Analysts at Motilal Oswal Institutional Research, too, feel that there is little scope for the government to significantly lower direct and indirect tax
“As corporate tax
rate has not been reduced on the largest 1 per cent companies that account for a majority of corporate tax
collection, we believe the government is unlikely to cut the effective tax rate from around 26.5 per cent to 25 per cent. Further, personal income taxes have been one of the bright spots from the tax collection perspective. The Centre is unlikely to provide significant relief to these two classes, although some changes cannot be ruled out,” says a pre-budget note from the brokerage.
Historically, the markets
have done well a fortnight ahead of the presentation of the budget with the S&P BSE Sensex
gaining in the range of 1 per cent to 4 per cent in the past four out of five years, as per compiled by Business Standard Research Bureau. In 2018, the S&P BSE Sensex
had gained 4.07 per cent in the 15 days prior to the presentation of the Budget, making it the best fortnightly run in 12 years.
“I don’t think there will be a pre-interim budget or post-budget rally this year as there is a lot of uncertainty regarding the outcome of general elections scheduled later this year. The interim budget, at best, will be a balancing act between the revenues and the planned expenditure,” says G Chokkalingam, founder and managing director, Equinomics Research.
In a recent report, Somshankar Sinha, managing director and head of India equity research, too, ruled out a significant upside for the equity markets.
“With valuations expensive, the macro soft and political outcomes uncertain, we see few triggers India's equity markets
this year. Axis Bank and ICICI Bank are among our top-10 ideas, as are Infosys, ITC, NTPC and Sun Pharma; while we would avoid Reliance Industries, Hindustan Unilever (HUL), Hero MotoCorp, Lupin and Wipro in the large-cap universe,” he wrote in a recent co-authored report with Piyush Nahar and Pratik Chaudhuri.