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The 2015-16 Budget is unlikely to improve corporate bottomlines immediately and may not enthuse the stock market enough to prop up valuations.
However, the combined effect of the proposals will bring long-term gains for corporate fundamentals.
These were the key takeaways from the post-Budget deliberations organised by Association of National Exchanges Members of India (ANMI) eastern region chapter here on Saturday. Experts felt that though the Budget may not prove to be a game-changer in the short term, it lays the foundation for a strong growth path.
PP Gupta, MD of Techno Electric & Engineering Co Ltd, said that if the rate of interest remained moderate and currency stability was ensured, the Budget provisions would help corporates improve profitability over the next couple of quarters.
“The Budget would kick-start the capital expenditure cycle and send positive signals to the global investing community in terms of ease of doing business in India,” Gupta added. It is clearly strong on direction, he felt.
Stock analyst Rajat Bose said the market expectation was too high from the 2015-16 Budget. “Despite weak corporate performance, particularly in the October-December quarter, market valuations had peaked on hopes of a game-changer Budget.
Post-Budget, many of the valuations cannot be sustained or justified. The benchmark indices now are likely to see downward correction. There are huge open positions,” he pointed out.
Amitabh Kothari, chartered accountant, described Arun Jaitley’s second Budget as a lawyer’s Budget. Speaking on the direct tax provisions, he said the devil was in the detail. “The euphoria generated by the proposal on the roadmap for reduction of corporate tax died down as soon as the impact of simultaneous withdrawal of exemptions became clear,” he explained.
The off-Budget hike in petroleum product prices on Saturday was also a dampener for the positive sprit, he said.
Tax expert Sushil Goyal said the Budget broadened the service horizon – mutual fund distribution was also brought under its ambit as well as a few other areas. “The Budget also plans to recognise digital invoices as a precursor to the GST roll-out,” he said.
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