InvestorQ : What are the broad expectations as the markets enter the six day budget week before the FM presents the Budget 2020?
Aditi Sharma made post

What are the broad expectations as the markets enter the six day budget week before the FM presents the Budget 2020?

K V RAO answered.
2 years ago
The FM will present the budget for 2020-2021 on 1st February at 11 am.  The Economic Survey that would be presented the previous day will give certain hints about the budget proposals.

Important points:

(1) Pro-growth and fiscal discipline are twin challenges.

(2) The budget will aim towards achieving US$5 Trillion GDP target. Likely proposals:

(1)IT deduction limits on investment under Section 80(C)is likely to go up to Rs2.50 Lacs (up from Rs 1.50 Lacs) (2)Housing loan deduction limits are likely to go up. (again personal taxation)(3) Measures to boost the real estate sector (companies that would benefit are: Ultratech Cement, Kajaria Ceramics, Crompton, Asian Paints)(4) Reduction in dividend distribution tax (cost of capital will get reduced, Companies that may benefit are: Infosys, TCS, ONGC, IOC, Bajaj Auto, Hero Motors, HLL, Colgate, Nestle)(5)Auto scrappage policy (+ for automobile companies) (6)Banking Financial services sector (including NBFCs)Profits earned by companies in this sector may get tax incentives. 

There are other measures that would be a big boost to this sector ( banks that may benefit are: SBI, BOB, PNB, Canara Bank and also private sector players HDFC Bank, HDFC, Kotak Bank, ).  Investors can definitely bet on this sector for short term gains. Caution: All gains from budget proposals will be short-lived.  So only traders ( and not investors) will be immensely benefited.

Aashna Tripathi answered.
2 years ago

The Union Budget 2020 may be just 6 days away and this is going to be 6 days of full-fledged trading in the stock markets. Here is what markets are chiefly expecting to happen in the Union budget announcement.

· Markets are genuinely hoping that the government revives the economy without straining its finances too hard.

· Of course, this will imply that the government may have to expand its balance sheet a bit and free up resources to revive growth. In other words, this is more fiscal deficit.

· The slowdown meant government revenues left a hole in its finances. The onus will be on Nirmala Sitharaman to loosen purse strings and increase infrastructure spending.

· Markets want the budget to desperately ease taxes on long-term capital gains and provide other relief measures for the markets. This could include a scrapping of the dividend distribution tax (DDT) also.

· Sharp in personal income taxes (both in the slabs and also the rates) could be a boon for the markets as it will give a boost to consumption. Needless to say, the markets will benefit if economic revival is made the focal point of the budget.

· Budget also could be the road ahead or the pathway to the PSU banks and a clean slate for the banks to expand their loan books next year could be a major positive. Specific sectors like autos and NBFCs will also look for rescue packages.

· With the government largely silent on the AGR issue of telecom companies, it is hoped that the government may choose to soothe the tempers in the budget by giving more time and concessions to the telcos. The non-telecom applicants for bandwidth like GAIL, OIL and PGIL maybe exempted from the AGR ambit altogether, which is fair.