Edelweiss CEO Rashesh Shah was bombarded with questions on the Budget's impact on the market in an hour-long chat.
Shah was prompt, precise and analytical with his answers as he provided valuable insights into the year's biggest financial event. Here is the transcript:
Rashesh Shah says, Hi This is RAshesh Shah. Welcome!
rajae asked, whats the impact of MAT
Rashesh Shah answers, at 2007-02-28 16:04:13The impact of MAT for IT compnaie swill be a small hit on profits - appx 2-3% fall in profit margins. This will vary from compnay to compnay - satyam and hcl will be affetced more.
piyushpv asked, How market trend after budget it become on positive or not ?
Rashesh Shah answers, the budget trend has been co mingled with the global selloff. Our take is that the budget is nutrel for the market. The market fall has been more due to global selloff in US and othe rmarkets yesterday
db91 asked, what is ur outlook on bank shares
Rashesh Shah answers, Sloghtly positve for bank sahres as the dividend distribution tax on MF will encourage bank deposits
db91 asked, what should i do about ivrcl/punjlloyd
Rashesh Shah answers, there seems to be something in the fine print for construction companies which have claimed infra 80i benfits - the apprently the budget has a clause asking a lot of these construction compnaies to give back the 80i benefit from 200 onwards. this is vary negative if true
Ujjwal asked, Hi Mr. Shah, At this stage and with this kind of Budget, what is the future of Sugar Sector i.e. Bajaj Hindustan, Balrampur Chini & Dhampur Sugar?
Rashesh Shah answers, the sugar sector has been down for the last 5-6 months. the stocks are down appx 6-70%. The budget has not chnaged the outlook for sugar but overall the price fall has caputred the negative outlook on the sector for the next 12 months. We recommed staying out of this for a year or so
rohan asked, what will be the impact in stock market
Rashesh Shah answers, The impactb on markets is nuetral. Nothing very positive and a bit negative for Cemment and IT compnaies. The market is more exposed to global sell of than the budget per se
shalit asked, is this the right time for small retail investors to enter the market
Rashesh Shah answers, the right time for small invetsors is always after a nie corection. We think this sell off will present some good stockpicking oportunities. But the buying shdould be for investment portfolio - with holding period od 12 -18 months.
PURUSH asked, In the light of the latest budget proposal on to levy differential excise duty based on prices of cement, how stocks like Birla Corp and Ultratech are likely to be affected
Rashesh Shah answers, Most fo the cement companie swill pass on the excise hike - which is appx 10 rupees per bag - to the consumers. there is still a demand supply gap in cement with demand more than supply so mfgs will pass on the hike. THis will make construction more expensive
Somnath asked, Why the market crashed today 500 points ? Is it the impact of the budget only or because of corrections in global markets also played an important role. Somehow Coincidently
Rashesh Shah answers, the fall was largly due to global market sell off - the hudget could have provided some positives which would have made the markets bounce up. But overall the budget is nuetral - middle of the road. Noting very positive for the corporate sector and markets and maybe a bit negative. Overall the key positive in the budget is the control on fiscal deficit. this is encouraging
shailendra asked, In the changed scenario(increase in dividend pay out tax) will it be better to invest directly in the market rather than through MFs
Rashesh Shah answers, the div dist tax is only on liquid and fixed income schemes. The equity schemes may not be affected
chirag asked, how do u rate this budget from the growth perspective keeping in the mind the current rate of Inflation ?
Rashesh Shah answers, the budget is more middle of the road kind of budget. Nothing pro growtrh neither anything which is stringly anti inflation oented
TP asked, Is it good to buy IT shares like infosys, TCS and Mahindra. Will budget affect the growth of these companies?
Rashesh Shah answers, the IT companies will be negatively affected by MAT - some more some less. Companies like Satyam and HCL may take a bottom line hit of 3-4%
chithra asked, Hi, What will be the impact on Steel companies after this budget?
Rashesh Shah answers, mildly positive for steel companies as the import of scrap will become cheaper
raj001 asked, Hi shah,The market slide today is not on the account of buget but the global markets.Do u think the panic in the markets settling some time soon.
Rashesh Shah answers, the markets are feeling the heat from liqudiity flows slowing down, the increase in interest rates, and global market sell offs. The budget has not affected this in any way. We amy see more consolidation for the makret for the next 2-3 months
pb91 asked, what index level should i buy bank sharse
Rashesh Shah answers, the bank sahres will become good buys once inflation slows down adn then interest rates start to come doen. Until it is the other way - i.e. risiing rates and inflation - it is better to stay away from bank sahres
AniA asked, What will be the impact of this Budget on construction sector?
Rashesh Shah answers, The taking away of 80i benefit - retrospectly - is negative for constriuction comanies. But the prices have corrected a lot and these companies will start to become good investments soon. The sector is still very strong fundamentally
kpmurali asked, Hi rashesh, Do u think it is better to hold cement stocks after todays budget and what should be strategy post budget
Rashesh Shah answers, yes. Cement stocks came down by 8-10 per cent today as a reaction to the excise hike. We fel the companies will pass on the hike and hence these companies look good after the correction as demand continues to be robust
Kake asked, How is Chidambaram planning to control fiscal deficit? Is it majorly thru government revenue increase or thru cutback in expenditures?
Rashesh Shah answers, the revneus have been very good for the govenment and hence the fiscal situation has improved a lot. The expenditure is still very high
pb91 asked, do u think the budget will bring real estate prices (not real estate stocks) down
Rashesh Shah answers, no - esp the hike in cemnet wil push costs up a bit not down
Pankaj asked, With a index going down...Do u still feel inventing in Mutual fund is safe>>
Rashesh Shah answers, Mutual funds are very good vehicles for medium to long term investing.- esp. after corections the market is now down appx 105 from the peak. We feel there will good opportunites to inevst into good MFs over the enxt 2-3 months - one shdoul stay invested in MFS and increase this in staggered manner over the next 2-3months
anuj asked, How the FBT will be calculated on ESOP given by companies ?
Rashesh Shah answers, The norms are not out yeta but experts beleive that this will be calculated on discount to fair value of the esop and that discount will be treated as perk and taxed under FBT
bhupender asked, is there any plan for saving which can reduce tax for income tax except insurance and PF how can we save whithout tax
Rashesh Shah answers, the new FMP products are good - esp. the ones with maturtiy more than 1 year - wherein you get long term capital gains advantage are good
Pankaj asked, What do you expect on the real Estate boom? Is it a bubble or realistic...specially in northern India ..
Rashesh Shah answers, Real estate has been hypeed up a lot and the valuations ect have been going up. These have to be corrrected as such prices =- and values - are hard to sustain. Retail invetsors hsoudl stay out of real estate stock at these prices
Monika23 asked, Sugar stocks especially bajajhind and Renuka sugar have withstood the fall today, infact they have gone up..is it the right time to buy into sugar?
Rashesh Shah answers, sugar stocks have been falling for the last 6 motnhs - and most stocks have corrected by 60-70% by now. Given the agri thrust of todays budget there has been some buying in these sector - but over the next 1 year the fundamental os the sector do not lok encouraging which has been factored ionto the prices
raj001 asked, Mr Shah,I presume we are in the phase of correction.What do you think will be the downside levels of this phase of correction
Rashesh Shah answers, usually corrections can be 15% or so. we have now corrrected by 10% from the peak. we beleive the market has entered a consolidation zone for the next 3-4 months during which time it will bob around in 4-5% range
namita asked, what about midcap investment is it benificial or not?
Rashesh Shah answers, Good qulaity mid cap stocks which are not very expensive, and where there is strong history of growth are the one which you could buy. But hold these for atleast 1-2 years to get full upside
namita asked, what about midcap investment is it benificial or not?
Rashesh Shah answers, mid stocks of good companies with good management and stong demonstarted earning growth which are not very expensive (growing at 25% and PE 10-12 kind of compnaies) are the one investors can buy. But hold these for atleast 1-2 yeras
kallol asked, What will be the cost of 1 bag cement it it is Rs 220 now
Rashesh Shah answers, should go up by rs ten per bag
anuj asked, ESOP's are given at one time to the employees spread over 3-4 yrs. Will the FBT pass on to the employee ? Plus what would be the tax rate and how will it be calculated ?
Rashesh Shah answers, it was mentioned that FBT will be levied upon excercise of the option
dinny asked, Are IT stocks like INfosys,TCS good buys at these levels or one should go for some midcaps
Rashesh Shah answers, the large caps stock are a safer bet now - we expect makret to be in consolidation phase for the next 3-4 months - hence you are beter of sticking to larger caps during this time
BhosandiKe asked, Can you please elaborate the ESOP myths in more details please. I am having US MNC share allocated 2-yr back, if I excersie them now how I will be affected?
Rashesh Shah answers, the details will be out in the next couple of days. we need to see if these will be taxed upon exercise, the compaany will have to pay and at what rate
Prakash asked, What will be main effect of budjet on normal middle class man?
Rashesh Shah answers, Budget does not afftec the midlle cla. this was a pro rural and agri budget
HKR asked, Does the short selling by institutions (as allowed by the FM in the budget) affect market sentiments positively ?
Rashesh Shah answers, this should improve the liquidity and provide more stability ot the makret
HKR asked, Does the short selling by institutions (as allowed by the FM in the budget) affect market sentiments positively ?
Rashesh Shah answers, this is improve liqidity and provide more stability ot the market
Somnath asked, Hi Rashesh; I dont know why corrections in the chinese market was triggered?
Rashesh Shah answers, The chinses market had gone up by 60-65% in the last 4 months. The mutual funds there have bene collecting huge amounts of money and the market there has been overheated. Some chnages in govt norms for share market and liqidity of sahres was the catalyst
Anit asked, How is Reliance looking after today's correction? Whether budget has any good news or bad news for Reliance?
Rashesh Shah answers, the budget is mildly positive for reliance - for the refining and marketing part
monalika2005 asked, how u see the impact of budget on inflation.
Rashesh Shah answers, the budget is not anti inflationary - unfortunately. We were hoping for more anti inflation measure - esp relating to easing supply side pressure - but there were none of these
monalika2005 asked, how u see the impact of budget on inflation.
Rashesh Shah answers,
Raju asked, Is it he right time to enter market or should I wait for some more correcti ? What are the best shares to invest now ?
Rashesh Shah answers, Slelctive investment thru MFs or into good quality comanies over the next 3-4 months would be agood startegy
santosh1 asked, Sir Please reply to my previous question regarding the the price of cement.
Rashesh Shah answers, cement prices will go up by 5 to 10 rupees per bag
Rashesh Shah says, Ok Thnaks a lot. Enjoyed the very intelligent and probing question. GOood Bye!!!
