What D-Street wizards Porinju, Naren & Neelkanth say as Budget moment nears
, ETMarkets.com|
Updated: Feb 01, 2018, 10.45 AM IST
NEW DELHI: As Finance Minister Arun Jaitley reached Parliament to table his last full Budget ahead of the 2019 General Elections, Dalal Street veterans in interviews to ET Now talked about Budget expectations and the outlook for the economy and the stock market.
Smallcap czar Porinju expects a huge push for rural economy in Budget 2018, but does not believe any big movement on the market due to the event.
"I do not think any big move in the market just because of the Budget because 80-90 per cent of reforms and economic development have been taking place outside the Budget in the last couple of years," Porinju said.
The worst thing, Porinju said, that can happen to the market in an event of a unfavourable Budget would be consolidation in the market.
According to S Naren, Chief Investment Officer, ICICI Prudential AMC, the market is to respond to taxation changes, if any, in the next 2-3 days.
"What happens to taxation is pretty important, but if you are going to have only equities go up and interest rates keep going up, you are not going to have any big capex cycle, that is my worry," Naren said.
As per Section 10(38) of the I-T Act, gains on equity investment beyond 12 months are exempted from taxes if the securities transaction tax (STT) is paid on the sale transaction. In case of non-equity mutual fund schemes, the duration to qualify for LTCG benefit is 36 months. The long-term capital gains tax (LTCG) in this case is 20 per cent after indexation. There are fears that either the LTCG would be levied on equity or the duration would be raised from one to two or three years.
Naren said people seem to think that it is only the equity market that matters, but if one looks at the situation today, a continuous increase in interest rates is an equally negative development. "I would actually watch the Budget to see how much they are able to get money into debt because it is extremely imperative that interest rates do not shoot up. And it is very important that debt investors are incentivised," Naren said.
Neelkanth Mishra, India Equity Strategist at Credit Suisse, said that contrary to popular expectations, he believes that the government would have room to spend. The market veteran is expecting increased allocation for irrigation and affordable housing and agriculture policies.
"If your objective is to boost rural income, there are not too many schemes that can absorb a very meaningful increase in expenditure. I do think that there will be increased allocation to, for example, crop insurance or marginally to the rural housing subsidy, the increase in irrigation subsidy or the Pradhan Mantri Krishi Sinchai Yojana. But the extent of increase that is possible in one year will be quite limited," he said.
Smallcap czar Porinju expects a huge push for rural economy in Budget 2018, but does not believe any big movement on the market due to the event.
"I do not think any big move in the market just because of the Budget because 80-90 per cent of reforms and economic development have been taking place outside the Budget in the last couple of years," Porinju said.
The worst thing, Porinju said, that can happen to the market in an event of a unfavourable Budget would be consolidation in the market.
According to S Naren, Chief Investment Officer, ICICI Prudential AMC, the market is to respond to taxation changes, if any, in the next 2-3 days.
"What happens to taxation is pretty important, but if you are going to have only equities go up and interest rates keep going up, you are not going to have any big capex cycle, that is my worry," Naren said.
As per Section 10(38) of the I-T Act, gains on equity investment beyond 12 months are exempted from taxes if the securities transaction tax (STT) is paid on the sale transaction. In case of non-equity mutual fund schemes, the duration to qualify for LTCG benefit is 36 months. The long-term capital gains tax (LTCG) in this case is 20 per cent after indexation. There are fears that either the LTCG would be levied on equity or the duration would be raised from one to two or three years.
Naren said people seem to think that it is only the equity market that matters, but if one looks at the situation today, a continuous increase in interest rates is an equally negative development. "I would actually watch the Budget to see how much they are able to get money into debt because it is extremely imperative that interest rates do not shoot up. And it is very important that debt investors are incentivised," Naren said.
Neelkanth Mishra, India Equity Strategist at Credit Suisse, said that contrary to popular expectations, he believes that the government would have room to spend. The market veteran is expecting increased allocation for irrigation and affordable housing and agriculture policies.
"If your objective is to boost rural income, there are not too many schemes that can absorb a very meaningful increase in expenditure. I do think that there will be increased allocation to, for example, crop insurance or marginally to the rural housing subsidy, the increase in irrigation subsidy or the Pradhan Mantri Krishi Sinchai Yojana. But the extent of increase that is possible in one year will be quite limited," he said.
