On Budget 1999-2000:

Budget deviates from the narrow concept of `kick-starting' the economy necessarily by the government. It makes a bold attempt to rely on the consumers' spending attitude towards revival of the economy by increasing the wealth and more importantly the confidence of its investors. This has been done by the government through the thrust given to the capital markets and the housing sector.

The budget has nothing on foreign direct investment (FDI) in sectors like ports, power generation and distribution, roads and other sectors. On the other hand, the budget is definitely inflationary and the hike in diesel pricesand the overall increase in excise duties (because of the customs duties may have a cascading effect on the prices). A Rupee 1 hike on Rs 8 translates into almost a 13-14 per cent increase would affect the prices of all commodities.

In capital markets, the efforts to strengthen mutual funds would mean more money flowing into this sector which would make its way into the market and this should go a long way in making it more vibrant. This would increase the wealth of its shareholders which will increase their confidence to spend. This can come as a shot-in-the-arm for the economy which is suffering from overhang of recession.

Because of the sops to UTI the general market perception is that the supply from UTI will stop, and there will be a supply-demand mismatch, which we are witnessing now also. With more demand and less supply, the few trades that are occurring is leading to a disproportionate effect on the stock prices leading to an upsurge in the market. And when UTI has massive inflows we will seethis effect compounding on the markets. There will be an action-reaction galore in the market and the Sensex should touch 4,000 levels in the next 8-12 months.

Housing sector sops will lead to increased demand for dwelling units and revival of interest in the real estate. Both can generate multiplier effect on the economy.

The efforts to curb fiscal deficit at 4.4 per cent is certainly ambitious and a double edged weapon. This is because apart from the positive side it would mean more pruning of the government expenditure which does not bode well for the economy as a whole and if they are hell-bent on meeting the fiscal deficit then the government would drastically cut the expenditure which means lower outgo into infrastructure and other areas because the government is the single largest consumer and buyer in India, at present. As also the disinvestment target of Rs 10,000 crore. A new initiative has been on the exit policy with the government permitting PSUs to frame its own VRS to be financed by bondsissued by the government.

We are looking at:

Nestle:
In this company because of sluggish exports in the fourth quarter the performance of the company was affected in the markets but now that the exports of the company have been restored. On the cost front the prices of bean coffee have eased up and overall on the domestic front they continue to show robust growth. We expect the company to show a 18-20 per cent topline growth and 30-35 per cent bottomline growth for the next three years.

HCL-Infosys:
Hardware accounts for 75-80 per cent of the sales while 20 per cent comes from software sales and services. The software and services comprises of vertical application, systems intergration and software outsourcing. The company has developed a niche in this segment and is aggressively targeting a growth rate of 60 per cent every year. The margins are very high in this segment. Profits in the current year can be around Rs 62-63 crore which can jump to over Rs 100 crore next yearon an equity base of Rs 31 crore.

Wartsilla Diesel:
The order book of this company is almost three times of what it was in the corresponding period a year back. Secondly, contribution from Khapoli unit, which made a contribution of 30 MW last year is expected to go upto 50 MW this year which would have a direct positive impact on the profitability of the company. The year 1999 should see a beginning in contributions from IPPs.