Budget 2021-22: Stock investors not expecting any market-specific measures

The budgets have largely been disappointing to markets during the tenure of the NDA since 2014: they have fallen on five occasions the day of its presentation

Finance Minister Nirmala Sitharaman, MoS for Finance Anurag Thakur, Chief Economic Advisor Krishnamurthy Subramanian and others pose for a photograph during the final touches of Union Budget 2021-22, at Finance Ministry in New Delhi, Sunday, Jan. 31, 2021.

PTI

Special Correspondent   |   TT   |   Mumbai   |    01.02.21  :  Stock investors are not expecting any market-specific measures in the budget though sectoral reliefs across the economy may perk up specific scrips, the sombre mood reinforced by a more-than-2500 crash in the Sensex last week.

The budgets have largely been disappointing to markets during the tenure of the NDA since 2014: they have fallen on five occasions the day of its presentation. Exactly a year ago, the Sensex had crashed 988 points — its steepest fall on a budget day in six years .

However, this time around, there may be some relief for investors as the markets have seen a sell-off before the budget presentation.

During the week before the key event, the 30-share BSE benchmark crashed 2592.77 points or 5.30 per cent while the Nifty has lost more than 737.30 points and it is now below the psychological 14000 mark at 13634.60.

“Two good things have happened before this budget. First there has been a correction in the markets and second we do not have high expectations about this budget. In fact, less than 24 hours before its presentation, we are wondering what it could bring to the table. Therefore, the markets may not see a big fall,’’ says Arun Kejriwal, director, KRIS an investment advisory firm.

An analyst with a domestic brokerage here added that investors are going into the budget with lighter positions and that expectations are muted as the government has so far desisted from announcing big-bang stimulus measures to boost growth after the Covid-19 pandemic. He, however, added that the markets will also focus on the proposals and that any coronavirus cess on high income individuals or companies may not be taken positively.

Brokerages, however, do have sector-specific expectations. For the banking sector, it includes a bad bank, a bank investment company  that will take over the government’s stake in the 12 public sector banks. Some even expect a bold announcement in the form of privatisation of some of these banks apart from continuing their consolidation so as to bring down the number of state-owned lenders to four.

They also expect a higher deduction on housing loans and reduction in long term capital gains rate on real estate assets to 10 per cent with their holding period also reduced to 12 months from 24 months.

Some optimists are looking forward to some good news on the long-term capital gains (LTCG) on listed shares. “Among the key expectations, the investors will look forward to the abolition of long-term capital gains tax or redefining long term to two years and reducing the taxation to nil, while further allow indexation benefits to equity mutual funds and some relief on dividend distribution tax in hands of investors,’’ says Nitin Aggarwal, CEO, Religare Broking.

A note from Centrum says that the budget will prioritise growth-oriented measures so that the momentum of recovery is sustained. The emphasis is likely to be on the revitalisation of durable consumption impulses as the supply side measures have already been implemented.