4% Cenvat, fuel price cut to boost auto sector: Experts

Deven Choksey, KR Choksey Securities does not expect the stimulus package to have any impact on the markets. The only positive you will find is the expenditure of Rs 20,000 crore and Rs 10,000 crore tax free bonds but given the kind of state of economy in which we are and the demand boost that we require, I don't see much efforts taken place in bringing down the tax rates. The Central Value-added Tax (Cenvat) reduction will help bring down prices of some of the products but no other major efforts are taken. At this point in time, the industry wanted much more and the government has given very little." He hopes the government ill come out with further packages.

Dipan Mehta, Member of BSE said the RBI rate cut, the lowered fuel price and the stimulus package cumulatively should be quite positive for the market. "The 4% cut in Central Value-added Tax (Cenvat) favours one or two industry and this will go a long way in providing relief to a whole host of industries." He feels the government is trying to stimulate demand by reducing prices.

Mehta does not see any short-term impact on the economy but said that these should take positive effects over the longer period.

On the auto sector:

Mehta feels the 4% Cenvat reduction in addition to the reduction in petrol and diesel prices should galvanize the auto industry. However, he said it would take 2 to 3 months before we see a rebound in demand in that sector.

Choksey believes the auto sector would start to look attractive with the 4% Cenvat. However, he said that he hoped the government to take certain steps towards the housing sector.