The Union Budget of India
The Union Budget of India, or the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India. It is presented each year on the last working day of February by the Finance Minister of India in Parliament. The budget has to be passed by the House before it can come into effect on April 1, the start of India's financial year.
Core Financial Issues Discussed
In the Union Budget, the Finance Ministry discusses core financial issues like taxation, expenditure, fiscal deficit, subsidies, etc., given to different sectors, which affect the macroeconomics of the country. The Government also declares important policy initiatives and outlines plans for economic policy in the coming months.
Impact on the Stock Market
The stock market tends to be greatly influenced by the budget. The stock market response reflects the quality of the budget. If the government gives subsidies or tax rebates or if there are some policy changes, then the respective sectors get influenced positively or negatively, which affects the overall stock market.
BSE Sensex Overview
The BSE Sensex is a value-weighted index composed of 30 stocks and was started on January 1, 1986. The Sensex is regarded as the pulse of the domestic stock markets in India. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around fifty percent of the market capitalization of the BSE.
Market Volatility and Turnover
The Union budget creates enormous market volatility and turnover in the stock market prior to the budget as different expectations prevail with respect to tax impacts on individuals, companies, and the overall economy. After the budget announcement, volatility continues as market movers such as FIIs, DIIs, Mutual Funds, HNIs, and retail investors adjust their portfolios as per the budget impacts. Empirical research can guide hedging and trading around the Budget date to a certain extent. This research has become even more important, pertaining to the fact that stock index derivatives are now traded in India.
Project Objective
The objective of the project is to help economic agents speculate on the movement of the stock index, predict index volatility, and hedge themselves against fluctuations of the index. The objective is to gather empirical evidence to shed some light on questions directly related to trading and portfolio formation on Indian Stock Exchanges.
The Union Budget of India, or the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India. It is presented each year on the last working day of February by the Finance Minister of India in Parliament. The budget has to be passed by the House before it can come into effect on April 1, the start of India's financial year.
Core Financial Issues Discussed
In the Union Budget, the Finance Ministry discusses core financial issues like taxation, expenditure, fiscal deficit, subsidies, etc., given to different sectors, which affect the macroeconomics of the country. The Government also declares important policy initiatives and outlines plans for economic policy in the coming months.
Impact on the Stock Market
The stock market tends to be greatly influenced by the budget. The stock market response reflects the quality of the budget. If the government gives subsidies or tax rebates or if there are some policy changes, then the respective sectors get influenced positively or negatively, which affects the overall stock market.
BSE Sensex Overview
The BSE Sensex is a value-weighted index composed of 30 stocks and was started on January 1, 1986. The Sensex is regarded as the pulse of the domestic stock markets in India. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around fifty percent of the market capitalization of the BSE.
Market Volatility and Turnover
The Union budget creates enormous market volatility and turnover in the stock market prior to the budget as different expectations prevail with respect to tax impacts on individuals, companies, and the overall economy. After the budget announcement, volatility continues as market movers such as FIIs, DIIs, Mutual Funds, HNIs, and retail investors adjust their portfolios as per the budget impacts. Empirical research can guide hedging and trading around the Budget date to a certain extent. This research has become even more important, pertaining to the fact that stock index derivatives are now traded in India.
Project Objective
The objective of the project is to help economic agents speculate on the movement of the stock index, predict index volatility, and hedge themselves against fluctuations of the index. The objective is to gather empirical evidence to shed some light on questions directly related to trading and portfolio formation on Indian Stock Exchanges.