Union Budget 2017-18: 'More ears on ground than ears on market expectations'

Nikhil Khandelwal, MD, Systematix Shares & Stocks

“The Union Budget presented today had more 'ears on the ground' than 'ears on the market expectations'.

Clearly – the market speculation around LTCG, Corporate tax rate cut etc. across various forums was not mentioned in any form in the Budget (except tax reduction for 2.5-5 lakh income bracket). These omissions, combined with the clarity of tax pass through for AIF 1 and 2 category funds (these have been the biggest grey areas) have really been highlights of the Budget. These issues supported by the government’s own fiscal health – reflected in strong fiscal deficit nos have been the most important factors for FIIs and speculators to enter fresh long or annul their shorts – leading to the rally in the markets as seen today. 

Besides, the above macros and investor sentiment related issues, the government has clearly emphasised their strong focus on the rural and middle income individual – for whom enough and more has been provided through high MNREGA investment, Housing for 1 crore HHs in next 4-5 years, tax exemptions for SMEs and sub 5 lakh salary individuals, besides several skill development and job creation related opportunities. We think that this Budget has also put in place various blocks to improve the farm level income – and hence we believe that farm inputs requirement and rural incomes are both set to increase in the times to come.

We expect these initiatives to further empower the largest population segments in India – and thus powering the consumer demand in the times to come, a big positive for consumer staples as well as discretionary industries, banking sector, consumer finance etc. 

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Nikhil Khandelwal

MD|Systematix Shares & Stocks

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Another big winner of this Budget is the housing sector wherein both rural housing and urban housing, especially the affordable housing segment has received a major push and will drive a significant investment into infrastructure development of the country.