Pre-budget Analysis : Pre-budget February 2012 ::Kotak Sec

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Pre-budget Analysis : Pre-budget February 2012

¾  The Finance Minister will present the FY2012-13 budget in the backdrop of a sharp rise in the fiscal deficit for 2011-12. Interest rates have risen sharply in FY12 and budget provisions are expected to largely determine future monetary actions, we opine. Thus, the FM's priority in the 2012-13 budget will be fiscal rectitude, we believe.

¾  Overall, we believe that, the budget will aim to provide an investment - led supply push to growth as against a consumption - led demand pull (higher subsidies, etc). Lower deficit and borrowings (and interest rates) post tax increases will also encourage investments. The resultant easing of supply constraints will also reduce the pressure on inflation. 

¾  We believe that, the budget may have: Positive implications for Banking, NBFCs, Capital Goods, Cement, Construction, Logistics, Media, Oil & Gas, Power, Shipping sectors; Negative implications for Automobile sector and Neutral for sectors like Aviation, FMCG, Hotels, Information Technology, Metals & Mining,  Real Estate, Telecom.