The stock markets have remained under pressure ever since the beginning of this year. Sensex has fallen over 10 per cent from January 1 till Feb 17 and it has corrected by 20 per cent over the past one year.
Worries on account of global markets, continued selling pressure by foreign institutional investors and crude oil slumping sharply are mainly impacting domestic markets. The continuous surge in yen and gold is also adding to investors’ anxiety.
In such scenario, market and companies are eyeing the Union Budget 2016 announcements to be presented by Finance Minister Arun Jaitley on February 29.
After talking to market experts, we list out budget expectations that will dictate trends for stock market movement:
1. Market and industry participants would welcome any cuts in duties to boost domestic demand
2. Incentives for boosting consumption which could help trigger investments from the private sector
3. Cuts of service tax in exports to boost segment
4. Commitments to the domestic industry particularly metals through announcements of anti-dumping measures, etc. These steps would go a long way in improving demand and thereby top line growth for companies across sectors.
5. Brokerages would look for steps that can reduce cost of transaction for investors that includes STT, exchange transaction costs, SEBI transaction charges as well as service tax and cess.
6. Restoring the benefits under 88E for STT.
7. Ease of KYC would be another welcome move. While the single KYC structure was proposed in the previous Union Budget, however this is yet to materialise in effect. Rationalisation of Dividend Distribution Tax and increased tax exemptions/incentives for retail investors towards equity, would also help increase retail participation in the markets.
8. If the budget has a stable tax regime and does not increase any tax rate, then the moves in the market would be primarily dictated by the earnings outlook and the global volatility.