Quote by Principal Mutual Fund on Budget 2019
July 8, 2019 • Abhishek Verma

Bekxy Kuriakose, Head – Fixed Income, Principal Mutual Fund

Mr. Rajat Jain, Chief Investment Officer, Principal Pnb AMC

Mr. Rajat Jain, Chief Investment Officer, Principal Mutual Fund on Budget 2019.

“The budget continues its focus on infrastructure growth in areas of  water, roads, affordable housing and railways and has provided for substantial spends in this space. There is an effort on further improving ease of doing business and raising resources, esp . from the offshore markets to provide for growth.  The key question facing the economy is the growth slowdown and market expectations were for specific steps that could be taken in this regard. There is a bit of disappointment here from an initial reading of the speech. The shifting of NBFC governance to RBI is welcome along with the provision of partial credit enhancement. The details of proposal to increase public shareholding to 35% would be awaited as it could lead to increased supply of paper while at the same time increasing India's weight in global indices.”

The views contained herein are the independent views of the spokesperson and are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. The views and strategies described may not be suitable for all investors.

It should be understood that any reference to the securities/ sectors in the document is only for illustration purpose. The information contained in this document does not constitute an offer to sell, or a solicitation of an offer to buy any security, investment product or service.  Investment involves risk. Past performance is not indicative of future performance and investors may not get back the full amount invested.

As an investor you are advised to conduct your own verification and consult your own financial and tax advisor before investing.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

Below is the quote by Ms. Bekxy Kuriakose, Head – Fixed Income, Principal Mutual Fund on impact of Budget on Debt Market & Outlook and attached is her photograph, for your reference.

Do let us know if you require any additional information on this.

“The newly appointed Finance Minister positively surprised the debt markets by reducing the fiscal deficit target from 3.4% as laid down in the Interim Budget to 3.3%. Gross borrowing, Net borrowing, switches and buybacks have been retained as given in the Interim Budget which is a relief. On closer look at the fine print, while the fiscal deficit at absolute level is almost the same as in Interim Budget: Rs 703760 cr (703999 cr in Interim) what has been increased is the Nominal GDP assumptions from 11.5% to 12%. This helps in therefore showing an optically lower fiscal deficit target. Among other notable items in the Budget, the GST collections have been scaled down by almost Rs 1 lakh cr which makes it more realistic considering the trend in recent collections. Income Taxes target has also been reduced by 50000 cr. Thus the Revenue Deficit is higher at 2.3% as compared to 2.2% projected in the Interim Budget.

The mention of sovereign bond issuance in foreign currency as a diversification and to alleviate demand pressures domestically also aided in the rally today in gilt and bond prices.

The ten yr gilt benchmark as on 2.15 pm today afternoon is trading around 6.65%, 10 bps lower than yesterday's level. With the Budget announcement out of the way and govt sticking broadly to the fiscal parameters, markets will now move on to other events. The overall environment remains benign with subdued headline and core inflation, falling global bonds yields, dovish global central banks and ample banking system liquidity.”

The below links give the three main documents one can peruse among all those available.

Links:

Abstract of Receipts giving the breakup and targets for various receipt heads : https://www.indiabudget.gov.in/doc/rec/ar.pdf

Sources of Financing the Fiscal Deficit: https://www.indiabudget.gov.in/doc/Budget_at_Glance/bag2.pdf

Budget at a Glance: https://www.indiabudget.gov.in/budget2019-20(I)/ub2019-20/bag/bag1.pdf

The views contained herein are the independent views of the spokesperson and are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. The views and strategies described may not be suitable for all investors.

It should be understood that any reference to the securities/ sectors in the document is only for illustration purpose. The information contained in this document does not constitute an offer to sell, or a solicitation of an offer to buy any security, investment product or service.  Investment involves risk. Past performance is not indicative of future performance and investors may not get back the full amount invested.

As an investor you are advised to conduct your own verification and consult your own financial and tax advisor before investing.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.