Budget – Known – Unknown
Action Plan -Our Practice
Budget is a known event but some outcomes of the same are unknown ( like elections ) .
It is easier to prepare yourself for these kind of events ( vs unknown-unknown events )
For examples , in this budget , we have following risks :
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% of Capital Expenditure to GDP ratio ( if it goes down , it is a risk for infra sector )
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Spending on Defence , railways , PLIs, Water
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Selling of shares of PSUs thus increased supply of shares ( govt may like to do that as valuations are tempting)
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Capital Gains tax ( increase in rate or tinkering with duration)
Actions one can think before budget -Our Practice before Known-Unknown Events
If you’re a long term & believe in India story , you don’t need to worry much – just wait for the budget to get over & see the Capital allocation to different sectors – you can decrease the allocation where you see the decreasing government focus.
Yes, you should be more worried about your recent purchases where either you’re in a loss or in small profit- you can book those before start of the budget . If budget comes favorable , you can buy them at 3 pm .
If it comes bad , you would have saved some money . Yes if budget comes good , you will get your sold-positions at higher price !
Well the point is that if you are expecting big gains in those stocks, you can buy them at 4-6% higher price also – and still you would make money . The extra money paid is just an insurance cost .
If Budget is really bad – can liquidate your positions partially asap – if you wanna panic , panic early
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