Post Badget - a missed opportunity : Edel Research

       Budget emphasizes on consumption, inclusive growth, and 'common man':

—  Government continues with small-ticket contra-cyclical expenditure (eg, NREGA, agri-schemes)

—  Raising exemption limits and abolition of surcharge reducing effective income tax rate, thereby increasing disposable income and purchasing power

       A missed opportunity

—  Not enough on the future roadmap of disinvestments and reforms

—  No big announcements around infrastructure – except certain bits and pieces, mostly focusing on rural infrastructure

       Government raises its fiscal deficit estimate. Deficits worrisome, but a known devil:

—  Government now projects gross fiscal deficit (GFD) at 6.8% of the GDP for FY10. This is closer to our long-held estimate of ~7.5% of GDP in FY10

—  Centre now projects gross market borrowing at ~INR 4500 bn for FY10

—  Our view on 10-yr yield: over 7% for most part of H2FY10, end-march 2010 at ~7.5%

—  Increase in MAT or implementation of GST (from April 2010) not adequate to boost revenue

       We remain positive on Indian equities over medium to long-term:

—  Decision on reforms, infra-investments and disinvestments can possibly be taken up by the government outside the budget

—  We maintain our overall positive stance on India and re-iterate our view - buy on dips