There’s only a day left for the new Union Budget 2015 to roll out. There has been considerable excitement and interest in this Budget, because it is the first full-fledged budget by the BJP government. It is also the first full-fledged Budget after 10 years that will not carry any left-wing influence. That alone is enough for everybody, from businessmen to investors and even the average earning member, to start re-thinking their bank balances. Tempting though it may be to get a jump start on your financial planning, there are certain factors of consideration to be kept in mind before investing in anything around Budget time, whether it be stocks, automobiles, home loans or even gold for that matter.
Buying a car: The month before the Budget is always preceded by a great deal of speculation, particularly on whether taxes would go up or down, especially tax on automobiles. So there is a general tendency for rush buying around this time based on rumours that auto taxes might go up. My advice is, do your technical homework and narrow down on your choices for a new car, choice of bank etc and wait till the Budget is announced. Even if the taxes do go up, there is still a grace period of at least a month before the changes are in effect. Having already done your technical homework, you still have a month to execute the purchase.
Investing in stocks: With every new rumour about the budget, there is renewed speculation in the stock market. It is, of course, very tempting to rush and invest in some of these stocks with the anticipation that it’s value will increase post Budget. But, the period before and immediately after the budget, is a very volatile time in the stock market. Besides, one can be sure only after the government has announced its measures during the budget session. So refrain from playing the fiddler for some time and wait till the market stabilises.
Sectoral Investments: Ahead of each sector’s budget hearing, shares of companies related to that sector are likely to come into focus. For example, ahead of the Railway Budget, shares of companies whose business is related to railways are likely to have come into focus and there may be a slight increase in the value of their shares. Likewise for defence, pharma and other plausible sectors. Many people have a weathered eye peeled on the home loan segment. If home loan interest rates increase, it spells bad news for that considerable majority who want to buy a home. But for that smaller cross section of people who use it to invest in real estate stocks, it seems like a boon. In this manner, the budget hearing will throw up many opportunities for some sectors. It is necessary that people don’t act upon it in an ad hoc manner. Study carefully and invest in the shares of a particular company only if you are reasonably certain of the kind of opportunities it may provide in the future. After all, this is largely seasonal.
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