Budget 2006 to favour bull or bear?

Pre-budget expectations from the investors and stock market players especially from the country's most investment savvy state "" Gujarat focused on continuing investor friendly policies and to an extent regularised trade.

Some investors of equity market wants government to disinvest public sector units (PSUs) in the coming budget.

"This is the best time for Indian Stock Market when the sensex is touching unprecendented heights due to investor friendly policies which we expect to continue in the next fiscal budget. This will encourage more investors to participate in this bull-run, said Shashikant Koticha, an analyst associated with stock markets based in Rajkot.

"Also there are chances that tax structure is likely to be imposed on long term gains although this would make little impact on the investor segment as there are other benefits like no taxes on dividends which are likely to continue," he added.

The budget is more or less concentrated to the limited segment of the society, designed more or lees keeping in view the manufacturing and service sectors.

With investors moving towards small investment schemes, Kishor Ghiya a stock marketer explains, "Small Investment Schemes have been able to register approximately Rs 1,17,000 crore as against Rs 1,000 crore in various investment options floated in Indian Stock Markets in this financial year. It is an alarming situation because investors are getting tax benefits on such small investment schemes."

He also said that the ministry of finance may impose some slab structure or a tax percentage on a particular transaction pattern which would by and large catalyse the process of attracting small investment scheme investors towards stock market investment options and further regularize trade.

Depository participants in city are more concerned on maintaining the existing tax-structure policy as applicable on stock market.

"Securities Turnover Charge (STC) should be maintained the way it is and there should not be any change in it. If taxes imposed in form of STC are more it is likely to impact the market in reverse way, therby reducing the turnover ratio in such a bullish market too," explained Ketan Marwadi, renowed stock marketer and depository participant from Rajkot.

Nitin Parikh from Nitin Parikh & Consultancy said, "We hope that government should not increase security transactions tax (STT) as a further rise in it will increase the additional cost too. As a result the volume of traders and brokers may decline," said Parikh.

He also said that the budget 2006 will be industry friendly as well as capital market friendly. Dishant Sagwaria, CEO of Ahmedabad Stock Exchange said that government should disinvest such PSUs in which disinvestment is required.

Prasad Akolkar, executive director of Vadodara Stock Exchange Ltd (VSE), said, "The government should focus on agricultural sector for the overall GDP growth as projected by RBI and other independent research institutes can be safely presumed at 5.5 to 8 per cent."

He added that the market momentum is likely to continue in positive direction and will remain bullish.

G C Maheshwari, dean of faculty of management studies, M S University, Vadodara, opinioned that the recent agreements of the government with the CIS countries for exploration and production of crude oil will further lead to growth of Indian oil companies.

"Irrespective to budget, the market will remain buoyant as the fundamentals of the economy are strong and the Indian industries have gained from its last 10 years experience to withstand any jerk," he maintained.

"The previous year duty cuts given to steel sector will be continued to be the same this year as this had raised the valuations of the steel sector companies leading to the ambitious plans of the steel giant and the upcoming steel SEZ in Gujarat," said Sunil Behki, a Vadodara based leading stock broker and columnist.

He said, "As per market indications, the cement sector will witness a robust growth due to plans declared by the government regarding the national highway development, rural electrification and huge construction activities", he said.

This development programme are an ongoing process mostly but large scale development lead to surge in construction activities which may lead to imbalance in demand and supply scene creating a strong base for the rapid growth of cement industries in coming months.