The Budget may have been short of the big-bang policy moves that the market was hoping for. Still, it may be too early to question the government’s commitment to reforms, feel some of the FIIs that ET spoke to. The main concern among these players at the moment is the projected fiscal deficit of 6.8%, which is more than what the market had feared.
“I see no adverse impact on FII flows. In our view, the India story is on track for the next few years,” says Sam Mahtani, director, emerging markets of the London-based F&C Investments.
“One has to keep in mind that the government has five years to implement the reform programme. We need to have a long-term view, keeping in mind the government’s new fiscal responsibilities. We are currently overweight on India, and we like the infrastructure space,” added Mr Mahtani, who manages more than $2.5 billion in emerging markets. Most market watchers feel there could be a slowdown in FII inflows, if not an outright reversal. So far in 2009, FIIs have net invested $5.2 billion into Indian equities and have been the main drivers of the recent rally.
Ashu Suyash, MD and Country Head, Fidelity Mutual Fund, highlights the fact that not all policy announcements are made in the Budget. According to her, over the last year, the government has been responsive and made policy announcements as warranted by the prevailing environment. “One area where greater clarity would have been welcome is on specific steps that would be taken to bridge the deficit, which is at a worrying level. On balance, though, the government’s focus on continuing to stimulate economic growth is encouraging,” Ms Suyash said.
Yet, there are also fund managers who feel the government has missed out on an opportunity to instil confidence among investors. On Monday, FIIs net sold shares worth Rs 351 crore, and according to provisional data on BSE, they sold shares worth Rs 921 crore on Tuesday.
Samir Arora of Singapore-based Helios Capital is of the view that the big picture roadmap was missing from the Budget. “This could have provided confidence to investors about how we would go from A to B in a credible manner,” he added. And there are others who feel the market had set itself up for a disappointment.
“Given that we had a large stimulus programme going on last year — which has been sustained — the fact that there was no dramatic increase in direct/indirect taxes is in itself a relief,” says Pratik Gupta, MD-equities, Deutsche Equities, who believes that expectations going into the Budget were unrealistically high, partly raised by a rather bold Economic Survey.
“Nonetheless, the increase in fiscal deficit is a long-term worry. We would have liked bolder announcements on disinvestment. The post-Budget sell-off has taken away the near-term market momentum. However, the long-term growth potential remains intact and the Budget is not the only policy tool for the government,” said Mr Gupta. Echoing a similar view, Jyotivardhan Jaipuria, MD and head-research, BoA Merrill Lynch, says, many of the reforms might happen outside the Budget. “The market technically needs a breather. It has been slightly on the higher side,” added Mr Jaipuria.
“I see no adverse impact on FII flows. In our view, the India story is on track for the next few years,” says Sam Mahtani, director, emerging markets of the London-based F&C Investments.
“One has to keep in mind that the government has five years to implement the reform programme. We need to have a long-term view, keeping in mind the government’s new fiscal responsibilities. We are currently overweight on India, and we like the infrastructure space,” added Mr Mahtani, who manages more than $2.5 billion in emerging markets. Most market watchers feel there could be a slowdown in FII inflows, if not an outright reversal. So far in 2009, FIIs have net invested $5.2 billion into Indian equities and have been the main drivers of the recent rally.
Ashu Suyash, MD and Country Head, Fidelity Mutual Fund, highlights the fact that not all policy announcements are made in the Budget. According to her, over the last year, the government has been responsive and made policy announcements as warranted by the prevailing environment. “One area where greater clarity would have been welcome is on specific steps that would be taken to bridge the deficit, which is at a worrying level. On balance, though, the government’s focus on continuing to stimulate economic growth is encouraging,” Ms Suyash said.
Yet, there are also fund managers who feel the government has missed out on an opportunity to instil confidence among investors. On Monday, FIIs net sold shares worth Rs 351 crore, and according to provisional data on BSE, they sold shares worth Rs 921 crore on Tuesday.
Samir Arora of Singapore-based Helios Capital is of the view that the big picture roadmap was missing from the Budget. “This could have provided confidence to investors about how we would go from A to B in a credible manner,” he added. And there are others who feel the market had set itself up for a disappointment.
“Given that we had a large stimulus programme going on last year — which has been sustained — the fact that there was no dramatic increase in direct/indirect taxes is in itself a relief,” says Pratik Gupta, MD-equities, Deutsche Equities, who believes that expectations going into the Budget were unrealistically high, partly raised by a rather bold Economic Survey.
“Nonetheless, the increase in fiscal deficit is a long-term worry. We would have liked bolder announcements on disinvestment. The post-Budget sell-off has taken away the near-term market momentum. However, the long-term growth potential remains intact and the Budget is not the only policy tool for the government,” said Mr Gupta. Echoing a similar view, Jyotivardhan Jaipuria, MD and head-research, BoA Merrill Lynch, says, many of the reforms might happen outside the Budget. “The market technically needs a breather. It has been slightly on the higher side,” added Mr Jaipuria.
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