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Market moves during the specially permitted budget session may be good entertainment, but will they be anything else?

On 28th February, will you be watching the no doubt thrilling India-UAE match at the World Cup match, or will you be watching the even more exciting presentation of the Union Budget? If you are a punter on the stock markets, then the choice will be clear. Even though the budget is on Saturday, SEBI has allowed the markets to open. It had originally indicated that it would not do so, but appears to have relented to the entreaties of the 'broking community', as it likes to describe itself.

I have my doubts about how much good will be done by SEBI's permission. No doubt, some people will make money and some will lose it, but overall, the specifics of the budget are hard to understand on a live basis. There are two kinds of impact that a budget can have. There's the overall direction and tone, whereby one can judge how resolute the government is about measures that strengthen the prospects of sustained growth over the years. And then, there's the micro impact, which can have be positive or negative for specific sectors or companies.

For long years during the pre-liberalisation years, the budget essentially had an impact only on specific sectors or companies because there was never any change in the overall direction. But nowadays, the only important thing in the budget are the macro numbers, and the display of intent in terms of reforms and the general direction of the economy.

Budget day trading will move markets and stocks in response to specific sentences and paragraphs of the speech, without even having access to the actual budget papers. This sounds like a utterly useless exercise and there seems no point to it. But then again, that's probably no different from trading in reaction to a lot of the news that flows on any given day.