PSU divestment, US economic recovery, Goods & Service Tax and Direct Taxes Code will influence the market in 2010
T
he expectations of invesrors are now slowly gerring disintetested as
in 2009 were low and these the shorr-term teturns are not attrac-
were overshot by me market tive, and are sometimes even nega-
as we saw earlier. Now that 2010 is tive. All in all, 2010 will be a good
upon us, we must try and figure out year for PSU disinvestment which had
what could be the major economic sropped between 2004 and 2009, as
events this year. First, this budget is the then UPA government had ro rely
more likely ro be a rough exercise for on the Left parties' support ro survive
the finance minister (FM) as he has and the Left is very clear about the
ro balance the two sides of receipts government's control of industry. As
and expenditure. That aparr, the FM such, 2010 will be me year which will
will also have ro deal with the progress decide whether the central government
achieved in the various reforms that is actually pro-reform or not. We have
are being brought in such as the goods high hopes.
and service tax (CST), direct tax code The mird imporrant thing to watch
(DTC) and the proposed significant out for shall be the one which is on
changes in the Companies Act. While the rop of every invesror's mind. Will
the proposed dates for CST and DTC me Sensex cross 20,000 first? Actually,
implementation have been declared, as we have discussed earlier also, me
there is apprehension that the actual year-end predictions or expectations
implementation may be delayed by a regarding srock index movements are
year because of various reasons. made based on the current atmosphere,
All these have a great bearing on the and in any and every turnaround in
market movements roo. For example, market sentiment, the predictions are
there is a general feeling rhat the CST more likely ro miss the target. This year,
will lead ro lower costs across the me predictions are genetally on the
board. This, if true, can be a significant bullish side, and everyone is expecting
positive development, and if there is me global recovery ro pick up speed
a delay in its implementation, there during 2010.
could a negative impact on market There are a few question marks
sentiment. The same also applies ro the regarding this, and if there is some
direct tax code. The second imporrant unexpected happening somewhere, the
facror would be the proposed PSU dis- whole process could get derailed. As
investment that has been announced. we know, many economists are rais-
There is reason ro believe that now, ing questions abour the wisdom of
with the Communists out of the reck- preventing a depression through such
oning, the UPA government will speed heavy government spending by various
up the disinvestment process. Various leading countries. This is truer of the
PSUs are planning IPOs and FPOs in US than any other country, as it is by
the first half of 20 1 0, and the invesrors far the biggest economy.
- especially retail investors - are highly Till now, the handling of the econ-
charged up for the same. Here, timing omy by the Obama administration has
and pricing would b~ the key facrors. been good, and if the recovery g~ins
While timing can now be decided by speed, well and good. Bur, if the high
the companies depending on market unemployment rate does not come
sentiment, the pricing will have ro be down soon, or the demand growth
considered fully by the government. slows down, then mere could be seri-
Cood companies have priced their ous issues ro be tackled. And the mar-
IPOs very aggressively in the recent kets could tank in that case. Let us
months and in the process the retail hope mat such an event does not take
invesrors who invest for the shorr term place. Happy 2010. ~
T
he expectations of invesrors are now slowly gerring disintetested as
in 2009 were low and these the shorr-term teturns are not attrac-
were overshot by me market tive, and are sometimes even nega-
as we saw earlier. Now that 2010 is tive. All in all, 2010 will be a good
upon us, we must try and figure out year for PSU disinvestment which had
what could be the major economic sropped between 2004 and 2009, as
events this year. First, this budget is the then UPA government had ro rely
more likely ro be a rough exercise for on the Left parties' support ro survive
the finance minister (FM) as he has and the Left is very clear about the
ro balance the two sides of receipts government's control of industry. As
and expenditure. That aparr, the FM such, 2010 will be me year which will
will also have ro deal with the progress decide whether the central government
achieved in the various reforms that is actually pro-reform or not. We have
are being brought in such as the goods high hopes.
and service tax (CST), direct tax code The mird imporrant thing to watch
(DTC) and the proposed significant out for shall be the one which is on
changes in the Companies Act. While the rop of every invesror's mind. Will
the proposed dates for CST and DTC me Sensex cross 20,000 first? Actually,
implementation have been declared, as we have discussed earlier also, me
there is apprehension that the actual year-end predictions or expectations
implementation may be delayed by a regarding srock index movements are
year because of various reasons. made based on the current atmosphere,
All these have a great bearing on the and in any and every turnaround in
market movements roo. For example, market sentiment, the predictions are
there is a general feeling rhat the CST more likely ro miss the target. This year,
will lead ro lower costs across the me predictions are genetally on the
board. This, if true, can be a significant bullish side, and everyone is expecting
positive development, and if there is me global recovery ro pick up speed
a delay in its implementation, there during 2010.
could a negative impact on market There are a few question marks
sentiment. The same also applies ro the regarding this, and if there is some
direct tax code. The second imporrant unexpected happening somewhere, the
facror would be the proposed PSU dis- whole process could get derailed. As
investment that has been announced. we know, many economists are rais-
There is reason ro believe that now, ing questions abour the wisdom of
with the Communists out of the reck- preventing a depression through such
oning, the UPA government will speed heavy government spending by various
up the disinvestment process. Various leading countries. This is truer of the
PSUs are planning IPOs and FPOs in US than any other country, as it is by
the first half of 20 1 0, and the invesrors far the biggest economy.
- especially retail investors - are highly Till now, the handling of the econ-
charged up for the same. Here, timing omy by the Obama administration has
and pricing would b~ the key facrors. been good, and if the recovery g~ins
While timing can now be decided by speed, well and good. Bur, if the high
the companies depending on market unemployment rate does not come
sentiment, the pricing will have ro be down soon, or the demand growth
considered fully by the government. slows down, then mere could be seri-
Cood companies have priced their ous issues ro be tackled. And the mar-
IPOs very aggressively in the recent kets could tank in that case. Let us
months and in the process the retail hope mat such an event does not take
invesrors who invest for the shorr term place. Happy 2010. ~
No comments:
Post a Comment