Aseem Dhru, MD & CEO, HDFC Securities talks to Rajesh Bhayani on markets and fund flows post the Union Budget 2010-11.
How do you see the Budget from the capital market's point of view?
What is good for the economy and companies is good for the capital market also and this is a balanced Budget. It has laid down a road map of tax reforms and Direct Tax Code and Goods and Service Tax (GST) are expected to come in force from April 2011. The fiscal deficit will be gradually brought down in the next three years. While last year's Budget was stimulus for rural Indians, this year's Budget according me is stimulus for urban Indians as they will be left with surplus by way of a lower income tax burden. Companies have also been given relief by the withdrawal of surcharge. Excise duties have been hiked but higher demand in the economy will digest this.
How will the markets move from here and will fund flows of foreign institutional investors (FIIs) reverse?
The Budget-related uncertainty is over now and the market will follow global trends now. In recent times, Indian and Chinese markets were trailing global markets and hence FIIs are expected to have positive bias towards Indian market once global markets stabilise. The problems in European countries look overblown. In recent months, the Indian market was moving in a narrow range and the lower end will serve as strong support while amongst the worries on global front there will be a positive bias and by December we may see surprise by way of market touching previous highs.
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