BUDGET “OUT” –BUDGET

Please consider this is to buget out your self to tune in line with the actual budget placed by our FM. These suggestions carry very less importance as the actual budget be out by 12 noon today.

The major economic concerns now India is facing- FISCAL deficit, which is quite high. The main reason is the populist measures adopted for the last 3 years and accumilated pressure from the recent recession in the world economy, mainly from US. As we are partly celebrating the global recessionary impact, forced us to accept to stimulate the slowing down economy by pumping extra unbudgeted money into the system to float above the much debated rate of growth above 7.5-8%.
Now we are propelling our growth above the normal claims in numbers but the inflation is eating the savings. So there is no big joy to FIIs or to make call for FDIs to huge gains for the investments, so is our stock markets, performing to the tunes, is no special event at all. The inflation cutting measure may tighten the fund availability that may effect the sentiment in the stock marke as well.
With this backdrop, the FM will decide the allocation with concerns from the economists,

Socialists. The populist welfare measures as the key driving force for all the Governments, a model now globally accepted. The share sale of PSUs will be made to adjust the fiscal deficit. This will encourage some favours to some sectors and withdrawl of stimulus impacts many.
The funds allocation: as usual the defence sector will get the lions share. The Govt. will allow more private participation in defence projects. The eduction sector will open to foreign universiities. The agriculture sector will get the boost with subsidy to micro nutrients. The rural employment schemes will get 50% more hike and rural infra focus will be more. The health care will get good boost so is the corporate hospitals and pharma. The insurance sector will get good boost.
The FM very likely to reduce the surcharge on equity transactions and on corporate tax. The anomility existing to DIIs and FII s will be levelled. The implementation of the GST will be announced, may be by next fiscal. The customs duty will be increased on imported raw materials like MEG ect that benefit Reliance. The stimulus package will be continued to Textile sector.

The excise duty will be increased on tobaco products. The excise duty will be increase on small cars and diesel cars. The oil and Gas secor will attarct more taxes. The steel sector excise duty likely to be increased.
The Govt may allow cheaper raw material to boost the steel and cement sectors by reducing duties on coke and scrap. There could be increase of fund availability to roads, seaports-and airports. There will be a clear message on boosting the housing sector, especially for poor. The banking sector will get boost to raise capital to gear up for mega expansions of Indian corporate sector, may allow to raise foreign caiptal easily.
The customs duty will be levied on power equipment and bulk drugs especially Pencilin-G imports. The govt may allow duty free imports for 3-G equipments and wimax. The announce ment on e-governanace and UID will boost the IT companys and telecos.
On over all pro-poor, rural demand driven, market nutral slightly positive biased budget is expected.

The threats and the opportunies perceived are:
Automobile sector get effected. Banking sector will get boost, cement nutral, construction-infra- the support continues, Housing good boost, compuer education-good, the IT demand creation locally but attract more taxes, durables attract taxes, engineering sector attarct taxes/neutral, Banking and financials- boost, breverages- attract taxes, Pharma- boost to research and hopitals boost, Textiles boost to cootton but not to synthetic, teleco-demand boost, shipping boost, Agro products-retail mall culture- attract taxes, agro inputs –boost, Power-neutral petrol and gas- negative, subsidies will be reduced –good to ODC, renewable enegry will get very good boost, nuclear power kick start, fertisers –good.entertaiment attract taxes so is IPL.

Now the markets will have something to give response to budget. The Nifty above 4885-4915level will take to 5240-50 level and then to 5480+. The ICICI has to trade above 835 levels,Bharti has to trade above 298, Reliance above 1020, DLF above309. The markets are now dependant on the budgetary supports and the cut in corporate tax can trigger the Bull Run. Incase the sentiment get hurt Nifty trades below 4800-4760 the go to first 4500-4530 or even lower to 4360-80 level is not ruled out. But as of now bulls are better positioned and will in short term.