BANKING
| Balanced growth oriented budget likely: Anagram Research Thu, 18 Feb 2010 04:53:37 GMT |
| The Economic times Balanced growth oriented budget likely: Anagram Research 18 Feb 2010, 1023 hrs IST, ET Bureau MUMBAI: With the Union Budget for FY2010-11 around the corner, Anagram Research puts forth its expectations from Finance Minister Mr Pranab Mukherjee. Although technically the Budget has lost its significance in recent times, it still remains an important macro exercise to assess and evaluate the direction and progress achieved within the economy, the brokerage said. “We believe that the stage is now set for the government to initiate major policy reforms in several key areas which include the implementation of Goods & Services Tax (GST), consolidation of public sector banks, raising of foreign holding in the insurance sector from 26% to 49% while increasing the focus on Infrastructure building with a major thrust on roads, airports, ports and power projects. The new cycle of reforms, if implemented well would drive growth in corporate sector profits, and should positively impact the domestic equity markets,” said the brokerage firm. According to Anagram, the year 2010 will be a very interesting and important one for the Indian equities markets. The markets are coming off an incredible 2009, when the markets rose by more than 80 percent, there were huge inflows from foreign institutional investors and the economy proved resilient. At the same time, the return expectations needs to be moderated as a repeat of 2009 is unlikely. This will be a very important year for economic reforms in the country, with goods and services tax (GST), direct tax code, a new education bill, insurance policy, petroleum pricing and other issues all on the agenda. The government must demonstrate its commitment to these measures, or risk serious investor disappointment. Investors also want to see a clear roadmap for getting the fiscal deficit under control. These will be critical to sustain interest among investors, both locally and internationally, in an environment where valuations are not cheap. Certain key market drivers in the near term which would be closely watched include: · Interest rates are going to rise, probably from April onwards, as the RBI will be forced to react to double digit consumer price inflation numbers. · Excise duties and other taxes are likely to go up as the government will have to begin a normalisation process and take back some of the fiscal stimulus announced in 2009. · The rupee is likely to continue strengthening in 2010 (against the dollar); maybe not dramatically but another 4-5 percent is very possible. · Economic growth will accelerate by at least 100 basis points from about 7 percent to near 8 percent, as we get a more normal monsoon (hopefully), and exports start growing again. · Markets will also look at positive cues from the US and European markets wherein the action from the Fed will be watched closely. Any indication of a pull out the stimulus here will be witnessed by short term volatility by our markets also. On a sectoral basis, Anagram expects sectors like IT, capital goods, power equipment, construction, cement, hotels, retailing, telecom, insurance, food processing, fertilisers, oil & gas/allied services, infrastructure, consumption and agri related sectors players to benefit from this forthcoming budget. that would be the major beneficiaries. |
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