Five reasons why markets will do well even if Budget 2014 disappoints
MUMBAI: Deficient rains are making consumers unhappy across the country as they face the prospect of water cuts and high prices of essential commodities. But the same cannot be said of investors who are watching with glee as the Sensex and the Nifty scale new highs almost on a daily basis.
If the Budget is disappointing, markets could fall and FIIs could move away to other markets by selling their holdings in India. Now, there is a good chance that the Budget may neither shower goodies on investors nor dole out sops to corporates. Jaitley has a tightrope to walk and his first priority will be to rein in fiscal deficit and announce tough measures to cut spending and lift investment.
An improving economy makes it attractive for foreign investors to buy Indian assets and companies can get the kind of valuation they have always been seeking. Last, the economy is rebounding from multi-year lows. A high-powered panel of experts at an ET round table last week clearly said the economy has bottomed out and that a new business cycle may soon be in the offing. A GDP growth of 5-5.5 per cent in FY15 could signal the start of a much-needed recovery.
FOREX CALL: SELL EUR/USD BELOW 1.3610 TG-1.3595/1.3575/1.3545 SL-1.3635
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