The Budget announcements have been made. The finance minister changed the tax slabs giving more money in the hands of the people. However, he also hiked duty on petroleum leading to a fuel price rise.
The entire Opposition walked out of the Lok Sabha in protest terming the Budget 'inflationary'.
What effect will the Budget have on food prices? And on prices of other things? Has the FM given with one hand and taken away from the other?
Therefore, is the time right to invest in stocks?
In a chat on rediff.com on Thursday, market expert A Shyamsunder offered some valuable investment tips. Here is the transcript:shyamsunder says, Hi, This is Shyamsunder, look forward to a gr8! chat session - shhot your questions on the budget.
sathish asked, what are the sectors looks good for 2010
shyamsunder answers, at 2010-03-04 16:00:01considering the focus of this budget and the emphasis on Government spends all infrastructure related industries and ancillaries, food processing and sectors directly benefitting from increased consumer spends like FMCG, Consumer electronics etc look promising
Pandit asked, I am 35.What is the amount to be invested to get Rs.35-40 lakhs corpus at the age of 55.
shyamsunder answers, Considering your present age you are left with around 25 years left for retirement. You will need to set aside at least Rs.10,000 per month to get to your target corpus. This may be invested in ULIP's and SIP's
Raghvendra asked, Hi Sir,This Raghvendra from Nagaland.I am earning Rs 100000/- per month and my saving is 60000/- per moth and want to invest money in such kind of fund where the risk is little less with good return. Could you please guide me Sir?
shyamsunder answers, Hi Raghavendra, please understand the risk - return matrix. Returns are directly proportional to risk. I can see that you dont have an appitite for risk, you should invest 60% of your savings in fixed return bearing instruments like fixed deposits, debentures, company FD's, PPF, Bonds etc. The balance can be invested in equity linked investments like Mutual Fund SIP's and ULIP's. This will balance your returns over a perios of time
Desperate asked, Does the current Budget help the salaried class? Or is there a catch somewhere? Also, what happens next year when the new tax code comes into effect? Will it kill all tax benefits?
shyamsunder answers, The budget does help the salaried class this year. With the change in the tax slabs, this class will be left with a better take home. As regards the Tax Code expected in 2011, the approach is to have a low base rate of tax and get rid of the plathora of exemptions and concessions which makes the tax act look very complicated. It will be a welcome change from the present.
rkr asked, I do have 10lacks in hand. Should I invest in Mutual fund through STP or pay my outstanding home loan which is 20 lacks ?
shyamsunder answers, The answer depends on what is the balance tenure of the housing loan. In case its too far off, say another 5 years plus to go, it may make sense to invest in an SIP which can get you decent returns over 3-5 years time. The return on the same will be higher than the outgo on the housing loan. In the meanwhile, you can also enjoy the tax benefits of the interest and principal repayment of this loan
rekha asked, Hi Shyamsunder,Wanted to know if it is advisable to invest in ulip based pension plans..
shyamsunder answers, Yes certainly, ULIP,s so make sense in the long run. The investment should have a tenure of at least 5 years to get the best results. This tenure will catch all cycles of the market and average out the returns.
putlu asked, whats the good news for enterpreneurs in the budget?
shyamsunder answers, The good news for entraprenures is that the measures taken in the budget, some of which are bold and inflationary in the short run, will ensure a robust economy in the coming years. This will throw up many opportunities, and avenues for funding support which is essential for any entreprenure.
suhas.ksagar@rediffmail.com asked, Hi, Sir ! This is suhas from Talegaon - will this budget be benifitial to real estate market in maharashtra?
shyamsunder answers, Please understand that this is the Union Budget and there wont be any provisions which will be beneficial to any particular region. Coming to the point the budget has put more money in the hands of the common man by way of tax relief, this will increase the individuals eligibility for housing loans, this is a positive for real estate. The increase in spends on infrastrucre will create new destinations and avenues in the real estate market. The subsidised interest rate for low cost homes continues which is good news.
Harmeet asked, Hi Shyam, I want to know which one is a better option for saving - NSC or PPF , and why ?
shyamsunder answers, PPF is the better option any day, as it gives a better base return and enjoys better tax benefits on investment as compared to NSC. Inspite of its long tenure, PPF has withdrawal options based on the tenure of the account. Most important, a PPF account cannot be attached (frozen) by any authority.
replyromi asked, Do you think the budget provisions could increase the cost of Real Estate ?
shyamsunder answers, The rollback of excise duties have increased the prices of steel and cement, the key inputs to any real estate project. The introduction of service tax on projects which are under-construction could increase the cost as well.
wakaoo asked, Sir, which are the major cities in India to invest in Real Estate as on date?
shyamsunder answers, All metro cities look promising. However considering the emphasis on development of infrastructure in this budget, Tier II and TierIII cities will also get interesting in the future and offer better returns.
suhas.ksagar@rediffmail.com asked, Do you think increased/increasing rate of GOLD is a effect of budget
shyamsunder answers, The increase in Gold Prices has no correlation with the budget. In fact you will find a correlation between gold prices and the prices of crude oil. Gold is an internationally traded commodity and hence reacts to global cues, more than local.
ramesh asked, Hi Shyam, This is Ramesh. I have sold my flat recently. In order to avaoid Long term capital gains, is it mandatory to keep construction agreement doc which specfies the purchase price of the apartment? I donot have that somehow but only the sale deed doc for the UDS portion of the land. But I have paid the builder thru bank cheques only. Will they be sufficient for tax filing? Please respond. Thanks.
shyamsunder answers, In the case of an LTG claim in a return it is always advisable to have the agreement of the property handy. This will reduce a lot of hassels. The date of the agreement is important to calculate the 3 years that the property needs to be held in order to claim long term capital gains rate of tax.
shraddha_rumade asked, There are lots of Budget home cumg in Nagpur Do u thnk tht investing over ther ewill b the wise decision Aggy
shyamsunder answers, Nagpur is an interesting destination. As I have mentioned in a previous answer, Tier II & III cities will become interesting investment destinations considering the emphasis on infrastructure development. With the development of MIHAN and Butibori Indystrial areas, Nugpur holds great promise as a destination.
Rohitas asked, How does the Budget impact the housing sector? Will real estate prices rise further?
shyamsunder answers, As far as Real Estate is concerned this budget has been a mixed bag. The good news is that there has been an allocation of Rs.5400/- crore towards urban housing development schemes. The increased disposable income in the hands of individuals will help them get eligible for housing loans as well as improve there leveraging capacity, this could stimulate demand. The interest rate subvention for low cost housing projects will continue for one more year which is a welcome step. The increased spend on urban and rural infrastructure will improve living conditions and reduce distances and create new destinations for Real Estate development in the long run. The effects of the increase in excise duty and introduction of service tax will have an inflationary effect and the prices may rise.
ramesh asked, Thanks Shyam. To add further to my query on Long term capital gain, I do have my Sale deed agreement registered 4 years before. But I donot have my construction agreement, though I have paid thru bank cheques. It is very difficult to get construction agreement from the builder now. Let me know is it still mandatory to have construction agreement or can be managed with proof of bank cheques, sale deed etc. Please confirm. Thanks.
shyamsunder answers, The circumstantial evience should be fine, however it should be presented well with proper statements and proof.
shraddha_rumade asked, Dear Sir,What will u suggest, if sum1 want to invest in land or budget home in terms of appreciation in cumg 3 years
shyamsunder answers, Chose a destination or location which holds the promise of appreciation on account of possible future development in the area. The peripheral areas of all cities in general hold this promise considering the kind of development that is slated for the future
Sutapa asked, Is real estate a good investment opportunity?
shyamsunder answers, Real Estate is a time tested investment opportunity. Considring the fact that India which has the second highest population in the world and limited land mass, there will be ever growing demand for real estate and with the improved standards of living, the demand for real estate can only increase. However to increase te ROI, the timing of investment has to be right.
delta asked, which are the major sector you think may suffer due to the current budget? and what will be its implication on common man??
shyamsunder answers, The IT sector seems effected by this budget, the withdrawal of the STPI scheme and the appreciation of the Rupee will deliver a double whammy and make the sector less competitive in pricing in the international market and effect their margins. For the common man the inflationary measures of increase in excise duties, fule prices and the current double digit food inflation will be painful
shyamsunder says, Thanks for your questions, hope I could give satisfactory answers..Bye