The Hindu Business Line : <I>Dos and don'ts </I>

It is the day of the Union Budget once again, a day that stock markets await with hope and trepidation. Here are a few dos and don'ts that market participants need to follow on the budget day in the interest of the health of their portfolios.

Dos

Do take two hours off from your busy schedule to listen to the FM's speech live on the television. The part where one needs to wake up, in case you fall asleep in the first half when the FM makes endless increases in allocation to various social benefit schemes, is when he starts talking about the financial sector and the capital markets.

Investors should take a broad white tape and stick it at the bottom half of their television sets on this day. The idea is to hide the ticker from view. Watching the wild behaviour of stock prices on this day can have a very harmful affect on the blood pressure.

A better idea would be to just listen to the audio alone. This would ensure that the distracting highlights that keep popping on the screen do not hog all your attention.

Don'ts

Do not telephone any fellow investor or any of your dealer friends just before the budget presentation begins. They are sure to know of some hot stock that is definite to shoot up after the budget. More mistakes are made in the early hours of the budget session than in the run-up to the event.

If you happen to be among the few lucky ones who are sitting on cash, do not rush to buy any stock during this session. On prior occasions, we have seen the market move in the opposite direction on the day after the budget. This happens due to certain clauses being misunderstood by market participants.

Conversely there is no need to dump shares due to some unfavourable provision in the budget document. We have seen such provisions getting diluted after the industry concerned raises uproar.

It is of course very difficult to resist that urge to call the broker or punch the order on the net as some doomsday-inducing pronouncement is made by the FM. It might help if you lock yourself in a room without telephone and Internet and throw the key out of the window.

Those holding leveraged positions need not be told what to do and what not to do. It is assumed that there would be substantial reason why those positions are being held in the first place and the holders would know when to exit them, should the need arise.

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