Union Budget – Key Themes and Implications for specific Stocks

For Indian companies, the implications will be based on 6 broad themes…

Converging the FDI / FPI story

The budget has made an attempt to remove the distinction between FDI and FPI limits. This will provide the much needed leeway for banks like IndusInd, Axis Bank, Yes Bank and Federal Bank to raise their foreign holdings. Also Axis had a problem in the MSCI inclusion due to the absence of any FII limit. With this convergence, all the private banks will be eligible for inclusion in the MSCI. This would make a difference in terms of ETF demand for these stocks as their buying is normally determined by their inclusion and weightage in the MSCI. Continue reading

Implications of the Union Budget for specific sectors

From a broad perspective the cut in corporate taxes is a positive for most Indian companies. But this will happen over 5 years and there will be no change in the MAT. At a macro level, defense will be the big story and infrastructure points like power and roads will see huge investment push from the government. Similarly, the cut in corporate taxation from 30% to 25% is also a major positive for corporates across the board. But service tax net has been expanded and the rate of service tax has been raised from 12.36% to 14%. Also excise duty has been raised by 50 basis points which will add to cost of manufacture. Continue reading

Direct Tax Implications of the Union Budget

The Union budget has interesting implications for corporate and individual taxation.  While there are no big bang tax reforms, the budget has made a small attempt to reach out with benefits to Indian corporates and individuals.

It needs to be understood that with a higher allocation for defense and infrastructure the leeway for cutting taxes was limited. However, the government has made an attempt to give some benefits to tax payers. Continue reading

Union Budget 2015: The Weight of Expectations

The Union Budget has met a lot of expectations on the infrastructure and reforms front. Some of the highlights are as under:

Where the budget met expectations: Continue reading

Union Budget and the Macro Economy

The Union Budget will be assessed on the basis of the promises inflation, fiscal deficit and growth. The government has done well on all these fronts. Inflation is likely to be held at around 5% and the fiscal deficit has been slightly raised for 2016 from 3.6% to 3.9% and for 2018 from 2% to 3% to keep additional level buffer for pump priming.

Financial inclusion seems to be the major theme of the Union Budget with the JAM combination (Jan Dhan, Aadhar and Mobile) to be leveraged to focus on financial inclusion and ensure direct transfer of subsidy benefits. The government has also committed to stick to its commitment of implementing the GST on April 1st 2016. Continue reading

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