Budget 2018: After Finance Minister Arun Jaitley presented the Union Budget 2018 in Parliament yesterday, the consensus assessment of top mutual fund managers is that it was a balanced budget overall. “It is a good budget overall. I will rate it 8 on 10. The grandfathering clause on LTCG ensures that the past gains are protected,” Nilesh Shah Of Kotak Mutual Fund told in an interview to ET Now. So what exactly the expert is betting on post Union Budget 2018?
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“Based on the budget clearly rural and agriculture are two sectors which have given a huge push. All stocks, whether they are related to farm equipment, farm inputs, or rural economy by way of FMCG or rural financing should benefit from the budget as government pushes more money into the agriculture and rural sector,” Nilesh Shah told in the same interview.
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Top mutual fund managers cheered the government’s move to grandfather past long term capital gains. “ In capital gains, the grandfathering of the gains was not heard of in India. Domestic investors have not experienced this kind of relief by the government,” Raamdeo Agrawal of Motilal Oswal noted.
Explaining why equities remain an attractive alternative despite the the introduction of LTCG tax on equities, Alok Singh, Chief Investment Officer, BOI AXA Mutual Fund says that historically, equity has delivered better returns than other asset classes. “Even after the introduction of LTCG equities remain attractive. Equities are one of the only asset classes where you can expect double digit returns. Further, the fact that previous gains made till 31st January will be grandfathered will come as a relief to investors,” Alok Singh, Chief Investment Officer, BOI AXA Mutual Fund told FE Online.
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The expert also pointed out that in the long run, earnings recovery will matter. “That (earnings recovery) is more powerful than capital gains tax because in any case, the stock is not determined by the capital gains tax, it is determined by the corporate earnings and corporate earnings growth. And that has not been impacted at all,” Raamdeo Agrawal of Motilal Oswal told ET Now. On similar lines, Navneet Munot of SBI Mutual Fund said that it was a very balanced budget overall, and rated it 9 on 10.