Market Commentary for the week ended June 26, 2009

The Union Budget 2009-2010 which would be presented on July 06, 2009 will be crucial in gauging the new government’s policy stance. The budget is more likely to focus on reforms to bridge the galloping fiscal deficit, emphasize rural spending, increased infrastructure allocation & providing incentives to the export led sectors viz IT & textiles. Given the spending pressures, we expect the central government’s fiscal deficit to remain high at 6.5% of GDP and the consolidated deficit at 10% of GDP in FY10. This is expected to be arrested to a certain extent by way of disinvestment and auctioning of 3G license.
It will be interesting to see how far the new government succeeds in fulfilling the expectations which have arose after the new mandate came into force. We believe that while there might be some disappointments, some of the expectations may turn into much needed actions which could put India into a sustained growth path.
weekly-pointer_29thjun09.pdf