Overall, the Budget announcements are modest and neutral. The fall in stock markets was a knee-jerk reaction as most market players felt that the government fell short of expectations with regard to setting a clear road map for foreign direct investment (FDI), insurance and pension reforms and divestment of PSUs.
Also, an aggressive 144 per cent hike in the National Rural Employment Guarantee Scheme in its first year had kept people guessing about plans for the scheme in coming years. A higher fiscal deficit does raise doubts about the recovery of the investment cycle. From here on, markets will tend to look for real recovery sings rather than giving this government the benefit of the doubt on policy action.
Deepak Sawhney
Head of Research, Networth Stock Broking