Budget Analysis: Vibhav Kapoor sees market resuming downtrend after Budget

Vibhav Kapoor, Director, IL&FS stands in full support to the Union Budget 2013-14 presented by Union Finance Minister P Chidambaram in the Lok Sabha today.  He told CNBC-TV18 that the finance minister had a very difficult job to do because there was no money available. With the limited options he has done a decent job.

Kapoor believes that market was waiting for this Budget and now it will be resuming that downtrend from now onwards. Below is the verbatiom transcript of his interview to CNBC-TV18 Q: What have you made? Do you think it is a non-event kind of a Budget? It is just an accountants Budget with expenditure and revenues just added up? A: The finance minister had a very difficult job to do because there was no money available. He didn’t want to raise taxes so as to upset the capital markets or other people. So, his options were extremely limited and within those options he has done a decent job. This is not a Budget, which going in the short term cause the markets to rejoice in a big way. He has concentrated on the most important point of time which was fiscal consolidation. It was to cut down the fiscal deficit to 5.2-5.3 percent and 4.8 percent for next year which he has achieved. So, what we must look into the figures and we probably need some more time for that as to how credible this 4.8 percent is and whether it is achievable. I have some figures with me and it’s too short a time to analyse them. The numbers look pretty okay except two things which are not over optimistic. However, the government will really need to put in efforts to see that they are achieved. Their net tax revenue which is budgeted to be 19.1 percent higher than the revised estimates in the current year and the other is the subsidy figure which is Rs 30000 crore less than what it was in the revised estimates of this year. Out of that food subsidy is up only by Rs 5000 crore. So, going forward we need to see whether the food subsidy bill can really add much more to that. These will be the two figures that need to be seen. Q: We are entering a tricky month as well and up until now it looked like the Budget sort of was holding the market out. Would you worry about downside risks going into next month given what is happening globally - the fact that sentiment seems to have got hit again today? A: We have always been of the view that 6100 target which we hit, which was our target for January-February was hot a few weeks ago and from there downtrend has started. The range we have been looking at is about 5500-5600 on the downside. So, the market was probably just waiting for this Budget and it is probably going to just resume that downtrend from now onwards. Also the global situation which the market will revert back to in a couple of days is not all that good. Although, the global markets have been going up, but some sort of a correction also would be starting in the global markets soon.