Will the Union Budget 2020 by Finance Minister Nirmala Sitharaman Disappoint the Markets?

 

UNION BUDGET 2019

The agenda of the new India was prominent in Finance Minister Nirmala Sitharaman’s ‘ledger account’. Under this, objectives have been set for giving clean India, lodging with each family, water to each family and power, gas associations with each house. Introducing the outline for quickening the pace of improvement, the eager crucial water, and lodging in the middle.

The administration of Prime Minister Narendra Modi came back with an immense command, in the principal spending plan of its subsequent term, the new India motivation was advanced. It was on this motto that the Modi government went to the surveys and turned out winning with a pounding dominant part.

The legislature has defined a few objectives for 2022, with its decadal and five-year objectives, when the nation will celebrate 75 years of freedom and 150th birth commemoration of Mahatma Gandhi. These incorporate Swachh Bharat, lodging with each family, water to each house and power to each house, gas associations. The following period of the Swachh Bharat Mission focuses on solid waste administration in each town. Ladies’ self-improvement gatherings will likewise be shaped in each locale.

UNION BUDGET 2020

Since so many years the day of the Union Budget is normally a Full action-packed and roller coaster ride day of record trading volumes in the Indian stock market and this kind of event, not a single trader will try to miss.

If you don’t have seen the calendar already, please make an important note that is it scheduled for Saturday, 1 February 2020. Both the National Stock Exchange and Bombay Stock Exchange have made an official announcement that Indian stock markets will open like a normal trading day.

Each year the union finance budget gives a new fresh ray of hope and also builds a lot of expectations from the finance minister and the government in the forms of reforms, policy, and relaxations. It is seen more often that these hopes, expectations, and excitement leads to major setbacks and disappointments. However, then also every trader and investor each year still dare to think more optimistic. And now this year, as always, we are asking these questions.

Will the Union Budget 2020 disappoint the Euphoria this time as well?

Dalal Street and Industry Experts Expectations from Union Budget 2020

We are hearing lots of rumors and speculations of the removal, abolishment or relaxation of Long Term Capital Gains Tax (LTCG), Securities Transaction Tax (STT) and Commodities Transaction Tax (CTT).

Then there are a lot of positive views had been built up with the respect to rationalization or a cut in personal income tax. And specifically, expectations of every Indian have gone up drastically, especially after the big announcement of Union Finance Minister Nirmala Sitharaman (FM) reduced taxes for corporates and foreign companies investing in India in September 2019.

There are a couple of several hopes and optimism by various different sectors from the budget as well. On the Contrary, the Indian Government is facing massive and tight fiscal deficit crises at present and due to that nobody is sure how much the finance minister will deliver.

On another hand Even if the Finance Minister walks the tightrope and delivers on all the major expectations that have built upon there won’t be anything left to surprise the markets and as a result, we might be also witnessing a huge profit booking in Indian Stock Markets.

And other scenarios, if Finance Minister fails to deliver the hopes and expectations then it will disappoint the market players and Foreign Institutional Investors that will trigger a huge sell-off or worst case may be a massive bloodbath on Dalal Street.

As we analyzed with every angle there are a lot of ifs and buts in this year’s Union Budget.

As every follower and subscribers know that I don’t recommend trades based on expectations and assumptions. I truly recommend trades based on viability and certainty. And the only thing which is always absolutely right and real in the financial markets is the price. And that is the only reason every trader believes that Bhav Bhagavan Che…Price is God.

I had already done a thorough review and research from the perspective of price action, data analysis and also other parameters in Nifty at the beginning of the month. My views on Nifty is still the same as also I analyzed the futures and options data from the previous month which is December expiry.

However, after the recent sharp fall in the benchmark indices, Nifty still showing and moving in a strong rising channel and until it sustains here the bulls would have the upper hand and advantage to maintain the stability and control on the markets. Contrary, we also witnessed bearish divergence in the Relative Strength Index remains a major factor of concern even now for the bulls.

And also one more interesting factor that Bank Nifty is becoming a bigger and riskier concern for the bulls now because it had not risen like the benchmark Nifty had done in the last two trading sessions.

As per the data Bank Nifty had hit an all-time high on 30 December 2019. This had been identified to be top of a head and shoulder pattern. (H&S) which signals a bearish reversal pattern from a technical analysis point of view. As it hints for the probability of the reversal of a trend from a bull market to a bear market.

In a Head and Shoulders pattern, an index or stock has normally been in a bull trend for quite some time. It usually rises, makes a high, and then cracks comes back down, corrects a little more, again rises to a higher high, and than fails to make a higher low, try to rise again, but finally fails to make a new high, and then begins to break down. So in this, it is been visualized on the chart as the two shoulders and the head.

In this type of situation normally the pattern which is developed would confirm once the index falls below the neckline of 31,000 and sustains on a closing basis. And this falls would signal a major fall equivalent to the distance from the head to the neckline which is about 1,500 points.

One more concern that the bearish divergence in the Relative Strength Index also signifies momentum is slowly moving in the favor of the bears or shorters.

Now if this scenario gets confirmed in the coming days then Nifty bulls will have a difficult time since Indian banks have very high weightage in Nifty.

Now its a just wait and watch the situation from the technical point of view. So we have now four days left for the monthly expiry and in this can bears puncture big holes in the bullish Nifty in advance before the budget or will Bulls Hold their ground strongly and sustain till the expiry.
Now, Bank Nifty unable to hold the expiry then it would be the first signal and budget also disappoints than we may see a fall of 2500-3000 points in Bank Nifty from Current levels of 31500.

And finally, if it sustains and holds this level till expiry and then Budget Delivers than may see new Bank nifty high and will surpass previous all-time high of 32773.85.