Union Budget Viewpoint by Amit Gupta, CEO TradingBells
It is a forward-looking budget focusing mainly on Infrastructure development and Rural Development. The government is very positive in reaching a target of Rs. 3 trillion GDP in the coming fiscal year, and has mentioned that India is capable of reaching the 5 trillion mark in the near future. “It took us 55 years to reach our 1st trillion, and another 5 years to reach the next 1 trillion,” said the Finance Minister Nirmala Sitharaman.
Every rural household to be electrified by 2022 end – this is good news for consumer appliances. Also, there is a focus on Aadhar as it has been made interchangeable with the PAN card. Also, NRIs application to Aadhar has been simplified – a step towards promoting the application and use of Aadhar as a single and unique ID.
Corporate tax on companies with up to Rs. 400cr annual turnover is reduced to 25% - this is a huge relief to the markets. STT levy has been streamlined, and the STT for exercised options will now be applied only to the difference between settlement and exercise price - That's a relief since now traders won't have to be worried about compulsorily squaring off in-the-money options before expiry!
The government has clearly laid its intention of taking further steps towards eliminating the use of cash in the economy. A 2% TDS on large cash withdrawals (more than Rs.2cr per year from a bank account) makes the intentions of the government clear. Besides, there are some steps towards providing relief to NBFCs, as PSU banks will get a one-time 6-month credit guarantee of Rs1 lakh crore to buy high-rated pooled assets of "sound" NBFCs.
Overall there were no major surprises in this budget, and the markets don’t like surprises. We can expect the domestic market to trend sideways in the coming days waiting for its next big cue.