Monday, 29 February 2016

{LONGTERMINVESTORS} Budget 2016 FII Views


Budget 2016 BofA-ML View
* Budget has not fully factored in outgo of 7th Pay Commission
* FM maintained balance between fiscal constraints & growth
* Market to focus on earnings, global cues with fear of punitive taxation behind it
 
Budget 2016 Citi View
* 7th Pay Commission implementation restricts scope for public capex
* Credible fiscal consolidation plan despite strong headwinds
* Credible fiscal consolidation plan should help in monetary easing
* Lower market borrowing creates space for private credit
* Revenue from spectrum auctions is a wild card
* Tax revenue growth assumption conservative
 
Budget 2016 CLSA View
* Disappointed with absence of corporate tax cut
* Fiscal discipline raises probability of inter-meeting rate cut by RBI
* Key disappointment was unchanged allocation of ₹25,000 cr for bank recap
* Nominal GDP growth slightly higher than expectation
* Overall net tax appears achievable
 
Budget 2016 Credit Suisse View
* Budget is supportive of growth, continue to like consumption names
* Buffers include very conservative taxes and no amnesty inflow
* Stress points include high spectrum sale proceeds expectation
* Stress points include high strategic disinvestment target
* Stress points include increase in Pay Commission provision
* Stress points include low PSU bank recap quantum
 
Budget 2016 Morgan Stanley View
* Budget continues to pursue path of fiscal consolidation, reviving investment
* FY17 infra spending likely to increase by 16% YoY
* Lack of larger recap for PSBs & increase in dividend taxes key negatives
 
Budget 2016 Nomura View
* Fiscal consolidation to cement credibility of govt
* Remain positive on market and see 15-25% return this year
* Surprised that Govt maintained fiscal targets despite pressure on expenditure
* Top picks remain Axis Bank, L&T, IOC, HDFC Bank, Maruti
 
Budget 2016 UBS View
* Budget has not fully factored in outgo of 7th Pay Commission
* Budget was broadly disappointing from urban consumption perspective
* Expect 50 bps of policy rate cuts in CY2016
* Fiscal consolidation on divestment or spectrum sales is of poor quality
* Forecast Nifty earnings growth of 10% at 7,500
--
CA Mihir Desai

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