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The internet broke into a frenzy the day finance minister Mrs. Nirmala Sitharaman announced that the upcoming budget is going to be the most unique budget presented in the last 100 years. Twitter was abuzz with memes and predictions. But for retail investors or a beginner, this frenzy made little sense. So here is Shyam Advisory, explaining to you the importance of budget and what it means to the investors. Understanding the budget, its nuances, and everything else related to it will help you in choosing wisely among Bank nifty Tips, and Crude oil tips.
The Budget is the annual statement of proposed expenditure and earnings of the government. It has been mandated in the Constitution of India that the Budget be presented in the parliament. A fact which is not commonly known is that it contains the data for 3 financial years. In every country, the budget is probably one of the most exciting moments for the capital market as well as the entire economy. Not only does it contain a detailed explanation for previous expenditures but it also brings forward the approach the government has in mind for the future of the country. Therefore, each annual budget can be seen as a stepping stone in the economic progress of the economy.
A budget is composed of two parts viz the Finance Bill and The Appropriation Bill. The finance bill deals with the manners in which the government raises the money. It includes taxation details, Bonds floated, loans taken, and grants received. The Appropriation bill, on the other hand, contains a detail of the manner in which the government is allocating money to various ministries. Hence it has a detailed explanation of the manner of spending of the ministries.
Historically, on every budget day, the market swings wildly. With every line the finance minister speaks, it appears to have a bearing on the market’s sentiment. So while a long-term investor might like to wait and watch, swing traders are in for a treat because the volatility on a budget day is usually a record high. Speaking in terms of share market tips, the intraday tips can either hit the stop loss or make you one of the biggest profits you might have received, ever.
Let us admit that the new decade, starting with 2020 has not been anything we asked for. Because of the Covid crisis that emerged out of China’s Wuhan market, everyone had a very rough year. The market tested patience as they touched historic lows of 7000 during the March April crash of 2020. Apart from the stock market, the Indian economy was badly disrupted because of having one of the harshest lockdowns, all over the globe. Due to the impending labor crisis, agrarian struggle, and the credit crunch, the Indian economy entered a phase of recession, after showing negative GDP growth for 2 consecutive quarters.
But soon after that, India’s economy rose back boosted by the PM AtmaNirbhar package, along with global stimulus. As of today, India has rebounded sharply with manufacturing PMI numbers looking strong, 2 vaccines being used, and lastly but definitely not the least, a soaring stock market. It is this context that makes the budget of 2021 a must-watch event. We will constantly update our readers with relevant stock option tips and Bank nifty tips, before and after the budget.
In the above-stated context of pandemic, recession, and recovery, the challenges before the finance minister are clearly overwhelming. And it is in the face of these challenges that she has promised a ‘once in a century budget’. It goes without saying that her priorities are going to be the allocation of funds to the projects with a great multiplier effect as well as supporting the existing ones to prevent job losses.
It goes without saying that the likely focus of the budget is going to be on the demand side as the government has already thrown its major efforts in the supply side. Therefore the major sectors that are likely to benefit from the new budget are Construction, Healthcare, and Rural Economy.
Before the onslaught of Covid, the construction sector employed close to 65 million in India directly and nearly 35 million employed in associated industries. Reviving the construction sector will boost up the demand for steel, electrical items, and cement directly. Its indirect beneficiaries are going to be appliances, gadgets, and furniture goods. All of these industries are labor-intensive and hence focussing on them will go a long way in reviving the employment creation activity.
With this approach, the government is likely to help the urban poor and the migrant workers, both of them being badly hit by the pandemic. Along with a renewed focus on these sectors, the government can also bring about tweaks in tax laws and a change in interest rates through interest subvention to make affordable housing a reality on the eve of the 75th anniversary of India’s independence in 2022.
Even before the pandemic, the state of India’s healthcare was in shambles. With just 2% of GDP being spent on public health, India ranks low when compared to its G20 peers. Public healthcare is the first point of contact and sometimes the last resort for all of those who can not afford costly healthcare in expansive hospitals. The pandemic has just highlighted the loopholes in the existing healthcare system. Even prior to Covid, healthcare saw a nearly 25% rise in outlay over the 2019 budget in 2020. The upcoming budget can certainly bring about major changes. With the global focus being reshifted towards affordable healthcare, India is not going to risk its global image by not increasing attention to healthcare, especially with 2 vaccines being used on the public.
Along with healthcare, India’s next big soaring spot is education. It is a well-known anecdote that an educated mother is likely to give birth to healthy children. Over the past years, increasing budgetary allotment to the education sector has come from the education cess, levied on top of the income tax. This is likely to be changed as prior to the pandemic, digital education was only promoted. Now it has become a priority. And even though the country might return to normalcy, some learning is likely to remain online. This needs a significant amount of funding for digital infrastructure. Therefore, the budget can be a big boost for NIFTY IT segment stocks. If you are looking for a suitable Stock Option Tip, then IT segment stock should be the preferred choice.
It is an open secret that Indian farming is highly unremunerative, even though 65% of the population depends on agriculture and related industries for survival. That the livelihood opportunities are very limited in rural India was highlighted when during the post-pandemic period there was a rush for jobs in MGNREGA. The scheme needed an additional 45,000 in the June July period, and even that was unable to satiate the demand for jobs in rural India.
In a scenario where the govt. is aiming for making India a 5 trillion economy, there is a dire need for increased allotment to the scheme and improved job creation activity in rural India. Since the targeted spending in rural India was disturbed by the ongoing pandemic, the finance minister is likely to go long on rural India. Investors can make possible gains in well to do companies engaged in the rural Indian segment. In the commodity segment, our commodity tips will be updated post-budget announcement.
Therefore the budget is likely to be a big influencing factor on stocks in the insurance sector, education sector, and agricultural sector. The impact on the rupee movement can only be predicted once the budget has been presented in the parliament. Readers will be updated with profitable currency tips in the wake of the budget.
Shyam Advisory posts regular NCDEX tips and MCX tips that aim to keep you in sync with the development in the market and economy. Our intraday tips and stock options tips have been trusted by our valued customers. While following any investment advice, readers are suggested to use their discretion.