Mr. Avinash Gupta, Assistant Vice President Research Equity, Bonanza Portfolio Ltd

Bonanza Portfolio Ltd: Budget Expectation: 1). What are your expectations from the upcoming budget?The government last year had just got in the office and had to present budget with in a very short period. It was believed that Government did not have time to formulate new policy initiatives. This budget gets significance as it would provide a view of what the government wants to achieve and how. The market is thus expecting the Budget to give a clear thrust and direction to reforms. The current scenario is The Government has projected a growth of 7.75% plus or minus 0.25% for FY10. This growth is being achieved inspite of draught and difficult external environment. The consolidated fiscal deficit is running above 10% of GDP which is not sustainable. Inflation is rearing its head and inflation of food articles is a matter of serious concern. Exports continue to be sluggish and imports are rising over the last few months. The liquidity in the domestic market is ample.RBI has initiated steps in tightening the liquidity by stepping up CRR in January 2010 and SLR in October 2009. International credit markets have eased considerably since the last budget and Indian corporates are able to raise fund abroad. It is hoped that the recent concerns relating to credit default in Europe do not escalate. Foreign flow of capital has been good in the recent past. In CY 2009 the FII’s invested more than 17 Bn USD in India. External environment is improving with major economies of the world on the recovery path. In view of the above the following is expected v It is expected that Government will announce new initiatives which have a long gestation period. A significant push for the reforms is expected.Ø The improvement in the delivery of subsidy to the targeted segment of population would get special attention. This would enable government to better manage the subsidies and thus fiscal deficit. Ø The move to GST would get further push v Norms for minimum floating stock for listed companies may be stipulated. The disinvestment required to meet the criteria could generate substantial resources for the Government. v The effort of the Government would be to contain the subsidy bill to address Fiscal deficit. Government revenues would be buoyant in view of expected GDP growth of more than 8%. v No new indirect taxes are expected except for roll back of some of the concessions given as a part of the stimulus package.v Some relief to individual tax payers is likely. v The direct tax code was circulated for public comments. The final shape of the direct tax regime would be of significant interest. v We expect an approach towards reforms in the financial services sector and the regulatory environment in view of developments in the recent past in the world. v We expect a significant step up in the investment in agriculture sector in view of the stated policy of the Government to step up the growth.v We expect the thrust on Infrastructure, Healthcare and Education will continue. Steps are expected to attract investment in these areas. v With in the investing community there is expectation that cost of executing the trade would be reduced. In many cases taxes are more than the brokerage paid by investors on the transactions. 2). Any specific sector or source you are looking for? We expect that the budget would give push to reforms. Agriculture, Infrastructure, Healthcare and Education are the sectors which would be watched closely.

Mr. Avinash Gupta,
Assistant Vice President Research Equity,
Bonanza Portfolio Ltd.
M: 09810530951