While the Indian equity market is set to remain open this Saturday as the government announces its annual Budget for the fiscal 2015-16...
While the Indian equity market is set to remain open this Saturday as the government announces its annual Budget for the fiscal 2015-16, the market participation may remain relatively thin, say market observers. While the Street has a lot of hope riding on the maiden full-year Budget of the BJP government, since the event is scheduled on Saturday for the first time in sixteen years, the enthusiasm may not be reflected in volumes.
Experts say that FII participation will remain subdued as hedge funds as well as long-only funds will largely stay away from trading on a global holiday.
According to UR Bhat, director, Dalton Capital Advisors, hedge funds are largely going to remain away from the Indian markets and it may reflect on the overall FII activity.
“It is a global holiday and just because Indian markets are open it is unlikely that hedge fund managers would be going to their offices. FII participation is likely to remain subdued in Indian markets on Budget day.” added Bhat.
In the last 25 years, there have been only four instances when the Budget was presented on a Saturday shows the government data. In the latest instance the Budget was announced on a Saturday on February 27,1999.
As per Andrew Holland, CEO, Ambit investment Advisory, even long-only funds may not be active in Saturday’s trading given the nature of their investment. They may make adjustments to their portfolios in the subsequent trading days if they think that the Budget announcements have changed something for a sector. “Also a lot of fund houses would not be allowed to trade on a Saturday,”added Hollnad.
In case of the domestic institutionals, while LIC observes an official holiday on Saturday, even mutual funds will have a non-business day, Amfi decided on Monday.
“LIC will not be able to participate on Saturday as it is a non-working day. Further, LIC is an investor and not a speculator. Normally, LIC doesn’t take event-based calls. In any case, it would take 3-4 days for impact of the Budget to be clear,” an LIC official said on conditions of anonymity.
While the Amfi decision means that investors will not be able to purchase or redeem mutual fund units on the Budget day, it may not restrict a fund manager from managing his portfolio, mutual fund manager told FE.
Meanwhile the retail participation may be healthy given that many broking houses have announced to increase margin requirements on that day. While brokers like Geojit BNP Paribas and Sharekhan are planning to increase the margins for derivatives as well as cash segments, Angel Broking has not changed their margin requirement.
“We do expect our clients to participate in the market. However, institutional participation may not be very strong that day and volumes may also be comparatively lower,” said Vinay Agrawal, CEO of Angel Broking.
The trading activity on Budget days follow the general trend in volumes, shows data compiled by FE. In the last five yeas, as the market volumes recoverd even the total turnover recorded on Budget days has grown from R1.41 lakh crore in 2010 to R4.97 crore in July 2015 when the finance minister presented the interim finance bill for FY15.