Tata AIG Life’s CIO, Saravana Kumar however says absence of one-off revenue kicker such as the 3G auctions will make meeting fiscal deficit target difficult
Mumbai
What will be the overall impact of the budget on the stock markets?
The stock market initially gave an overwhelming thumb up to the union budget. The market eventually gave up most of its gains as it began to realise the challenges in meeting the fiscal deficit target of 4.6 per cent for 2022-12 and the net borrowing figure of around Rs 3.43 lakh crore. The fiscal deficit and net borrowing targets do seem ambitious, given the ballooning fuel and fertilizer subsidy. The absence of any one-off revenue kicker such as the 3G auctions in 2010-11 adds to the difficulty in delivering the stated targets.
Any sectors that will require a re-rating as a consequence of the budget announcements?
We don’t expect any major rerating post the budget but it is broadly positive for banking, agriculture, FMCG, pharmaceutical and real estate and negative for cement and telecom sector.
Has the budget made the case for investing in equity funds stronger?
We believe that with the Indian GDP growth of at least 8 per cent in 2011-12 will be a reason enough for a long term investor to allocate monies to the equity market. An investment into the market in systematic intervals is preferred as it cushions the investor from the market volatility. The budget has no negative surprise and it just reinforces the Indian growth story with its intention to deliver the twin objectives of growth and fiscal discipline. Secondly, the equity market valuations are attractive at current level. Secular story in infrastructure is positive.
Finally, how would you rate this budget in terms of its impact on the Insurance industry?
The budget has been broadly along expected lines with no negative surprises. The intention of the finance minister to provide an enabling environment to the Indian growth story does augur well for the insurance industry.