For the first time in last so many years, the MEDIA has actually not as big a hype surrounding the union budget as was the trend in previous years.
The only thing in contention is that whether or not the government will withdraw the stimulus package all at once, or will phase out the exit. There is hardly any probability of any new perks for industries with which it would benefit.
Based on the railway budget, it seemed that the government is in a mood to go for more socialist causes, since despite a shrinking surplus for the Railways, Mamata di did not hiked any of the passenger fare or the freights. Hence, if Dada also goes for socialist causes the deficit situation would worsen and can cause a selling in the broader markets and banking in specific
The economic survey document released today highlights the three key issues:
- Growth coming back on track and will reach around 9% by FY12
- A "gradual rollback" of stimulus measures after assessing the impact on each sector
- Concern of high food price inflation and this spreading to general economic inflation
Thus, I believe this budget to be a non-event in general, however too much socialist expenditure to cheer the AAM ADMI or a higher than expected roll back of the excise duty and higher than 5.5% announcement of FY11 deficit could lead to a sell off in the markets.
You could use the LINK to download our research team's Consensus budget expectation report.
Happy investing.
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