The Hindu Business Line : ‘Budget and global cues drag Sensex’

Coimbatore, March 4 Mr K.N. Sreedharan, Chartered Accountant, S. Krishnamoorthy & Co said that there was nothing to discuss on Capital Markets in the Budget other than chatting over a cup of coffee.

He was at the Ardra Conference Hall to address a meeting on ‘Reflections of Budget – 2008’ convened by Coimbatore Capital Ltd.

“What is there to discuss? The impact is obvious,” he said and observed that if the market slipped on the Budget day, it normally would recover the following day or vice versa, but this year, “the downslide continues, even after 72 hours of the announcement. This goes to show that the Indian market is not a standalone market any more. The impact is compounded by global cues.”

The market, however, has also not reacted to the Securities Transaction Tax. “This is the only positive factor,” he said and mentioned that he would not attach too much importance to the 5 per cent increase in the short term capital gains tax.

Reverting to the indirect impact or budget implications, he observed that there was no big change in the policy or structure.

Then why is the market reacting adversely? “That’s where global cues come in,” Mr. Sreedharan said.

“The state of the textile sector is pathetic with units wondering whether to sell the yarn or the mill itself, but finding no takers for both. Sugar factories are unable to recover the cost and foundries are in a fix due to the rising pig iron and steel prices. While the Budget has not given any direct or indirect benefit, it has neither been a market-friendly one,’ he said adding “all is well is not what we are seeing.”

The most debated issue of the Rs 60,000 crore farm loan waiver surfaced during the interactive session, with Mr. D. Balasundaram, Chairman, Coimbatore Capital, stating that there was an undue alarm over this issue and Mr. Sreedharan claiming it to be rather subdued.

“Look at the moral side,” Mr. Sreedharan said and asserted that the defaulters were rewarded while the honest repayer of loans ignored. “This is not going to halt the banking industry but the entire economy. A better credit mechanism would have done good.”

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