Though expectations are very high from Arun Jaitley's maiden budget, Japanese brokerage firm Nomura does not expect "miracles" in the first year of the Narendra Modi-led Bharatiya Janata Party. Mr Jaitley is due to present his maiden budget on July 10 and stock markets have rallied on hopes of a business friendly budget. The bourses have risen over 20 per cent year-to-date in a rally spurred by hopes that the election of Narendra Modi as prime minister would revive economic growth.
"I don't think you can expect miracles in the first year anyway and market probably understands that," said Prabhat Awasthi, managing director and head of Research Equities, Nomura India. (Watch)
While the bull run may not be over, there "will be more gentle cantor from here" he said. The new government's urgency on the policy side and its pro-active nature will ensure the rally is not over, Nomura said.
"So long as the budget moves towards giving fiscal space for investment and then gives a clear path in terms of how that fiscal space will be utilised... I think should be enough from market perspective," Mr Awasthi said.
While Nomura does not expect tax rate cuts, it believes there could be some "tinkering with the exemption limits". A relook at retrospective taxation is also expected as it affects the investment climate of the economy, it said.
India's economy has been grappling with its worst slowdown in 25 years, after it grew at sub-5 per cent for the second year in a row, last fiscal. Retrospective tax demands slapped on multi-national giants like Vodafone have deterred investors from looking at India as a favourable destination.
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