What’s in the
Budget 2017-18 for you as an Share
Market Investor?
Finance
Minister Mr. Arun Jaitley has stayed away from populist measures even though 5
states are going for election this month.
Instead,
he has presented a number of growth-oriented measures.
Viewers
watching Mr. Jaitley’s speech live in Parliament would have been disappointed
that there were no fancy announcements.
However,
many of his pronouncements appear to be reasonable, even achievable. Some
of the significant areas are low borrowings and a push for infrastructure
projects.
There
was considerable disappointment on the personal taxation and corporate tax
fronts.
Those
expecting higher tax benefit on personal tax were a little disappointed.
Although
Mr. Jaitley has brought down the tax rate for the first slab to 5%, the
effective savings will only be Rs. 5,000. Why? That’s because most investors
would have saved Rs. 1.5 lakh under section 80C. So, up to Rs. 4 lakhs, there
is no tax and from Rs. 4 lakh to Rs. 5 lakh, at 5%, it will be Rs. 5,000. After
that it is a flat Rs. 12,500 across slabs.
On
the real estate front, much was expected, especially as the government wanted
to reduce the influence of black money.
A
big push in the real estate sector was expected, but not delivered. Investors
fond of real estate were equally should have disappointed.
 |
| Mr.Suresh Parthasarathy, Myassetsconsolidation.com |
In the past, many people would have bought a second house and let out the property to avail themselves of tax benefits for the entire interest paid. For instance, if you took a loan of Rs. 50 lakh in the first year, you would have paid interest close to Rs. 3.7 lakh if you borrowed at 9%. Under the new rules, you will be eligible to claim only Rs. 2 lakh, which is a big setback but only to those who buy real estate on a speculative basis or for investment purposes.
Moreover,
to bring individuals to financial assets and reduce speculation in real estate,
long-term capital gains have been reduced to two years.
Now,
people will sell property to move to financial assets. So, there will be a
pressure on real estate prices.
Equity
Market Appears Attractive
With
inflation under control and the fiscal deficit at 3.2% of the GDP, the rupee
will be stable against the US dollar. This will be a dampener for gold and as
an asset class; gold is not attractive from an investment point of view. With
lower government borrowing and lower fiscal deficit, the banking system will
have good surplus for credit. Since credit offtake is not brisk, banks may cut
interest rates.
Most
of the time, when borrowing cost is low, the credit cycle picks up. With the
government thrust on infrastructure, cyclical industries are likely to revive.
Such a situation will push up the top line (sales) as well as the bottom line
(profits) of the companies and it will induce investors to look at stocks.
So,
you as an investor keen on creating wealth should naturally look out to equity.
This sector currently looks attractive and is capable of giving decent returns.
What
should you do?
Do
not stagger investment at this point. Instead, go in for lump sum to earn
better returns.
The
headwinds can come from US action on several front as Donald Trump takes one
controversial decision after another and also if the BJP does not gain from the
upcoming elections. But after some time, the market may discount such news.
For
details on where to invest, contact me.
Suresh Parthasarathy,
Registered Investment Advisor,(SEBI),
Columnist,
Founder,Myassetsconsolidation.
Mobile 98404 54737
CRISIL rating : MSE 3
| Skype: | suresh.partha |
Office Address
B 10 Gyan Angan Apartments,
56, East Mada street, Thiruvanmiyur,
Chennai-600041, Tamilnadu.
56, East Mada street, Thiruvanmiyur,
Chennai-600041, Tamilnadu.
Phone No
+91 9840454737
+91 9940478287
+91 9940478287
Email
info@myassetsconsolidation.com
suresh@myassetsconsolidation.com
suresh@myassetsconsolidation.com
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