'There is a need to deepen the reforms process...'
Mar 04, 2003

Author: PersonalFN Content & Research Team

Mr P.V.K. Mohan, Head Equity Research - IL&FS Mutual Fund spoke to personalfn giving his take on the budget and its likely impact in equity and debt markets.

Pfn: What is your initial reaction to the Union Budget? On a scale of 1 to 10, with 10 being the highest, how would you rate the budget?

Mr. P.V.K. Mohan Our score would be about 7/10

Pfn: How do you think the budget will impact the stock markets? Which are the sectors you see doing well?

Mr. P.V.K. Mohan The Budget should be favourable to the stock markets with the sops likely to improve sentiment. However the most crucial and sustainable driver would be the implementation of the announced infrastructure projects. Sectors, which are likely to directly benefit, are Automobiles, Banks, Technology & Hotels.

Pfn: Post budget, has the attractiveness of equity funds for retail investors increased? In your opinion, should the retail investor consider investing in equity funds now?

Mr. P.V.K. Mohan With a cut in small savings rate and given the robustness of the Indian economy with buoyant corporate performance, we believe equity funds present on attractive option, but more so from a longer-term perspective.

Pfn: What are the primary concerns do you have which could delay a recovery in the stock markets? What is your worst-case scenario for the stock markets?

Mr. P.V.K. Mohan The US - Iraq stand-off and its final outcome is the most important factor in potentially derailing the Indian economy and thus our equity markets. In the current environment we do not see a downside of more than 5 - 6% in the market but much would depend upon how the war-like situation unfolds and how soon it is resolved

Pfn: In light of the economic survey, and the presentation of the budget, how do you see the Indian economy performing in the coming year?

Mr. P.V.K. Mohan The Indian economy should grow at close to 6% in FY04, driven by a recovery in agriculture and continuing buoyancy in services and manufacturing. This would be contingent upon the implementation of the planned infrastructure projects.

Pfn: Any other issue which you feel could have been addressed (or addressed better) in the budget?

Mr. P.V.K. Mohan There is a need to deepen the reforms process and in light of the prevailing compulsions these have not been attacked vigorously. Also there is a crying need to channelise domestic long-term funds to equities to create depth and vibrancy in the Indian market