Investor expectations from union budget!

By | July 9, 2014


As the finance Minister Mr. Arun Jaitley braces himself to present the first union budget of the NDA government, there are high expectations from every quarter. From the common man on the street to the housewife struggling with high inflation and from the financial markets analysts to the long term investor, everyone is waiting anxiously as to what new would be in store in the annual budget.

The stock market had given its indication as it rallied to good position right from the day of swearing in of the new government. While it is hard to please just about everyone, the financial markets have a very high expectation from the budget and hope it can provide the much needed impetus for the markets to sustain a long term bull cycle.

Real estate and infrastructure companies bracing for a bull run: If there is one sector that is likely to receive the maximum impetus in this year’s budget, it has to be the infrastructure segment. There is a good possibility that the government may allow banks to raise long-term tax-free bonds for funding infrastructure projects. New infrastructure up gradation projects along with a dedicated road policy can bring good news not only for the infrastructure sector but also heavy engineering and realty sector as a whole.

Auto sector to remain buoyant: Bringing a pre budget cheer with the extension of excise duty cuts on small cars, scooters, motorcycles and commercial vehicles, the automobile sector is hopeful that duty cuts would be extended to other segments, thereby helping auto companies improve their sluggish sales. The high inflation in recent times has been a damper in automobile sales and any further reduction in duty is likely to bring down car prices significantly improving sale figures.

Positive sentiments for the midcap space: Stock market analysts and experts are expecting a clear cut policy on MSMEs and small business operations that is likely to improve the midcap and smallcap sector as a potential high performance segment as pro business polices are introduced in the annual budget. Foreign exchange experts are also hoping that Rupee will be back to 58 levels against dollar or may even go lower after the budget day.

Investors hoping for a disinvestment run of psus: The previous NDA government made disinvestment its prime policy and stock market analysts and experts are hopeful that the present government would look at fresh measures to boost disinvestment in the public sector undertakings or PSUs. If the government and the finance minister decide to walk the disinvestment route, there is a possibility of raising a large amount of liquidity into the system to the tune of Rs 50,000 Crore to Rs. 70,000 crore. PSU disinvestment also offers a good opportunity to retail investors that can trigger a positive market sentiment allround.

Expectation of tax sops: Common man, especially the salaried class is looking at various tax reliefs that have been spoken by every financial analyst in the recent weeks. From increase in the Income Tax exemption limit to increase in tax relief for home loan interest rate under section 24, the rumor market has been strong. It remains to be seen how much tax concession the finance minister is finally able to offer as he fights the bigger challenge of fiscal deficit and increasing inflation.



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