With joyous feelings towards Budget 2010, NBFCs, non-banking finance companies have been singled out by the stock market along with public sector banks as leading sector beneficiaries.
During this week, due to the Budget, NBFC’s stocks such as Bajaj Auto Finance, Shriram Transport Finance and Reliance Capital are ahead some 7-12%, as per the prospects of RBI, Reserve Bank of India, dealing with banking licenses.
Price movement study carried after the final four Budgets correctly explains that acquired Budget-day largesse that too in type of favorable policy announcements didn’t hold firmly over the profits in followed year. Even the sectors, battered ones, because of the ‘unfriendly’ budget didn’t continue to exist at the same vein after that.
Moves that didn’t last longer
Few cases should be considered. A sudden cut of excise duty over the small cars reflected a jump of some 12% in the stock of Maruti Suzuki during the following week after Budget February 2008. Within an years time, 30% of value had been lost in the stock. In Budget 2006, companies dealing with textile trade were rewarded on Budget Day with higher allocation to textile up-gradation fund and duty cut. After an year’s time approximately, even while 31% sensex had soard, few stocks still managed to trade at lower percentage, say 25-35%. In fact, textile sector was a regular receiver of flourishing announcements in Budgets 2005, 2005 and 2007. Still, the stocks did not do any good more than anything at sensex during any of these years.
During 2007, on Budget day itself, real estate companies battered 5%, right after the served proposal to impose service tax over commercial/residential property rentals. But the stocks outpaced sensex with some 66% profit during the following year.
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