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The Budget has nothing ‘either to cry over or to rejoice' and none of the proposals in it ‘has got any great impact on the stock prices', according to Mr K.N. Sreedharan, Chartered Accountant, Coimbatore.
He said while no particular industry got a ‘big bonanza' in the Budget for shares of any company in that particular business to shoot up, no industry suffered a high dose of taxation for that sector to be shunned by the investors.
Speaking at a Budget stock taking meet, organised by the Coimbatore Capital and Coimbatore School of Business here, he said during the nearly 150 minutes of trading post-Budget, the index was very volatile and after going up by nearly 500 points, Sensex shed much of the gains before closing by about 120 points up on that day. What began with a great expectation before the Budget speech started was probably discounted by the time the presentation was over. But on the next day, the market shot up by 620 points. What happened between Monday's market closing and Tuesday's market opening to ‘make the market mood change so dramatically' was a surprise.
Mr Sreedharan, posing the question as to what drove the market sentiments up post-Budget, did not think the Budget, or the international scenario or the available surplus after the Budget proposals could have contributed to the market buoyancy.
Even the I-T relief given by hiking the tax exemption limit to Rs 1.80 lakh from Rs 1.60 lakh would give a measly saving of Rs 2,000 in tax!
Few surprises
Mr D. Balasundaram, Chairman, Coimbatore Capital, said while the Budget sprang few surprises, this was understandable as the Finance Minister had ‘very little choice' since many of the Government's obligations like interest payment on its borrowings, Defence expenditure etc. could not be tinkered with.
He felt the target to raise Rs 40,000 crore through PSU disinvestment during 2011-12 was a ‘grave assumption' if the market continues to be lukewarm as it is now. More importantly, if the food security bill is passed during next FY, it would pose a great burden on the finances of the Government.
He said unless drastic steps were taken, inflation would rule high. In such a scenario, if the Government was not able to raise the planned resources through PSU disinvestment the interest rates may even go up from the current high levels. Businesses such as housing, automobile etc whose growth is dependent on credit driven demand would suffer a ‘great hit' and they would drag along sectors that are thriving on their growth.
Negative expectations
Dr S. Karthikeyan, Director, Coimbatore Capital, said the market witnessed a steep correction ahead of the Budget because of negative expectations like diesel vehicles being subjected to harsh duties etc but the sensex bounced back as these fears proved to be wrong.
He said sectors such as autos, metals, banks, consumer goods, big software companies, would benefit while some others like branded garments, a section of capital goods sect etc may take a hit. He cautioned the investors from moving out of the stocks to risk free assets and suggested that the investors should keep investing in their portfolio.
Dr K. Sabapathy, Director, Coimbatore Capital, gave an over view of Coimbatore School of Business, promoted by Coimbatore Capital that offered MBA programme with focus on finance and finance services with a focus on direct on job-training.
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