Market experts are pitching for clarity in tax on long-term gains under the proposed DTC, a clear timeline for rolling out Goods and Services Tax among other key measures in the upcoming 2011-12 budget.Stock markets in February so far have plummeted by over 11 per cent on concerns over high inflation, rising interest rate and, low morale and confidence of the investors due to uncertainty caused by a series of high-profile scams.
Market observers feel that the Dalal Street would benefit if some bold financial reforms are announced in the upcoming budget, due on February 28.
“From a stock market perspective, we would keenly watch for clarity of taxation on long-term under direct tax code (DTC) as any tax on long-term gains could lead to profit-booking before the tax comes into place,” Motilal Oswal Securities Associate Director (Business Strategy and New Initiatives) Manish Shah said.
“Another, key point will be disinvestment proceeds that could be below the target for fiscal year 2011 with a large target for fiscal year 2012 to compensate the 3G inflows in the fiscal year 2011,” Shah added.
Budget 2010-2011 had provided for Rs 35,000 crore for 3G and Rs 40,000 crore for disinvestments. The country has raised Rs 1,15,000 crore from the 2G and 3G and is on course to complete the disinvestment target.
Market experts feel that the Finance Minister should set another Rs 40,000 crore target from disinvestments in the upcoming budget.
Besides, price-rigging is another issue where the capital market market have suffered after the surfacing of price- rigging cases in many listed companies surfaced.
Analysts demand that there should be a mechanism to stop price manipulation on the first day of listing of shares by any company.
“The budget should make the disclosure of all the pledged compulsory. Currently only promoters’ shares are disclosed and non-promoters funded by brokers are being shown in the broker’s name,” CNI Research CMD Kishore P Ostwal said.
The final fiscal deficit for the fiscal year 2011 is likely to be lower than the 5.5 per cent target due to Rs 1,06,000 crore inflow from the telecom auctions.
The stock market expects the Finance Minister to pitch for a 5 per cent deficit target for the fiscal year 2012 and achieve the same without any financial jugglery.
The markets are also looking forward to increased investments in the infra-projects and agri-related sectors to give a multiplier effect to the economy.
The market is also hoping for more clarity on the implementation of goods and service tax.
“We expect the government to take steps to rollout the integrated GST in a year and changes in direct tax regime may be limited to aligning it with the upcoming direct tax code (DTC),” Unicon Financial Services Vice-President Madhumita Ghosh said.