Brokerage expectations from Union Budget: Tax sops, higher rural, infra spends on wish list

ET Bureau|
WHAT D-STREET WANTS
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WHAT D-STREET WANTS

The Union budget for FY21 will be the most watched event by market participants in the near term.
With India's economic growth slipping to its lowest level in six years, investors have high expectations from the upcoming budget to provide a stimulus to revive the economy, brokerages said.
Analysts believe that any disappointment on this front could lead to a sharp correction in the market.
Indian markets have gained about 15 per cent from September 20 when the government had announced a cut in corporate tax rates. Brokerages believe the government is likely to miss the fiscal deficit target of 3.3 per cent of the GDP for this fiscal year and may also miss the divestment target.
Here's what the brokerages are expecting from the upcoming budget which the government will be presenting on February 1.

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​AXIS CAPITAL
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​AXIS CAPITAL

>> Expect the government to miss its fiscal deficit target by 0.5 per cent of GDP to 3.8 per cent.

>> Govt may miss FY20 divestment target by about Rs 55K crore.

>> Divestment above 0.5 per cent of GDP can't be absorbed by public markets.

>> Expect higher rural & infra spending; tax breaks to boost auto, housing.

>> Expect nominal GDP to grow by 10 per cent.

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​CITIGROUP
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​CITIGROUP

>> Govt would likely opt for restraint.

>> Project 0.3 percentage point fiscal slippage in FY20 with Rs 30,000 crore-Rs 35,000 crore additional market borrowing.

>> Expect fiscal deficit to be pegged at 3.5 per cent.

>> Quantum of stimulus may be small given fiscal constraints.

>> There could be correction given high valuations if budget disappoints.

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​ANTIQUE STOCK BROKING
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​ANTIQUE STOCK BROKING

>> Budget may extend existing rebate (of Rs 12,500) to tax payers with income of up to Rs 10 lakh.

>> Budget may reduce or abolish long-term capital tax.

>> If budget disappoints it could lead to 5-10 per cent correction in market.

>> Project 3.5 per cent FY21 fiscal deficit of GDP.

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​JEFFERIES
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​JEFFERIES

>> Markets hope budget will bury macro gloom with magical fiscal stimulus.

>> Personal income tax cuts may achieve little and GST cuts look unlikely.

>> Govt may miss fiscal deficit target by around 100 bps.

>> A fiscal stimulus is possible; infra may be in focus.

>> Remain overweight on inexpensive industrials sector .

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​BARCLAYS
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​BARCLAYS

>> Fiscal deficit target may be breached by a relatively wide margin.

>> Expect a roadmap that returns the deficit to 3 per cent of the GDP by FY22-FY23.

>> Govt may target deficit of 3.5 per cent.

>> Govt does not have headroom for any large personal income tax cuts.

>> Govt may set a larger target of Rs 1.25L cr for divestment in FY21.

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