Published on 2/02/2018 11:46:12 AM | Source: Epic Research

This budget should rather boost the corporate earnings and stir rural demand - Epic Research

Below Is The Views On Union budget 2018 by Mr. Mustafa Nadeem, CEO, Epic Research

The finance minister presented his fifth budget which is well balanced. Markets as expected were very volatile. The long awaited relief for Middle class was refused and a 10% tax on Long term capital gains was introduced which may dent the AMC companies a little in short run. The Government is clearly tapping the capital Markets for additional revenue which would net in around Rs. 20k Crore in government’s kitty. Clear winner was agriculture sector which got Big reliefs from the government. The increase in MSP prices offered to farmers and big investment boost in agriculture allied products. Additionally, we may see certain pick up in gold demand coming from rural sector. The major expenditure has gone into National health mission with aim of providing healthcare to the weakest part of Society. We draw big relief from less than expected borrowing program by government. 

The Finance minister has divestment target of Rs, 80, 000 Crore. Minister has also assured of expenditure in connecting the regional air connectivity which may be a boon for Indian Aviation sector. The focus in defense sector has been on manufacturing as inferred rather than boosting the purchases.  The increase in customer duty from 15 to 20% in mobile manufacturing would net in additional funds for the government. We believe budget was a well-balanced act by the current government consider now such free lunch and bog sops before the looming national election and major state elections. This budget should rather boost the corporate earnings and stir rural demand to additionally benefit the economy. 

Nifty Futures closed at 11033 post a choppy session. It ended negative 21.50 points below its previous close. It was indeed a volatile session with a daily range of over 250 Points. Earlier in the day, Nifty shot up to 11140 levels but fell sharply as Finance minister announced the 10% tax on LTCG. Nifty Futures were trading at highs during the early sessions. Today’s range was not fruitful for most traders as markets ended flat without establishing a new trend.  Advance to decline ratio stood at 27 to 23. All sectorial index ended on negative note except for FMCG and AUTO sector index. 

The volatility index fell sharply by -11.44% which cushioned the markets against any increase in downside fear. Nifty had a big Candle which ended on a narrow range and a long tail. We expect the markets to be consolidating for next few trading sessions. The fall in fear index does provide a sigh of relief from downside but investors have to be cautious how market plays out in coming sessions. The upward bias remains same with a cautious approach. Resistance comes at 11100/11140. Downside support comes at 10980/10900.

Above views are of the author and not of the website kindly read disclaimer