Budget evokes mixed reactions from market experts
Jul 10 2014 , New Delhi/Mumbai
"Though the country is seen as an attractive destination for investment, documentation created a hurdle. The proposal to introduce uniform KYC norms and inter-usability of KYC records will definitely encourage foreign investment.
"Moreover, the clarification that income arising to FIIs/FPIs from transaction in securities market will be treated as capital gains will be helpful," PwC India executive director Suresh Swamy said.
Accordingly, characterisation of income of FII/FPI will no longer be an issue. Fund managers may now be able to relocate to India without creating additional tax risk for the funds they manage. This may also lead to increase in economic activity and thereby aid revenue and tax collection, Swamy said.
To energise capital markets, the government today proposed a slew of measures, including tax benefits and easier regulations for foreign investors and corporate bonds besides creating a new instrument Bharat Depository Receipts.
BSE MD & CEO Ashishkumar Chauhan said, "The Finance Minister has done an excellent job despite having only 6 weeks to prepare his first budget. The biggest positives have been containing fiscal deficit and GST implementation time frame."
Overall, big picture looks good and he has managed to make his mark in the history of Indian budget presenting in his own subdued and mature way, he added.
However, after a heady swing of 800 points intraday, the market ended on a negative note and the Sensex ended 72 points or 0.28 per cent down at 25,372 and the Nifty fell 17.25 points or 0.23 per cent at 7,567.75.
"It is a very good budget as a new step by the new government, over the near-term we are likely to see change in existing norms. The maiden budget comes amid very high expectations from both general mass and industry.
"Considering the huge mandate it has lot of populist expectation, growth and fiscal consolidation," said Vinod Nair, Head Of Research, Geojit BNP Paribas.
"...The new budget is clearly positive in terms of lower individual taxes, positive for many sectors like infra, power, realty and reviewing subsidy," Nair said.
According to Nomura analysts Sonal Varma and Aman Mohunta, "Budget is a mixed bag. The government did not use the opportunity to come clean on subsidies, which is a disappointment."
On the other hand, Rakesh Goyal, Senior Vice President, Bonanza Portfolio said, "As expected, the new government didn't come up with any big-bang changes to what was introduced in the interim budget by UPA government.
"However, markets are disappointed on the fiscal consolidation front. The budget didn't speak anything about the rationalisation of subsidies which was widely expected by most market players."