul Rege, Business Head - Retail Emkay Global Financial Services says that if the market falls post-Budget, retail investors should use the opportunity to increase their exposure to equity. "Investors should look at specific stocks, instead of sectors since they are getting stocks at 2008 valuations. Everyone is waiting for a correction," he says.

The fall or gain post-Budget will not be very sharp, says Aviral Gupta, Founder & Fund Manager, Mynte Advisors. "The India VIX (Volatility Index) is not reflecting the importance of the Budget. It was higher during the election. Since the interest from foreign institutional investors is very high, a downside will not last more than a day or two," he says.

Gupta too advises retail investors to use any fall post-Budget as a buying opportunity.

"Similar to the Railway Budget, the Union Budget too will focus on a restructuring of the whole system and how to make it more efficient. So, it is a good idea to add cyclical stocks to your portfolio because in case of a restructuring, these will gain,'' he explains.

Single day movements could be erratic because of investors taking speculative positions and selling out. But this should not impact the long-term decision for retail investors, says Umang Papneja, Chief Investment Officer, IIFL Private Wealth Management.

"A fall in markets post-Budget, if at all, would be temporary and retail investors should not panic. It is too early to make a sell call as it is only the start of economic recovery. Short-term movements could be erratic, but if you are overweight in sectors which will benefit from a recovering economy like banking, cement and infrastructure, then you need not worry. Even mid-caps are a good buy because they will do better in a rising market than large caps. And if you are one of those who has not yet entered the market, then a fall in the market is a good time to enter,'' he explains.

 Any downside in the market will not be too much, says Feroze Azeez, Director and Head Investment Products, Anand Rathi Wealth Management. "The direction of the Budget has already been established by the actions taken by the government so far. The government is focused on growth as is evident from the decision to hike railway fares and oil prices. That is why the markets have run up prior to the Budget. What the Budget will clarify is the pace of action. If the pace is not in line with market expectations then the market will fall,'' he says.

Since 2009, the Sensex gained in the month following the announcement of the Budget, except in 2012 and 2013. Even in 2013, though the Sensex fell by 0.14% one month after the Budget, it gained by 6.89% over a three-month period.

Azeez recommends getting back to defensive stocks, for a two to three period, since they are available at a good valuation. "Defensive have been beaten down and in a rising market they will also do well. So, retail investors can stock up on defensive stocks," he adds.

Business Standard
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Regards,

Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com


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