The Union Finance Minister Arun Jaitley has presented his maiden Budget Speech in Parliament on Thursday. Jaitley said the Government intends to usher in a policy regime that would bring the desired growth, lower inflation, sustained level of external sector balance and prudent policy stance.
Reacting on the budget announcement, Anand Radhakrishnan, chief investment officer, Franklin Equity-India, Franklin Templeton Investments, said, ''The equity markets were quite volatile during the day, and finally closed in the red. Certain sectors like realty, utilities, and metals, benefited from the budget. Small and mid-cap stocks also managed to outperform during the trading session. Hike in FDI limit in insurance to 49% will provide the much needed capital infusion to the sector from foreign players. An accommodative and predictable tax regime for foreign portfolio investors (FPIs) will provide comfort to them, and probably lead to higher interest levels for long term investment commitments. A boost to infrastructure sector will also be beneficial to revive the investment cycle once again. The budget also emphasizes on measures on enhancing domestic coal production and adequate supply of coal to the existing power plants. This will be beneficial to the power sector.
We believe that valuations are still reasonable for the markets on an aggregate level, although some individual sectors may be overvalued/undervalued at this juncture. We also believe that corporate earnings have bottomed out and the market valuations will reflect earnings recovery. With economic growth expected to pick up gradually, most of our portfolios are positioned to play on this economic recovery.''
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