Stocks: Joy gives way to realism
Reduction of fiscal deficit, a lower-than-expected net borrowing programme, reduction in surcharge on corporate tax and a disinvestment target of Rs 40,000 crore for FY12 were among the measures that buoyed the market.
“The Budget has not done anything dramatically wrong,” said Ridham Desai, managing director of Morgan Stanley Research, in an after-budget note to investors. “The biggest positive is the move to allow foreign individuals to invest in domestic mutual funds. This opens up a new source of funding for the current account deficit as well as for Indian equities.”
According to Dharmesh Mehta, MD – institutional equities of Enam Securities, everyone was expecting a populist Budget, “but it has turned out to be a very decent one.” Added Anup Bagchi, executive director of ICICI Securities, “The Budget seems to indicate that the government is more focused on the execution of several policies and also resolving the supply-led constraints in the economy.”
However, some like Andrew Holland, CEO-Equities of Ambit Capital sounded more cautiously. “The details of how the deficit would be trimmed needs to be seen. There is no great reason to believe at this point that investments by foreign investors in mutual funds will offset the current account deficit.”
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