Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/dmb/MorningInsight19032012.pdf
Sectoral impact
Budget Impact Sectors
Positive Banking, NBFCs, Cement, Construction, Logistics, Pharmaceuticals, Power, Retail, Telecom
Neutral Aviation, Capital Goods, Information Technology, Media, Real Estate,
Negative Automobile, FMCG, Hotels, Oil & Gas, Shipping
Source: Kotak Securities - Private Client Research
UNION BUDGET ANALYSIS FY2012-13
Its time to walk the talk
q The FM has presented a more realistic budget, setting the fiscal deficit target of
5.1% v/s 5.9% in FY12. The net market borrowings are expected to be
Rs.4.79trn v/s Rs.4.36trn in FY12RE. However, we believe that, this has to be
followed-up by effective follow-up action on the proposals or else, it may impact
growth.
q We expect further action on reducing the subsidy burden, during FY13. This
should likely result in moderation in interest rates, thereby helping growth,
though over the medium term. More initiatives on various administrative and
procedural reforms are also a pre-requisite to make the operating environment
more conducive for the private sector to start investing.
q The 22.1% increase in plan expenditure, in this first year of the 12th 5YP, will
likely give a fill-up to the public sector investments. Significant sums have been
allocated for investments in infrastructure areas like roads, power and agriculture, among others. Various sectors have been opened up for foreign funding
(ECBs), with a view to provide the private sector, easy access to funds.
q The increase in excise duty and service tax rates came in along expected lines.
We had also expected a negative list on service tax. While this will result in
higher inflation, the resultant moderation in markets borrowing should provide
some cushion. Various supply side initiatives, especially in agriculture have also
been proposed.
q On reforms, a "Medium-term Expenditure Framework" statement will be introduced to set a 3-year rolling target for expenditure indicators and control the
same. Other reforms including FDI (multi-brand retail, aviation, etc), land acquisition, mining, power, subsidy management, will have to wait for some more
time, though.
q On current account deficit (about 3.6% of GDP), the import duty increase on
Gold should help it moderate a bit, while raising additional revenues for the
Government. This may also ease the pressure on the rupee, which is a source of
inflation.
q On direct tax, the raising of the exemption limit and the threshold for higher
rates will provide some benefit to the individual tax payer. Exempting Rs.10000
bank interest from tax will also put more money in the tax-payers' hands. Imposition of AMT on non-corporate, non-individual taxpayers will result in higher
pay-outs for some of these entities, though exact implications need to be worked
out.
q For the stock markets, there is some benefit in terms of a partial reduction of
STT on cash market transactions. We await more clarity on the deduction which
has been made available to first-time individual investors in stock markets.
q Overall, we see the budget trying to provide a thrust on growth through consumption-related initiatives and also through public sector investments (increase
in plan expenditure). More private sector investments will be encouraged only by
further reform initiatives.
q While the market's concern on the fiscal deficit number has been addressed, it
will likely await follow-up initiatives, we opine. We expect the markets to remain
range-bound in the short-to-medium term and believe that, a bottoms-up approach will be the best approach over this time-frame.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/dmb/MorningInsight19032012.pdf
Sectoral impact
Budget Impact Sectors
Positive Banking, NBFCs, Cement, Construction, Logistics, Pharmaceuticals, Power, Retail, Telecom
Neutral Aviation, Capital Goods, Information Technology, Media, Real Estate,
Negative Automobile, FMCG, Hotels, Oil & Gas, Shipping
Source: Kotak Securities - Private Client Research
UNION BUDGET ANALYSIS FY2012-13
Its time to walk the talk
q The FM has presented a more realistic budget, setting the fiscal deficit target of
5.1% v/s 5.9% in FY12. The net market borrowings are expected to be
Rs.4.79trn v/s Rs.4.36trn in FY12RE. However, we believe that, this has to be
followed-up by effective follow-up action on the proposals or else, it may impact
growth.
q We expect further action on reducing the subsidy burden, during FY13. This
should likely result in moderation in interest rates, thereby helping growth,
though over the medium term. More initiatives on various administrative and
procedural reforms are also a pre-requisite to make the operating environment
more conducive for the private sector to start investing.
q The 22.1% increase in plan expenditure, in this first year of the 12th 5YP, will
likely give a fill-up to the public sector investments. Significant sums have been
allocated for investments in infrastructure areas like roads, power and agriculture, among others. Various sectors have been opened up for foreign funding
(ECBs), with a view to provide the private sector, easy access to funds.
q The increase in excise duty and service tax rates came in along expected lines.
We had also expected a negative list on service tax. While this will result in
higher inflation, the resultant moderation in markets borrowing should provide
some cushion. Various supply side initiatives, especially in agriculture have also
been proposed.
q On reforms, a "Medium-term Expenditure Framework" statement will be introduced to set a 3-year rolling target for expenditure indicators and control the
same. Other reforms including FDI (multi-brand retail, aviation, etc), land acquisition, mining, power, subsidy management, will have to wait for some more
time, though.
q On current account deficit (about 3.6% of GDP), the import duty increase on
Gold should help it moderate a bit, while raising additional revenues for the
Government. This may also ease the pressure on the rupee, which is a source of
inflation.
q On direct tax, the raising of the exemption limit and the threshold for higher
rates will provide some benefit to the individual tax payer. Exempting Rs.10000
bank interest from tax will also put more money in the tax-payers' hands. Imposition of AMT on non-corporate, non-individual taxpayers will result in higher
pay-outs for some of these entities, though exact implications need to be worked
out.
q For the stock markets, there is some benefit in terms of a partial reduction of
STT on cash market transactions. We await more clarity on the deduction which
has been made available to first-time individual investors in stock markets.
q Overall, we see the budget trying to provide a thrust on growth through consumption-related initiatives and also through public sector investments (increase
in plan expenditure). More private sector investments will be encouraged only by
further reform initiatives.
q While the market's concern on the fiscal deficit number has been addressed, it
will likely await follow-up initiatives, we opine. We expect the markets to remain
range-bound in the short-to-medium term and believe that, a bottoms-up approach will be the best approach over this time-frame.
No comments:
Post a Comment