Budget 2010: Impact on Stocks

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The key positive surprise was lower than expected government borrowing to fund the deficit, which we believe was a key reason for the intraday market
bounce, albeit partially offset by an increase in Minimum Alternate Tax (MAT) from 15% to 18%.

Key sectors impacted
Positive for Banks (PSUs), Infrastructure (IRB), Construction/Engineering (L&T), Consumer (excluding ITC), and energy (especially renewable energy).

Negative for Oil & Gas [Reliance Industries], tobacco (ITC) and power utilities. Companies that potentially will be impacted by increase in MAT include Havells India, Bajaj Hindusthan, Balrampur Chini, RCOM, Idea, IRB, IVRCL, NCC, and HDIL

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And the Key Challenges the Government is Trying to Address are as follows,

How to unwind the fiscal stimulus without hurting economic growth
How to sustain and broaden the agenda of inclusive growth
How to bring the fiscal deficit down and lay down a medium term road map for fiscal correction
How to develop and finance the acute infrastructure deficit that country is facing
How to move forward on the pending economic reforms agenda including disinvestment
How to contain food prices which is showing no signs of abatement