Pre Budget Moves.

Disclaimer: Only the Finance Minister knows what he is putting in the budget. As traders, we should try to manage expectations from big news events.
The ideal way to trade a news event is not to do anything. Sometimes (as in the election results) there is early warning of what the news might be.
In case of this budget (or any budget) that sense is not going to be available.
So we should try to set up a trade based on our own understanding of trading news events. It is all about trader perception. Will STT be abolished or ‘tweaked’ as some people are demanding on the TV? And, if it is ‘tweaked’ will it bring long term peace and prosperity to the country? I can answer this: STT is irrelevant to all but a few large local brokers (who should not be doing proprietory trading anyway).
My sense is: the budget may prove to be a non-event, as previous budgets are doing. Then, we are left to follow our charts. The reason why big news trading is difficult is due to volatility which occurs during announcements. The charts are telling us: the Nifty is poised for a big move, direction unknown. Why? The Index is in a narrow trading range between 4250 and 4400, for 12 trading days. An explosion is imminent.
A simple way to trade this is to buy 4300 calls and puts. Then, exit the losing leg next week. Or, buy 4400 calls and 4200 puts. But options should be preferred due to the increase intra day volatility.
I also regret that I could not give you a more tangible strategy for the budget: like saying buy xyz because the budget will give big concessions to the company. Perhaps other better informed people on Tv will tell us what exactly to do.

Have Fun!