Retail investors in CPSE ETFs could get ELSS-like income tax benefits, according to the Budget proposals, says Umesh Mehta
Retail investors in central public sector enterprises (CPSE) ETFs could get ELSS-like income tax benefits, according to the Union Budget proposals, Umesh Mehta, Head of Research, SAMCO Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Q) What is your first take on Modi government’s 2.0 Budget?
A) The government has emphasized linking inland waterways and increasing the number of cargo terminals to expedite the number of goods transported through water.
This could have an impact of Cochin Shipyard as they build ships and vessels and as more and more businesses use this route of transport, Cochin Shipyard could benefit from increased vessel orders and repairs.
This may also impact port operators and logistics players such as Adani Ports if more businesses use the water route as a mode of transport.
Q) Winners and losers from Budget 2019?
A) Infrastructure and Road building stocks were positively impacted as the government proposes Rs 80,250 crore to upgrade 1.25 lakh kilometers of the rural road over five years and also build 1.95 crore rural homes in FY20-22.
CCTV and fiber optics cable custom duty was hiked and hence it had a negative impact for Bosch, Dixon and Tejas Networks.
At the same time, IT companies were also negative impacted as the budget proposed for a minimum public shareholding of 35 percent from 25 percent. Since they have large promoter holdings IT companies took a hit.
Q) How do you rate the Budget 2019 on a scale of 1-5?
A) The Budget can be rated 3 out of 5 because the budget did not announce any big-ticket reforms related to taxation or the financial markets as was expected.
At the same time, the Budget departed from the previous budgets of announcing any heavy big-ticket expenditures. This time the budget took a steady approach with a view of maintaining the fiscal prudence of 3.3 percent.
Q) Anything specific which could impact investors and markets?
A) Retail investors in CPSE ETFs could get ELSS-like income tax benefits, according to the Budget proposals.
The government has also set a Rs 1.05 lakh crore divestment target this year which means a lot of divestments will happen.
At the same time, the government is said to propose to SEBI to bring minimum promoter shareholding to 65 percent from the earlier 75 percent. These 2 steps may lead to oversupply in the markets.
Q) Top five stocks which investors can look at buying post the Budget 2019?
A) Here is a list of top five stocks which investors can look at buying post Budget 2019:
Since it houses retail business, doubling of farmer income and increase in purchasing power parity of Indian Consumers will have a direct impact on RIL.
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Government’s doubling of farm income will involve several government plans and participation of the private sector. Being India’s largest FMCG Company, ITC can benefit immensely by PPP with the agriculture sector of India.
The Government has announced a big plan on 100% FDI in insurance intermediaries sector to boost penetration as it is an under-penetrated sector. The sector has a lot of tailwinds playing to its benefit.
As the government embarks on linking waterways, bigger roads and better water management systems, this complete infrastructure Services Company stands to benefit immensely.
With the bank recapitalization, rejuvenation of the banking system and resolution of NPAs, this banking PSU which is the country’s biggest and most efficient will benefit.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.