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Market Watch | Budget week, already?

india Updated: Feb 24, 2008 21:02 IST
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It's been such a quiet run up that one may easily be forgiven for missing it altogether; the fact that we have a Union budget at the end of this trading week. Forget a market rally, I don't think I have heard the term budget more than half a dozen times last week.

Now the event is almost upon us. To be sure, while the RBI's credit policy in these days of interest rate swings is hardly a non event, the budget - at least from a stock market perspective has been a thumping non event the last couple of years. Chances are it will be three in a row this year yet the door is open for a surprise, if only because expectations are truly low.

In the current moody state the market is in, that can only be a good thing. At least there is no negative trigger lurking in the heavy weight of expectations. Yes, a month back the cry for corporate and personal tax cuts had reached audible levels but they have receded to a whisper since. Now, people will be happy if the corporate tax surcharge goes and personal tax slabs are tinkered with to allow some relief.

Anything more will be a bonus. If these don't happen, the markets won't sell off either, they are marginal changes anyway. Hopefully nothing silly will be done with the capital gains tax regime. For the rest, it really doesn't matter.

Personally, I am skeptical about the ability of coalition politicians to craft progressive, forget reformist policy documents and downright cynical about the prospect of "implementing" any such policies. I doubt if it makes sense to get excited about new infratructure focus schemes etc and buy cement and construction stocks, as one look at the past few years will convince you that the gap between an announcement and it's execution is yawning.

Nowadays, sentiment is bad, and yes some direct tax changes can help lift the mood but beyond that I doubt if the budget is that crucial to where the market will be in March.

It's an important week for global economic data points. In these days of emotional bondage or "coupling" with global markets one has to keep an eye on these things : whether a few more American workers filed jobless claims in Iowa or fewer housing starts happened in Minnesota. What to do.

So yes, there's plenty of such US data this week coinciding with our derivatives settlement to make matters nice and stormy. And for a warm up this Monday morning, there is Reliance Power. 3:5 is close enough to 1:2, so expect Reliance Power to maybe get back to around it's issue price of 450, and then drift till it goes ex bonus.

Post that we should drift down to that 300-350 band again, and stay there. Anil Ambani has done the honourable thing of providing an exit to his shareholders around 450, that much at least would have been expected of an Ambani.

(Udayan Mukherjee ia an Executive Editor, CNBC-TV18)