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India Economics
What Do We Expect from
Budget F2013?
Two important issues we are watching for in
Budget F2013: The government is scheduled to
present the annual budget F2013 on March 16.
Considering the current weak macro trend, investors are
building hope that the government will recognize the
need to relay its commitment to reviving the growth
outlook with budget measures. We would watch the
budget announcement in the context of two most
important issues:
• A credible plan to cut government expenditure
growth
• Policy measures to encourage private investment
Market implications: According to our India Strategist,
Ridham Desai, “history does not favor the market in the
following 3-4 weeks. The markets are usually flat in the
month ahead of the budget and, in two out of three years,
fall in the month following it. In the past 15 years, the
market has been positive in the following years: 1997,
1999, 2004, 2006, 2009, 2010 and 2011 – there does
not seem to be a great correlation between market
performance and a market-friendly budget. We continue
to be buyers of Indian equities from a 12- to 18-month
perspective, though seek protection from a correction in
the near term.”
Industry-specific expectations: Our analyst team
expects the budget to be a clear positive for
infrastructure and utilities. We do not see any policy
measures that hurt consumption, but we believe any
credible plan to reduce government revenue
expenditure growth or oil subsidies will hamper the top
lines of some consumer industries in the near term.
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Economics
What Do We Expect from
Budget F2013?
Two important issues we are watching for in
Budget F2013: The government is scheduled to
present the annual budget F2013 on March 16.
Considering the current weak macro trend, investors are
building hope that the government will recognize the
need to relay its commitment to reviving the growth
outlook with budget measures. We would watch the
budget announcement in the context of two most
important issues:
• A credible plan to cut government expenditure
growth
• Policy measures to encourage private investment
Market implications: According to our India Strategist,
Ridham Desai, “history does not favor the market in the
following 3-4 weeks. The markets are usually flat in the
month ahead of the budget and, in two out of three years,
fall in the month following it. In the past 15 years, the
market has been positive in the following years: 1997,
1999, 2004, 2006, 2009, 2010 and 2011 – there does
not seem to be a great correlation between market
performance and a market-friendly budget. We continue
to be buyers of Indian equities from a 12- to 18-month
perspective, though seek protection from a correction in
the near term.”
Industry-specific expectations: Our analyst team
expects the budget to be a clear positive for
infrastructure and utilities. We do not see any policy
measures that hurt consumption, but we believe any
credible plan to reduce government revenue
expenditure growth or oil subsidies will hamper the top
lines of some consumer industries in the near term.