impact of budget 2014 on markets

8/10/2019 Impact of Budget 2014 on Markets

1/20

IMPACTOFUNIONBUDGETON

MARKETSComparative Study Of FY 13 & FY 14


2/20

AGENDA

Stock markets & its importance

Market Analysis 2013

Market Analysis 2014


3/20

THREE REASONS( SOURCE: KOTAKMAHENDRA SECURITIES)

1.DIRECTION OF THE ECONOMY

2. GOVERNMENT INTENT

3.GOVERNMENT FINANCES


4/20

IMPACT OF BUDGET ON

MARKETS(2013)


5/20

OVERVIEW

Direction of the economy in 2013:

> markets reaction to the budget very disappointing

>Example : STT ; Sensexdown

FD ; Sensex- up>Before budget : Bearish pressure- dropped to 4.2 %

> After budget : further 1.3 % decrease

Government intent

FD : bring down to 4.8 % of GDP or Rs 5.42 L

>Interim Budget: 4.6% or Rs 5.24L

> Report shows : FD has exceeded budget

estimates


6/20

OVERVIEW

>Government Budget : 4.9%

> GDP : 6.1-6.7%

> Report shows : went down to 4.7% ( Feb 28th2014)

Government Finances

> raised the Plan expenditure - 6.58 per cent to Rs5,55,322 crore

> inflation rate : average of 10.92%( increase from

9.42% (2012)>CAD


7/20

IMPACT OFBUDGETS MARKETS (2013)


8/20

CRITICISMS

Market Commentary: Sensex nosedives 290 ptsas Budget 2013 flops

CRITICISMS- Positive :

Uday Kotak & Adi Godrej:- lived up to the promise of Fiscal deficit

- good for capital and market investments

- emphasis on inclusiveness

Negative: Samir Arora ( helios capital)

- No moves to revive markets.

- FM delivered a mouse of the budget


9/20

PROPOSALS

Designated depository participants, authorized by SEBI,may register different classes of

>Portfolio investors, subject to compliance with KYCguidelines.

SEBI will simplify the procedures and prescribe uniformregistration and other norms for entry for foreignportfolio investors.

if investor has a stake of 10 per cent or less in acompany- treated as FII .

if investor has a stake of more than 10 per cent, it willbe treated as FDI will be laid.

FIIs will be permitted to participate in the exchangetraded currency derivative segment to the extent of theirIndian rupee exposure in India.


10/20

PROPOSALS

FIIs will also be permitted to use their investment in

corporate bonds and Government securities as

collateral to meet their margin requirements.

SEBI to prescribed requirement for angel investor

pools by which they can be recognised as

Category I AIF venture capital funds.

Small and medium enterprises, to be permitted to

list on the SME exchange without being required to

make an initial public offer (IPO).

Stock exchanges to be allowed to introduce a

dedicated debt segment on the exchange.


11/20

IMPACT OF BUDGET ON

MARKETS(2014)


12/20

OVERVIEW

Direction of the economy:

- Positive reaction to the Union Budget 2014.

- BSE benchmark Sensex erased initial losses and

jumped over 434 points- announced steps to strengthen investor confidence,

improve fiscal situation and boost growth.

Government Intent & Government Finance

-Fiscal Deficit:- The Government kept the fiscal deficit target of 4.1%

for FY15,

-Likely to reduce to 3.6% in FY16 and 3.0% in

FY17.


13/20

OVERVIEW

No to spending cuts: Government could not rely

only on spending cuts to reduce the budget deficit .

- work to spur economic growth back to 7%-8%,

which would result in higher tax revenue.

Objective: increase growth which in turn would

lower fiscal deficit as a % of GDP


14/20

OVERVIEW

FDI:

What was announced :

-Defense & insurance sectors- increase from 26 to 49%

General view: positive development

Expenditure Management Commission to beestablished this fiscal

GDP: 7-8 % along with macro economic stabilization

Government Budget4.5%

Total expenditure of Rs.17,94,892 crore estimated. CAD

Steps to revive SEZs

Six debt recovery tribunals to be set up


15/20

STEPSTOENERGIZEMARKETS

Measures undertaken to complete the ongoing

process of consultation with recommendations from

FSLSR

Steps for a vibrant ,deep and liquid corporate bond

market

Deepen the currency derivatives- elimination of

unnecessary restrictions

Issuance of depository receipts on all permissible

securities including debt instruments

International settlement of Indian debt securities

shall be permitted.


16/20

STEPSTOENERGIZEMARKETS

IDR shall be replaced by a much more liberal

Bharat Depository Receipt.

Uniform KYC norms shall be introduced and inter-

usability of the KYC records across the entire

financial sector shall be made possible.

To enable Indian financial sector consumers to

access and transact all financial assets, one single

operating demat account concept shall be

introduced.


17/20

CRITICISMS

Adi Godrej, Chairman of the Godrej Group,

said the Budget is a major boost for the stock

markets and GDP growth, while Crisil

Research has said the following are the five big

takeaways from the budget

1.Significant infra investment

2. FDI in defence and insurance positive

3 Students will benefit from more institutes of

excellence

4. Job creation enabled in sectors such as textile

5. purchasing power of households to increase via tax

exemption


18/20

CRITCISMS

Uday Kotak:

- Focus on financial savings- a big positive

Samir Arora (helios capital)

- Budget based on what government intends to do.- -volatility in market because investors are too

anxious and short term

- considers the budget better than the previous one


19/20


20/20

IMPACTONINVESTOR: SENSEX

Tech Pick : BATA INDIA (BUY)

Last price : rs 1280

- Govt has decided to slash excise duties on

footwear below 1000 to 6%- Tech Pick:MRF(SELL)

- Last price: Rs 22,347.95

- Slipped below 50 day moving average as traders

have cut down on long positionsTech Pick : ITC(BUY)

Last price:Rs 343

Recovered sharply inspite of fresh taxes

impact of budget 2014 on markets

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