Budget 2017 - There are two ways to make money in the stock market. Either one rides the growth wave, buy and hold stocks that offer rising earnings and stock prices or play the market volatility — buy a stock when it is rising and sell if it’s falling. The latter, also called momentum trading, can be profitable during periods of heavy news flow, such as before or after the Union Budget.
The run-up to the Budget is full of market-moving news about various sectors and companies, which translates into volatility, providing ample trading opportunities. After the Budget, the focus is on unpacking the financial impact of the finance minister’s proposals on key sectors and companies. Though the market tends to price in the impact of measures on the Budget day itself, traders can still make money by exploiting the gap between the market’s immediate reaction and the long-term impact of the Budget measures.
Historical data suggests that more often than not, the broader market corrects in the run-up to the Budget. For example, the Sensex fell by an average of 4.4 per cent during the 30-day period prior to the Budget. The pre-Budget trade has been a one-way bet, with the index correcting on all past 10 occasions(Read More)
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