Vallabh Bhanshali, Chairman, Enam Securities

I think it is a great stimulation budget. I want to compliment the finance minister for the pragmatism that he has shown.

I think the disinvestment part is being understated because he has said that needs to grow and that is where a lot of action is expected in my view.

I think it is a politically shrewd budget and he just stopped by saying that bank and insurance are holy cows and we are not touching them but the finance minister has given enough hints. And in any case, the budget is not necessarily the only place where he has to clearly lay these out and therefore he has left it to the right people to do so. Therefore I am not disappointed in that sense; one has to not only see the details but also the decisions by the ministries. Many times you have seen a big policy but individual ministries are fighting or sometimes you have states getting involved. Those are micro issues that have to be dealt with over a period of time in any case. But that seems to be the major resorts raising exercise and therefore the market was wanting it, and he has given it to the market.

We have to look at reforms through a different language and a different strategy. We have seen top down reforms, the results of bottom up of stimulation have been very good and unexpected. The market was very unhappy with the debt waiver and National Rural Employment Guarantee Scheme (NREGS) last year and then the world melted and all these turned out to be absolutely brilliant.

Here is a very sensitive finance minister who has looked at lots of things - he has looked at inputs from many people and responded to a variety of thins like anonymous donations to commodity transaction tax, to fringe benefit tax (FBT) etc and the jurisprudence of the taxations, for example minimum alternate tax (MAT); he has handled it extremely well.

One cannot say that it is a bad tax and therefore, in one swoop, he has increased it from 10-15%, unfortunately we don't have statistics. Therefore, what I am beginning to see is, here is a finance minister whose language and metaphor are different, whose understanding is different and therefore I am quite enthused by what I have seen so far because we have seen a whole lot of sensitivity which gives me a lot of satisfaction.

As far as the market is concerned, clearly it had discounted a lot and it was a catch up market. The market will come back I have no doubt, subject to the huge amount of paper that keeps pouring and diverting money away from the market and therefore it will go back to stock picker’s market and to a consolidation phase.

I do not know what the market will do tomorrow, but my sense is that the whole policy thrust seems to be thoughtful. There can always be differences between what a market expects or I expect. Given the fact that there is so much stimulation and a continuous focus on growth, though it maybe inflationary, at some point, it has this fiscal deficit concern and therefore one has to play this out and the market will have to tackle its positions before it tackles the government policy and therefore the market to that extent is not over bought. It has a good chance of turning around.

However, the big reality is that lots of stocks had run up 50-500% in the last four to five weeks. Therefore, I am sure that there was scope for trimming those positions and retracing some of that and the market is therefore in a consolidation, healthy phase tackling the qualified institutional placements (QIPs), the policies and the over built up.

Securities transaction tax (STT) has two parts; one is the tax itself and second is its alignment with the capital gains tax. Therefore, it needed to be tackled at different footing. Given the shortage of time that he may have had and there maybe reasons to look at it a little more slowly.

Also, fundamentally, I don’t think it distorts the markets having the arbitrage segment of the trade having been tackled already by the former finance minister. There is not as much difficulty as in the case of commodities transaction tax (CTT) and therefore I think the market can live with it.

I think MAT was a well thought out tax. Given the ingenuity of lots of people there was this widespread feeling that we needed a tax like that and it’s been their on the book. In a year like this, where you had to collect tax from somewhere, this is not a tax its only tax paid in advance in a way and he has also extended it from seven years to 10 years, so you can get credit over a long period of time. So, I am okay with that.