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'No big expectations from Budget'

Krishna Merchant / Mumbai 24 Feb 11 | 09:40 AM

Arun Kejriwal, founder, Kejriwal Research and Investment Services spoke to Krishna Merchant on the current market scenario and Budget expectations.

How do you see markets panning on expiry day today?

In the February settlement, traders who have gone long have not made money and those who have gone short by have made money except the recovery that we saw in the previous week.

The rollovers are lower than what it should at two days to go before expiry. There will be a fairly peaceful expiry.

Do you think the budget will surprise the markets on the positive side?

There are no big expectations from the budget. There is a feeling in the market place that with the kind of political turmoil seen in the country it will be a budget for the common man.

They are expectations of income tax relief to be raised from Rs 1.5 lakh to Rs 2 lakh. Assuming it happens, it would be not make much difference as the inflation is substantially higher than that.

If the government does commit expenditure to infrastructure and NREGA scheme, this can be a positive for the markets.

The government may extend benefit under Income Tax Section (ITS) 80 CCF for investments in infrastructure bonds scheme from Rs 20,000 to Rs 1 lakh.  Hence, you could see large amount of money flowing in, which would help government incur expenditure and this is something which can surprise the markets positively.

Reliance Industries (RIL) has risen almost 5% in last two sessions over the BP deal. Should one exit at current levels or stay invested?

The kind of the news that has come and the impact that would be felt on the company’s balance sheet is much more than the 5% gain seen on the share.

I would advise investors to stay investors and they should not expect 10% gains in few sessions. It is a long-term story as earnings after the BP deal would go up substantially.

What is your call on ADAG shares Reliance Infra, Reliance Power and Reliance Capital.? They were all buzzing in trade yesterday. Do you expect a further upside?

ADAG shares have a tendency to move as a pack and most often they move illogically. There is no reason why they move in particular direction, all at one time. It is a momentum pack and it swings with the mood of the traders.

The implied Volatility has surged to a two year high recently. How do you interpret this?

When there is higher volatility, you pay a high premium for trading in futures and options because there is fear, uncertainty about the way markets could move. This time there is more than one event which is happening simultaneously.

The Implied Volatility is high during this Union Budget because there are concerns over the political scenario, world markets, and worries over global conditions arising from tensions in Bahrain, Tunisia and Libya which can affect crude prices, and there are concerns over capital outflows and inflation.

Implied Volatility will hover around these levels until these events are over.

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Company Price Gain (%)
Sun Pharma.Inds.601.656.91
Yes Bank381.752.87
ICICI Bank332.302.17
Axis Bank618.302.15
Reliance Inds.1,210.952.00


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