More concerned about US$ than Budget: Deven Choksey

Deven Choksey, Managing Director, K R Choksey Shares & Securities talks to Palak Shah on the current market scenario and expectations from the Union Budget.

What are your expectations from the Budget?

Our assessment is that the Budget will be a calibrated approach towards 1) "fixing the fiscal deficit", a substantial change from the previous Budget tone of sops for the "Aam Admi" 2) roadmap on tax reforms 3) creation of social infrastructure. The Budget this time around is a challenge of maintaining balance between economic growth and curtailing fiscal deficit. We do expect sector specific rollback of the fiscal stimulus particularly in auto, cement, FMCG and metal sectors. On the reforms side, we expect a clear roadmap on disinvestment, GST (Goods & Service Tax) and DTC (Direct Tax Code) to be presented. FDI limits in insurance, airlines and defence will be increased with simplified norms in calculating FDI limit.

How do you see the markets reacting post Budget?

Historically markets build expectations on Budget and run up a little before the event. Out of the last 19 Budgets, in 13 cases the market had posted negative return within a week as most of the announcements are already factored in the pre-Budget run-up. We see valuations staying attractive given the growth prospects in FY11. However, we are uncertain about the behaviour of the US dollar and its subsequent impact on emerging markets and other commodities. We believe that by April 2010, there will be some certainty on the US dollar. Q1FY11 will be a good quarter to resume buying in Indian market, albeit selectively in few stocks where reasonable valuations and growth are available.

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