Will the Sensex repeat the 1992 performance when it "Pole-vaulted" thirty four percent in one month, post-budget??!!

CHENNAI: History indicates sensex posts negative returns for the one month after Budget. On an average, sensex lost 2.1% one month after budget day since 1991 or 14 out of 18 times the index post negative. But could it be different this time after July 6?

Foreign institutional investors (FIIs), insurance companies and brokerage companies expect the finance minister to deliver a reform-oriented budget that will incorporate tax cuts, fiscal consolidation, a divestment programme and infrastructure spending. In that bullish scenario , the market may repeat the 1992 performance when sensex vaulted 34% in one month post-budget . Though positive gains in the onemonth period after budget have been few, sensex has delivered an average 14% gain only on four occasions: 1992, 1999, 2004 and 2006.

“This budget in many ways will be a landmark budget. We are likely to see a judicious mix of developmental initiatives as well as economic reforms that should provide the right impetus to the economy. Stability of government and a developmental agenda will fuel further government spending and this will fire up another engine of GDP growth,’’ Saibal Ghosh, chief investment officer of Aegon Religare Life Insurance, said.

FIIs like Morgan Stanley also seem bullish. “We have to make an assumption ahead of the Budget as we did with the election result. Therefore, we expect the finance minister to deliver a solid reformoriented budget. The election results almost immediately improved the outlook for capital flows,’’ Ridham Desai of of Morgan Stanley said. [With inputs from Internet]

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