The Budget is unlikely to make any path breaking
policy changes. Key things the market will be eyeing are tax changes, progress
of UID, fiscal consolidation and NREGA spending. On the issue of a possible tax
on the wealthy, most people will not be averse to paying their fair share of
taxes. On the broader market, the
direction is northward than southward.
The trouble with Indian psyche is that lust for gold and real
estate. We don’t want to look at equities, which makes no sense. As a country
we are deeply under owning equity. In the course of this bull market this under
ownership will correct and when the pendulum swings we will go from under
ownership to over ownership.
What is going to propel the change? I think returns.
Ultimately if the market delivers superior returns on a consistent basis people
will come back to the market as they always have done.
By investing in gold and real estate right now you are
perhaps investing at the top of a cycle at least in some of these asset
classes. It is disappointing given the
fact that capital gains are tax free, dividends are tax free in India that more
people are not investing in equity. I think for whatever its worth that they
are being short sighted.
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