Jinsy: Hi, this is Jinsy Mathew and we have Pankaj Pandey, Head, Retail Equity Research, ICICI Securities with us right now for the Talk Show
Jinsy: Hello, Pankaj and welcome
Jinsy: Did the Budget proposals meet your expectations?
Pankaj: I would say it was largely on the expected lines. Service tax has been the priority for the FM and he has been applying pressure at the rite points and on the expenditure side he has been trying to balance expenditure and sources of income. So overall he has done a good job at raising revenues through sales tax.
Jinsy: Does the Budget give a hint of populism ahead of next year election?
Pankaj: There are certainly elements of populism but the good part is that it will not take a toll at fiscal deficit and I think that's where he has done a balanced job which is quiet impressive.
Jinsy: What will be the next major trigger for Indian markets, now that the Budget is over?
Pankaj: The major trigger for the market now is how the GDP growth rate will pan out in the coming year.
Pankaj: Currently the markets is trading at 15x and now if the GDP growth rate doesn't not revive or we are stuck in the range of 5-6% then the corporate earnings will not grow more than 12-13%. So in that sense there could be a chance of re-rating in terms of PE multiples.
Jinsy: Are the assumptions for revenue too optimistic? Especially, telecom auction sales?
Pankaj: Looking at the current situation, the numbers are a bit optimistic. But it could also depend on how the Government will go about pricing the spectrum.
Jinsy: Does RGESS still remain an attraction for the retail participants considering the fact that there was no major sops in terms of taxation exemptions etc?
Pankaj: Equity is never an investment option which one looks at from a short term perspective as it is more on a broader objective to beat inflation.
Pankaj: However, one cannot overlook the kind of returns equities have given in the long term. In India, since fixed income and gold has been doing better equity has not been very preferable among the masses.
Jinsy: Stocks such as Tata Motors and M&M reacted negatively to the news of hike in excise duty on SUVs. Do you see this as a long-term overhang?
Pankaj: For both the companies mentioned SUVs are just a small part of the portfolio. For M&M, what happens on the farm side is a major mover and Government has announced some measures for the agriculture space.
Pankaj: In the case of Tata Motors, there are buses which form a major chunk of their portfolio and offlate the stock ares driven by the JLR part of the story. So there is no big negative.
Jinsy: Which theme do you think will gain the most post the Budget?
Pankaj: I think it would be consumption as investment cycle will take some time to improve, though the measures have been taken in the right direction.
Jinsy: Thanks, Pankaj for your time and inputs
Pankaj: Most welcome. Bye!
