Union Budget 2019 India: One of the significant expectations from the Budget is lowering of both Short and Long Term Capital Gains Tax. The other long-pending hope is either the lowering or the complete removal of the STT -- Securities Transaction Tax. Any tinkering to these issues can spark a positive reaction from the markets.
By Milan Vaishnav
Budget 2019 India: After claiming an absolute majority again after the 2019 General Election, the Narendra Modi Government is slated to come up with their first budget of the second term on Friday, the 4th of July 2019. So many expectations have been build up around this event, which has always been one of the most important domestic events in a year. All industries representing different sectors, and people at large from the various strata of the society expect something or the other the Government from every budget. Investors are no different. At this point, it would be interesting to take a look at what can we realistically expect from the Union Budget 2019.
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One of the significant expectations from the Budget is lowering of both Short and Long Term Capital Gains Tax. The other long-pending hope is either the lowering or the complete removal of the STT — Securities Transaction Tax. Any tinkering to these issues can spark a positive reaction from the markets. Apart from this, Investors would also like to hear from the FM the steps that the Government might take to induce growth. The overall slowdown has been a concern, and the inflation has not come down to the level it should have been otherwise. Also, the previous rate cuts have not yet been transmitted fully to the end customers.
Amid all these expectations, the Investors need to keep in mind that the Budget that was presented in February was technically just supposed to be a Vote-on-Account. Instead, the Government has gone ahead with a full-fledged one. So, in all likelihood, there will be little suspense left in the coming Budget which may largely remain a non-event. Over and above this, the Government is also grappling with the issues of slightly widened fiscal deficit. It would require an act of delicate balancing by the Government to address the fiscal deficit while also doing needful to induce growth without disturbing the macro-economic factors much.
In a nutshell, Investors should not expect moons and stars from the Government this Budget as it is likely to be a mere extension to what was presented in February. Apart from this, with now being equipped with a firm mandate, the Government may not hand out too many goodies and take populist measures but may take some steps which may look bitter in the short term but may be better for the economy in the longer term.
All in all, the headline index NIFTY has appreciated more than 7% since February. The broader technical and the global macro environment do not provide a good ground for any substantial rally. Apart from the knee-jerk reactions that the Markets may give, the coming event of Union Budget 2019 may largely remain a non-event for the markets.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara. The views expressed are authors’ own)