After the winter session washout, the Budget session finally commenced on Tuesday. Samir Arora from Helios Capital believes this time the Union Budget is very crucial because the government may resolve some of the problems that impacted sentiments since the start of 2011. He tells Krishna Merchant that rural-oriented sectors will benefit from Budget 2011-12. Edited excerpts:
If you look at the historical data, indices have fallen seven out of 10 occasions around 10 days prior to the Budget. Do you feel things will be different this time? Are there expectations of a pre-Budget rally?
Yes, this time around January was a bad month and there is so much scrutiny over what the government will do. Hence, the government will do a few things and we can see it happening.
The market is reacting and it is not only a pre-Budget rally but a recovery from the overreaction seen last month where investors felt the government was not taking any decision.
Where do you see the markets heading in this pre-Budget rally?
I do not know how much will the upside be, but basically it cannot be the pace that the rest of the world is rallying and we are down 15-18 per cent. What we saw two weeks ago -- this kind of dichotomy between the two markets like the US and India -- will not be seen.
Do you expect an excise rise in this Budget in any particular sector to reduce the fiscal deficit? Will it dampen the market sentiment?
I am not sure if there will be an excise hike. However, if is there is an excise hike to control the fiscal deficit, it may affect some sectors for a few weeks or months. The Union Budget usually hikes excise on cigarettes, and this budget too may see that happen.
In agriculture, I do not think they will give out subsidies but they will encourage more investment.
More From This Section
What sectors do you feel will benefit from the Budget?
Some sectors will benefit more, like rural-oriented or agricultural-oriented sectors.
Do you expect any guidelines on the opening up of foreign direct investment (FDI) in retail from this Budget?
No, I do not think the opening up of FDI in retail will happen.
What is your advice for investors, given the current state of the Indian equity markets?
Investors need to have confidence in their country, which I feel, they don’t have.
How are the foreign institutional investors (FIIs) viewing this Budget?
I think this time the Budget is very crucial because we are expecting the government will resolve some of the problems that impacted sentiments since the start of 2011. In that context, this Budget is more important than what it normally is.