Fiscal math credibility, capital gains key in Budget: JPMorgan

Bharat Iyer of JPMorgan says after sell-off in broad market and more so in domestic cyclicals in 2016 so far, he believes the market is going into the Budget pricing in modest expectations.

According to him, key to whole exercise remains credibility of the fiscal math. At times, Union Budgets over the past have suffered on account of over-estimating of revenue and underestimation of expenditure, he says.

Iyer believes the market could have an appetite for fiscal slippage provided the end use of funds is very clearly mandated and adhered to for important issues like PSU banks recapitalisation.

According to him, key risk to watch out for is any adverse change to capital gains tax on equity investments.