Budget 2020: Gifts that stock market wants from Narendra Modi
Budget 2020: Dalal Street experts want overall components like fiscal situation, bond yields, economic growth, personal tax rates, infra spend, amongst others to be addressed in this budget.
Budget 2020: On account of Union Budget (#BudgetOnZee) getting presented today, the stock market is having some expectations from the Finance Minister Nirmala Sitharaman to deliver on. In fact on usual Saturdays, the share market in India remains closed but due to the budget presentation today, it is going to remain open today, which reflects the importance of the union budget for the street. In this budget, the Dalal Street experts want overall components like fiscal situation, bond yields, economic growth, personal tax rates, infra spend, amongst others to be addressed in this budget. However, they want the removal of LTCG Tax and some liquidity in the market as well.
On stock market expectations from Nirmala Sitharaman in budget 2020 Amar Ambani, Senior President and Research Head — Institutional Equities at Yes Securities said, "For FY21 also, we believe the Finance Minister will likely peg fiscal deficit target at 3.7 per cent again. Funding the budget will essentially hinge on ramp-up in GST collections. We also expect the FM to pursue a significant divestment target of Rs 130,000 crore. We sense the possibility of likely settlements in several long-pending litigations to raise resources," adding, "We don’t anticipate material demand-side measures in the budget, which is staring at zero growth in tax revenue this year. Consequently, we expect the government to remain status quo on popular market demands around LTCG, STCG, STT, DTT or the Super-rich tax introduced in the last budget. Even on the personal income tax front, a complete overhaul seems unlikely. However, we do foresee some relief for personal income in lower tax slabs, with minimal impact on the exchequer. Material demand-side measures could come through during the course of the year, once the government sees traction in revenue collection. The biggest relief may come in the form of extending limits on section 80C benefits, with eligible deduction raised to Rs 2.0-2.5 lakhs from Rs 1.5 lakhs."
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Ambani said that measures in recent times and the Prime Minister’s ongoing meeting with corporates have heightened expectations from the budget. Our view is that not all measures will necessarily flow through the budget speech. "In the past during the Modi era, we’ve seen major announcements made during the course of the year apart from the budget. The FM may use this opportunity to refer to some of them but formalise later,” Ambani concluded.
In a detailed research report prepared by the HDFC Securities it says, "Though expectations have been built on a sharp cut in personal tax rates following corporate tax cut announced in Sept 2019, we think that two large giveaways in quick succession is hoping for too much. If at all, some tinkering of tax slabs may be possible which may put Rs 5,000-8,000 in the hands of taxpayers. This may not revive consumption in a big way." The HDFC Securities report further saud that the Long term capital gains on equities or equity MFs may be abolished (though the holding period may be extended to 2 years vs the current 1 year) as it has not resulted in any significant revenue while dampening the sentiments. Dividend distribution tax may be abolished, but recipients of the dividend may be taxed on the whole of the dividend received by them.
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