One must not take today's reaction at face value since it is too wishful to think that a LTCG tax plus fiscal slippage has been met with green by the equity market on Budget day, says Udayan Mukherjee.
Post the Budget 2018 announcement by the Finance Minister the equity market corrected but later recovered a bit. However, according to CNBC-TV18’s Udayan Mukherjee one should not find solace in the fact that market has recovered to some extent because there could have been bit of selling before the event and post Budget, the short-term traders must have covered their positions.
According to him, one should not underestimate the power of the LICs and SBIs on post Budget day because the government must have been fully cognizant that the long-term capital gain tax would warrant an immediate sell-off and therefore a few thousand crores rupees could have been put in to support the market, so that the market does not sell-off completely, which could have be very much possible.
He says the real reaction in the market is seen in the morning after the Budget, so one will have to watch out for tomorrow.