Experts think the move is a good opportunity for investment bankers.
Disinvestment of Rs 40,000 crore in public sector companies next fiscal is expected to boost stock market sentiment as the exercise will provide excellent opportunity to invest in some of the blue-chip companies and boost revenues of investment bankers.
“I feel, this (disinvestment) will in fact throw excellent opportunity to participate in Navratna and Mini Navratna of Indian public sector,” said Pankaj Razdan, deputy chief executive, financial services, Aditya Birla Group. Some of the blue-chip public sector companies in which the government may divest its stake next fiscal include Engineers India, Coal India and Steel Authority of India.
Since the disinvestment will be through initial public offer or follow-on public offer, experts think this is a good opportunity for investment bankers. “PSU divestments amounting to Rs 40,000 crores and listing of profitable PSUs will result in enormous merchant banking and capital market activities,” said Anand Rathi, chairman, Anand Rathi Financial Services.
Other than disinvesment, market participants said the finance minister's move of increasing the disposable income in the hands of the individual, while keeping service tax rates unchanged are the key positives for the markets. The two per cent increase in excise rates is also well within market expectations, while no change in the service tax, too, has come as surprise to most of them. Another surprise for stock broking firms has come from higher revenues from securities transaction tax at Rs 7,500 crore in the next fiscal from Rs 6,350 crore revised estimate for the current fiscal as it indicates that the government expects higher trading volumes.
“The impetus will come from lower income tax incidence at individual level. This will leave higher disposable surplus with the households and help consumption story to continue and drive demand growth for fast moving consumer goods, auto and housing,” said Nirmal Jain, chairman, India Infoline.
Other than the broad measures, select industry-specific measures like issue of banking licence to companies and non-banking finance companies, sops for non-renewable energy companies, have attracted interest among the market participants. Share prices of companies like Reliance Capital, IDFC, Aditya Birla Nuvo, Moser Baer, Suzlon, MIC Electronics were some of the major gainers.
But the upbeat mood in the stock market was short-lived as part of the gains were erased as market players tried to understand the fineprints of the Budget. One of the big negatives seen by many is the increase in the petroleum products segment, which would further increase inflation.
Some of the experts, however, chose to take a cautious stand, saying that the indices witnessed a relief rally. "It is still not possible to say that markets will jump higher due to Budget statements," said Deena Mehta, managing director, Asit C Mehta Investment Intermediate. She said: "Market expected the worst and nothing bad happened.” “If all goes well, we can close the year with a 15-20 per cent rise in market indices,” he added.
Deven Choksey, managing director, K R Choksey, thinks fresh buying in the equity markets at higher levels may be a bit difficult due to the global scenario. He thinks it is likely that banking licences would be allotted this year itself.
