A 7.5 per cent rally in the Sensex over the past two trading sessions gives a clear indication of what the street thinks about the Budget and corporate earnings in the December quarter. A status quo on taxes and the government emphasis on growth are considered to be the right prescription by experts.
The focus on long-term growth drivers such as investments
in infrastructure is expected to have a multiplier effect, while asset monetisation and divestment would help generate necessary funding. Given the infra tilt, the key gainers are companies and service providers in the construction value chain. Further, a focus on localisation and increase of duties in select sectors are also expected to boost manufacturing across sectors.
The other key gainer has been the financial space, given the proposals for privatisation and steps to address the bad-loans issue through the creation of a bad bank.
Sanjeev Prasad MD & Co-head, Kotak Institutional Equities
“The Budget focuses on growth, and has relaxed the medium-term fiscal consolidation targets. The government has rationalised expenditure from the high FY21 levels, while providing higher support. The bigger focus remains on supply-side reforms to kick-start the investment cycle, critical for India’s medium-term growth prospects. Higher-than-expected bond yields pose the biggest risk to the market, as earnings recovery is largely priced in the market’s high valuations,” says Sanjeev Prasad MD & Co-head, Kotak Institutional Equities.
Motilal Oswal, MD & CEO, Motilal Oswal Financial Services
“Absence of negative news is a big positive, and so is the Budget's focus on infrastructure and capex-led economic recovery. The Centre has made considerable progress in formalising the strategic path for disinvestment and privatisation. While
it seems to have the right intentions, execution will be key. Overall, it has succeeded in laying out a strategic growth path for the economy. Successful implementation of the measures will help in keeping equity markets
buoyant,” says Motilal Oswal, MD & CEO, Motilal Oswal Financial Services.
Net sales and net profit are for trailing 12 months ; Price, market cap, P/E (price-earnings ratio), dividend yield as of Feb 01, 2020.Source: Capitaline; Compiled by BS Research Bureau
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