Post budget market

The budget has come and gone. Mr. PC has again managed to dent the sentiment in the capital markets by increasing the short term capital gains tax and tinkering with STT exemptions. Both these measures shall further reduce the liquidity in the markets. It is a bad time to have such measures.

A good thing was to give more money back to the income tax payer .This might increase domestic savings as well as consumption in the economy. In a way he is back to where he started-running huge fiscal deficits by giving such “pre-election” sops like loan waivers etc.

Coming back to markets- the equation which was 60/40 in favour of the bulls before the budget is now turning in favour of the bears. Budget was one event which could have taken us past the 5350-5400 levels. As we failed to do so, now lets be prepared for the break down of 5050 levels. All those who are on the sidelines shall jump in with short positions.

So lets see if the weak global cues today take us below 5050 or do we manage to stay afloat above these levels?