What Brokerages Expect From Budget 2019

Most brokerages expect the government to stick to the fiscal deficit target announced in the interim budget earlier this year.

Finance Minister Nirmala Sitharaman will present the first budget of the second term of Narendra Modi government on July 5.

Here's what brokerages expect from Budget 2019:

CLSA

• Government is unlikely to substantially loosen the fiscal deficit target
• FY20 revenue and expenditure will need to be revised downwards
• Remain hopeful for certain relaxations and incremental sops for the housing sector
• Water connection to every house should be helpful for building material players
• Auction of 4G/5G spectrum looks unlikely given weak operator balance sheets
• Income taxes may see some cuts, as already indicated in the interim budget

Kotak Institutional Equities

• Government may not be in a position to provide meaningful fiscal stimulus to the economy
• No change in the government's social agenda; fiscal deficit management will be quite tough
• Postponed portion of FY19 expenditure will be part of FY20 expenditure
• Do not see any scope for lower tax rates in general given the government's challenged fiscal position

Edelweiss

• Government spending can offset the private sector slowdown
• Budget likely to focus on rural economy, affordable housing
• Do not expect big changes in taxes in this budget
• Need to prioritise spending if the fiscal deficit target remains unchanged

Morgan Stanley

• See pickup in spending, mainly from the farmer income support scheme
• Fiscal deficit to be largely in line with target set in interim budget
• Expect the government to address the capital needs of state-owned banks in the budget
• Watching for increase in disposable income and interest deduction on home loans
• Rationalisation of taxes and clarity on subsidy required for the oil and gas sector

Centrum

• Agricultural sector, job creation and revival in corporate earnings growth key priorities
• Public sector banks may be provided certain amount of growth capital
• Some relief could be expected with lowering of the rates or duties on the key inputs in cement manufacturing
• Reduction in oil cess from current 20 percent to 10 percent to boost domestic production and reduce import dependence
• Expect 12-15 percent increase in allocation for both highways and railways segment

Antique

• Expect increased allocation for affordable housing in the budget
• Cement, building materials and consumer electrical to benefit from affordable housing push
• Expect recapitalisation of state-owned banks with a roadmap for consolidation
• Reduction in dividend distribution tax in order to reduce cost of capital
• Watching for infrastructure, consumption, agro-chemical, building materials and cement companies