Expect earnings de-growth to continue in Q1FY10: Dalton Cap

Here is a verbatim transcript of the exclusive interview with UR Bhat on CNBC-TV18. Also watch the accompanying video.

Q: How are you feeling going into the budget or do you agree with some of our other experts that the budget impact is 48 hours, after that global cues takeover?

A: I think yes, if the economic survey is anything to go by, we can probably expect some good things from the budget; the same sort of list that we have been carrying for last eighteen years - things to do list. We have been short on action and long on rhetoric, so it is time for us to convert the rhetoric into some action. I think that is what the market wants to believe will happen.

Q: Do you believe though that the budget could be as well seminal an event as the election outcome was and the way the markets reacted?

A: I don't think so because I think there is quite some sort of cynicism in terms of the budget outcome even though the right noises have been made in terms of the economic survey. Because I think we are in a fiscal mess and the leeway available to the government in terms of doing something dramatic is not very high.

Given the slowdown in the economy, it is probably difficult for the government also to tax its way out of trouble. So, therefore I think divestment is an option but talking of Rs 25,000 crore, which is half percent of less of gross domestic product (GDP) is not going to solve over fiscal problem in a great hurry. So, I think something more dramatic than what we have hitherto be used to, is required. But we have to see whether it is going to be different from last several years where we have got the right rhetoric but the wrong action. Market expectations now are somewhat more subdued than what it was immediately after the election, everybody thought that this is a complete game changer and things will be dramatically different than what it was last five years or last fifteen years, but doesn't look like as if today the market is expecting anything dramatic from the budget.
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