Views on various points in the Budget 2019

By Amar Ambani

Nirmala Sitharaman delivered her maiden union budget announcement on Friday. Sitharaman has tried to covered numerous complex aspects of the economy. Here is our opinion on union budget 2019-20.

--Increase in Public shareholding proposed from 25% to 35% potential negative for MNC and companies with high promoters holding. In many mid and small caps, it is better to have more promoter skin in the game, since India's capital market in the developing phase.

--Many MNCs listed on Indian bourses may consider delisting if increase public shareholding implemented.

--An overhaul of education material is much needed. It’s also a positive measure for companies in publishing space.

--If increased public shareholding norm implemented, the supply of paper in the market will increase. This will mean that money will be sucked out of the secondary market and valuations will remain under check.

--As expected, capital infusion in public sector banks has come through. Infusion of Rs. 70000 crore is positive for PSU Banks.

--High disinvestment target of Rs. 1.05 lakh crore and increase in public shareholding to squeeze liquidity from the secondary market.

--Excellent move to levy 2% tax on cash withdrawal of over one crore rupees in a year. Will help in a more transparent digital economy.

--Cost of ownership of vehicles further goes up with the implementation of special duty on fuel. Negative for auto majors.

--Body blow to HNIs by levying a high surcharge on the rich. The effective tax rate on the biggest bracket goes to 42%!

--The big surcharge tax on the high-income group and possible liquidity squeezing of secondary market liquidity due to disinvestment and increased public shareholding are causing the stock market to fall today.

Amar Ambani is the President and Research Head of YES Securities.

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