Finance Minister P Chidambaram
stuck to fiscal prudence and managed to rein in the runaway fiscal
deficit despite political compulsions. He hiked the outlay for
infrastructure and other development projects, increased excise on SUVs
and imposed a surcharge tax on the super rich.
"Finance Minister Chidambaram maintained his self-imposed 'red lines'. The former is consistent with a sizeable underlying budget squeeze which will have capped GDP growth in the second half of the current fiscal year, while we judge the latter to be fairly easily achieved via a modest additional tightening.
These headline numbers will come as a relief to the rating agencies and RBI, among others," said Credit Suisse in its budget report.
Following are the views of some brokerages on stocks and sectors that are likely to be impacted by the Union Budget:
Goldman Sachs:
We think the increase in the corporate tax surcharge for large companies will have a negative impact on the equity market. Our sector analysts think that the budget will be positive for agriculture (due to interest rate subsidies and higher credit availability for the sector), infrastructure (due to allowing more tax free bonds), financials (due to tax breaks on housing loans) and negative for consumer goods (increase in excise duties for cigarettes) and autos (increase in excise duties for SUVs).
CLSA:
According to the brokerage, the budget proposals have come across as a relief or ITC as feared ad-valorem duty did not come in for cigarettes. Power, media and property get negatively impacted by budget proposals.
ICICI Bank, Axis Bank, Tata Motors, ITC and Zee remain top ideas. CLSA has also added L&T to its top pick ideas after the sharp correction in the stock.
Increase in service taxes and 1 per cent TDS is seen as a negative for property companies.
JP Morgan:
Meltdown in equity markets post budget was due to elevated investor expectations. JP Morgan has maintained its cautious view on Indian equities for 1H CY2013.
According to the brokerage, the hike in surcharge on corporate profits is likely to impact earnings by 1-2 per cent. The rise in taxes for cigarettes and SUVs was in line with expectations.
It is positive on IT services and healthcare sectors, state-owned utilities and high quality financial stocks.
It is of the view that policy window for reforms will progressively get narrow and the FM's targets do look aggressive against the backdrop of macro data.
Bank of America Merrill Lynch:
The brokerage says that the Finance Minister sticking to fiscal deficit targets for FY13, 14 is good news. The market will now focus on the possible rate cut on March 19 policy meet. The tax hike for corporate India is likely to impact EPS by 1.5 per cent.
It is of the view that the market got spooked by worries on FII taxation, and expects a positive clarification from the Finance Minister on DTTA norms. Stock-wise announcement on house loan tax benefits are positive for HDFC and LIC HousingBSE 2.00 %. Its top picks include Maruti, ICIC Bank, Lupin, Tata MotorsBSE 1.50 % and DLF.
Hike in excise duty for SUVs is negative for M&M and rise in import duty of coal is negative for Adani Power and Tata PowerBSE 2.59 %.
"Finance Minister Chidambaram maintained his self-imposed 'red lines'. The former is consistent with a sizeable underlying budget squeeze which will have capped GDP growth in the second half of the current fiscal year, while we judge the latter to be fairly easily achieved via a modest additional tightening.
These headline numbers will come as a relief to the rating agencies and RBI, among others," said Credit Suisse in its budget report.
Following are the views of some brokerages on stocks and sectors that are likely to be impacted by the Union Budget:
Goldman Sachs:
We think the increase in the corporate tax surcharge for large companies will have a negative impact on the equity market. Our sector analysts think that the budget will be positive for agriculture (due to interest rate subsidies and higher credit availability for the sector), infrastructure (due to allowing more tax free bonds), financials (due to tax breaks on housing loans) and negative for consumer goods (increase in excise duties for cigarettes) and autos (increase in excise duties for SUVs).
CLSA:
According to the brokerage, the budget proposals have come across as a relief or ITC as feared ad-valorem duty did not come in for cigarettes. Power, media and property get negatively impacted by budget proposals.
ICICI Bank, Axis Bank, Tata Motors, ITC and Zee remain top ideas. CLSA has also added L&T to its top pick ideas after the sharp correction in the stock.
Increase in service taxes and 1 per cent TDS is seen as a negative for property companies.
JP Morgan:
Meltdown in equity markets post budget was due to elevated investor expectations. JP Morgan has maintained its cautious view on Indian equities for 1H CY2013.
According to the brokerage, the hike in surcharge on corporate profits is likely to impact earnings by 1-2 per cent. The rise in taxes for cigarettes and SUVs was in line with expectations.
It is positive on IT services and healthcare sectors, state-owned utilities and high quality financial stocks.
It is of the view that policy window for reforms will progressively get narrow and the FM's targets do look aggressive against the backdrop of macro data.
Bank of America Merrill Lynch:
The brokerage says that the Finance Minister sticking to fiscal deficit targets for FY13, 14 is good news. The market will now focus on the possible rate cut on March 19 policy meet. The tax hike for corporate India is likely to impact EPS by 1.5 per cent.
It is of the view that the market got spooked by worries on FII taxation, and expects a positive clarification from the Finance Minister on DTTA norms. Stock-wise announcement on house loan tax benefits are positive for HDFC and LIC HousingBSE 2.00 %. Its top picks include Maruti, ICIC Bank, Lupin, Tata MotorsBSE 1.50 % and DLF.
Hike in excise duty for SUVs is negative for M&M and rise in import duty of coal is negative for Adani Power and Tata PowerBSE 2.59 %.
