What To Trade When The Union Budget Is Near

What Should You Trade When The Union Budget Is Near?

The financial budget day is almost here. It will be presented on Saturday – February 1, 2025, at 11 a.m.

Markets are closed on Saturday but on Budget Day 2025, the stock market will be open for trading from 9:15 AM – 3:30 PM.

Q) Should you trade on Budget Day?

Ans) Of course not if you are averse to volatility, but if you are willing to take risk, trade Intraday only.

Q) What should you trade on Budget Day?

Ans) Stock markets will be very volatile on that day. Every stock, index and commodity will move randomly. No technicals or even logic will work. No kind of prediction will work. So here are a few things you can do:

1. Equity – If a fundamentally strong stock falls due to some budget news, do not worry the fall is temporary. You can buy the stock.

2. Derivatives – DO NOT SELL options on that day even if you are an expert. Just buy options for the risk you are willing to take. As far as the trend is concerned go for the current trend – do not take a counter trade. Trade one lot only.

If you want to trade futures, trade with a single lot only. You can keep a profit target of 100 points and stop loss of 50 points if trading in Nifty. If trading Banknifty then keep a profit target of 500 points and stop loss of 250 points. Set both profit and loss in the system. This broker allows keeping both the targets (profit and loss) in the system. This is called OCO (One Cancels the Other) trade. If the profit is achieved – the system will automatically cancel the stop-loss trade and vice versa. Click here to open an account – it is free to open an account.

Once the trade is live do not look at the trade as either profit or loss will be hit and you will know anyway so why panic unnecessarily?

The max profit in Nifty will be 75 * 100 = 7500, and
The max loss will be 75 * 50 = 3750.

The max profit in Bank Nifty will be 15 * 500 = 7500, and
The max loss will be 15 * 250 = 3750.

Take the trade only if you are comfortable with the max loss. Otherwise do not trade. If you want to keep a smaller stop loss it is not recommended as on a volatile day a small stop loss is likely to be hit.

Whether you are comfortable with the profit or not does not matter – your focus should be on the loss, not the profit.

Q) What will happen to INDIA VIX?

Ans) INDIA VIX will keep increasing and may go up to 22-25 on the Budget Day. Then from the next day onwards, it will keep decreasing. Even though INDIA VIX is inversely proportional to Nifty – on times like these this does not apply. What happens is unusual trading starts when the budget comes near leading to an increase in INDIA VIX. Once the budget is over these panic / speculative trades start decreasing bringing down INDIA VIX.

So yes, INDIA VIX will increase, but you should think about your money. As written earlier, either avoid trading near the budget days (from 3 days before and after the budget) or trade with one lot only. As far as equity buying is concerned, it has nothing to do with INDIA VIX.

Q) Should you constantly listen to the budget and take trades accordingly?

Ans) You will not win a million dollars if you do this. For money that will not make or break your life, it is not worth wasting time listening to the budget and taking action. You can always read the budget and its implications on the economy and business later in the day.

Of course, after reading the budget if you feel certain sectors may benefit you can buy stocks of companies that may benefit from the budget.