Budget: Why Normal Trading on Saturday is Good for Investors

The timing of Budget announcement was shifted from evening to morning in 2001 and since then stock markets have remained open for normal trading every time the Union Budget was announced.

This year will not be an exception as market regulator Sebi on Friday announced that stock markets will remain open on Saturday, February 28, when Finance Minister Arun Jaitley presents his first full Budget.

Here's why investors are happy with Sebi's decision:

1) Message from Dalal Street: The Sensex and Nifty deliver instant verdict on Budget. Over the last three years, markets have fallen on Budget days in indication that announcements fell short of expectations. Whether Mr Jaitley will manage to meet market expectations will be known on Saturday.

"Whatever is your expectation or analysis of Budget, let that reflect on market on that day itself," said TS Harihar of HRBV Client Solutions.

Some experts, like Samir Arora of Helios Capital, tweeted that government's decision to open markets on Saturday is a good omen.

2) Reduced volatility: Sebi's decision to allow markets to function on Saturday will help reduce volatility, most analysts say.

Independent analyst Sanjeev Bhasin told NDTV that if stock markets were closed on Saturday, there would have been a gap up or gap down opening on Monday.

"Traders will now have an opportunity to buy or sell on the basis of Budget announcements. This will lead to increased intraday volatility on Saturday, but will ensure that investors and traders can react to Budget," he added.

3) Higher volumes: Traders and investors are likely to buy and sell stocks with every announcement that Mr Jaitley makes. This will increase volumes, benefitting the exchanges as well as brokerages. However, foreign investors are unlikely to participate in trading on Saturday, analysts say.

TS Harihar said, "What happens is people see this kind of volatility ahead of Budget and they don't have an opportunity to play to the market. You see volume shift to Singapore Nifty and informal markets."

The Budget week will be six-day long, it will also witness monthly derivatives expiry on Thursday, prompting some investors to ask for a break in between.