Budget very positive for autos, retail: Nilesh Shah

Nilesh Shah, MD & CEO, Envision Capital Advisors talks to Sunaina Vasudev on the likely impact of Budget on different sectors and global markets among other things.

What impact will the Budget proposals have on different sectors?

This Budget facilitates demand growth and a GDP growth of about 7-8%. It tries to do a balancing act between fiscal consolidation and growth of the economy. By reducing tax rates the finance minister has increased disposable income in the hands of consumers which is expected to boost demand for consumer goods, autos, consumer durables etc. However, some of the other proposals like the hike in excise duty, cess on coal and the introduction of service tax in some other areas could be a negative for sectors like cement, steel and sectors that are consumers of cement and steel.

This Budget is very positive for autos, retail, consumer durables and any sectors which have anything to do with discretionary spending. Sectors which look good include auto, auto components and banks which have a few things for them in the Budget. Especially, the six month extension of repayment of loans to farmers work to the benefit of public sector banks. Most PSBs are attractively valued as well, quoting at or a marginal premium to book value.

What do you read from the global situation and what impact will it have on flows into India?

The international situation continues to be grim. It has moved from the US to Dubai to Greece and now to the euro, and resembles a game of musical chairs. It is hard to anticipate what will happen but you have to be ready for a lot of negative surprises.

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