Hope is a dangerous thing, as investors found out yesterday. If the Finance Minister was guilty of presenting an insipid budget that was low on the detail that the market wanted, investors too were perhaps guilty of expecting too much, too soon. That doesn`t absolve the Finance Minister of a budget that is low on ambition, boldness and vision but at least it teaches investors to not hope for the moon going into a policy event.
The real damage was done when the FM spelt out the 6.8% deficit number implying a large market borrowing programme with little detail on how he "would get back on the FRBM path". Global rating agencies will pass their judgement in the next few days but the bond market didn`t wait that long. The benchmark bond yield shot past 7% raising fears of interest rate spikes and triggering off a collapse in stock prices. At a macro level, that perhaps was the undoing of the market. At a more micro level, a lot of sectors had run up expecting substantial boosts from the budget. Education, real estate, textile and fertiliser stocks which had meaningful rallies leading up to the event collapsed completely . The surprise was Infrastructure, where stocks sold off as well, as apart from an increased outlay for the NHAI the budget was a bit low on bold moves.
Then there was disinvestment, which the market had pinned some hopes on. The pitiful Rs 1100 crore figure which the FM unveiled dashed those hopes. That number is truly inexplicable.
Not that this budget had nothing postive for the stock market and corporate India. The scrapping of FBT, extension of 10A/10B for IT companies, removal of CTT and no rollback of excise cuts were all positives, partly offset by the hike in MAT. The scrapping of the surcharge on personal income taxes may even be a limited consumption trigger. Tobacco companies were spared the axe this time and ITC was one of the few stocks that ended in the green, contrary to investor fears.
Yet what the market wanted was a green signal, that finally the drought on reforms is over. That a government, shorn of the Left, will press ahead with bold policy moves. The charitable view is to accord the FM the benefit of doubt : he didn`t have enough time to unveil a big bang budget and the best is yet to come, over the next few months and in the next February budget. The cynical view is that the market is running ahead of itself; despite the electoral surprise, things will improve only incrementally and over a much longer duration than investors want. The truth, as often, perhaps lies somewhere in the middle. While investing in India, the virtue of patience cannot be overstated.
After hoping atleast small ticket reforms be in place, this turned out to be a damp squib.... we have no hopes for next 4 budgets also under FM. :-) (if at all he presents)
Bazeegar what could be the short term target of nifty 3800-3850 or below that the target of sensex as u have mentioned earlier 10000 that means nifty will be around 3250 or below that when we should start buying as i sell 25% of my portfolio on ur reccomendation
The budget presented by FM today is a very good budget. Corporate India have given thumbs up to the budget while market have given thumbs down. Iam with the side of corporate India and fully agree that this budget shall take us to new growth path begining with 7% growth in the current fiscal and therafter aimimg for double digit growth. In fact window dressing was missing in the budget but if you read the budget in between the lines you shall find the contents of the budget is heavily loaded towards strong growth arising out of heavy outlay of plan expenditure which shall take our economy to a new height. The major benefeciary shall be cement and steel sector where we shall see unprecedent growth in time to come. The urban, rural and social spending all together shall enable to build a strong and vibrant India. Iam confident that very soon foreign investors shall realze the strength of the budget and shall return back with a bigger purse of dollars for investing in India to encash the strong India growth story. Three cheers....
i have heard that non Left people from Bengal are like water melon ,Green or black from outside and red from inside.Record tenure of left certainly made then red!even Udayaan is taking red!
we require larger share from agri sector in our GDP forr sustaining 10% growth in coming years and if this budget will help in increasing goods and services for our rurral people, it will be great!
infact i wish to settle after retirement in a rural area where we will be getting bijee-pani--sadak-haspital-law and order & good education rather in metro like Delhi
In stead of blaming the Finance Minister, we must try to help him to reduce the budget deficit If everyone wants stimulus and concessions government borrowings is bound to increase and so is the interest rates The deficit of nearly 7% was expected and still demanding for not raising tax base is not a correct step by the media In the first place the immediate rally of nearly 17% after election results was totally unjustified and we will go back to that levels after the budget I personally hold both print and electronic media creating high expectations and this was made clear by the Finance Secretary in his press briefing as well
The media in general and TV anchors in particular must find ways to increase the tax base and prepare the people to expect higher tax rates to cover the fiscal deficit Almost everyone wants disinvestment in large scale to reduce the fiscal deficit and stimulate the stock market We must remember that Finance Minister is presenting the budget for the country and not for the stock market and few industrialists with vested interests
I have not come across any discussion in the media or by the industrilists how they will help the government to reduce the fiscal deficit by contributing more by paying higher taxes When UK and US could raise tax rates to 50 and 40% media should have taken the cue and suggested to both the industry to prepare itself pay higher taxes till the slow down is over Now blaming the FM for our own fault is not right
Mr. Narayanamurthy of Infosys was the only man who stated sometime back that always expecting taxcuts was not the correct way to proceed for infotech companies. Each one will have to put in something in the kitty so that development can take place.
We find that out of the present budget, a substantial chunk is eaten by salaries and pensions of Government Servants.
The ideal level should be 10% or nearabouts should be the expenditure on administration of the total revenues collected. Only then, we can expect some sort of development to take place.
But Civil Services have always have a way of making room for more expenses on themselves. This should be curbed by Government Action and if necessary by an amendment to the Constitution.
Then ten per cent rule is a general recognised level all over the world. The efficiency and effectiveness of a Government can be considered only if this level is maintained.
Udyan ..it is you and your channels make hype of everything first, sensationalize everything to extremes. Budget is disappointing but not depressing and it is over all OK budget.
Silver lining is it has not anything negatives in it.
Udayan, patience always pays -no dubt; Pranabda has presented his excellent budget proposals, not yet passedby the parliament ; during the debate some more concessions are expected, and some benefits could be passed on to the corporates when budget passed; and in periodic intervals we could expect some policies would be announced for development; as Pranabda says he does not want to go at one go; we can expect some concessions for the market to move up in the near term; Now it is JAI HO Budget
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