We are just a week away from the Union Budget 2023. How do we know what kind of expectations are being factored in by the stock markets in the run up to the event?
Elsewhere in the world, people won’t even ask this question because in most countries the Budget presentation is no big deal. The Budget is simply a statement of government finances and the markets don’t bother so much about it because it does not come with any significant surprises.
But in India, the Union Budget is a closely watched event by the stock markets. Here, tweaks in taxes and government spending can often direct the growth trajectory, especially in years when private investments and consumptions are weak.
Agreed, stock markets are only a small part of the Indian economy and, many a times, the forces that govern the stock-market performance are far removed from the real economy and it is not impacted by what the government may or may not do. But, in the short-term, the Union Budget continues to be a big event for which traders position themselves, building in expectations from the finance minister’s announcements into stock prices.