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The interim Budget for 2014-15 to be presented Monday is likely to decide the course of automobile stocks next week. In case something like a better fiscal deficit number is announced, the auto stocks will rally along with all other stocks. Finance Minister P. Chidambaram will have a tightrope walk to do as he attempts to balance fiscal prudence with populism in an election year when he presents the interim Budget. The government aims at achieving the fiscal deficit target of 4.8% of gross domestic product for 2013-14 and to bring it down to 4.2% in 2014-15. The automobile industry, which is staring at a sales contraction for the second consecutive year in 2013-14, is seeking a lifeline from the government in terms of incentives.
The Society of Indian Automobile Manufacturers has sought packages for the automobile sector in the interim Budget, primarily for commercial vehicles, including a fleet of modernisation policy. It feels automobiles are over-taxed currently, and hopes for a reduction in the same. SIAM has sought for a reduction in excise duty on passenger vehicles. Passenger car sales contracted for the fourth straight month in January even as manufacturers hoped for a better start to the new year. As the general sentiment prevailing among investors is that the budget is feudal, it is less likely to have an impact on specific stocks. But it is expected to create an impact at least for the first few days after the announcement.
The full Budget will be presented by the next government, which comes to power after general elections slated for Apr-May. Some specific stocks like Tata Motors Ltd and Mahindra Ltd's stocks are seen trading with a positive bias next week on good results for the quarter ended December.
The interim Budget for 2014-15 to be presented Monday is likely to decide the course of automobile stocks next week. In case something like a better fiscal deficit number is announced, the auto stocks will rally along with all other stocks. Finance Minister P. Chidambaram will have a tightrope walk to do as he attempts to balance fiscal prudence with populism in an election year when he presents the interim Budget. The government aims at achieving the fiscal deficit target of 4.8% of gross domestic product for 2013-14 and to bring it down to 4.2% in 2014-15. The automobile industry, which is staring at a sales contraction for the second consecutive year in 2013-14, is seeking a lifeline from the government in terms of incentives.
The Society of Indian Automobile Manufacturers has sought packages for the automobile sector in the interim Budget, primarily for commercial vehicles, including a fleet of modernisation policy. It feels automobiles are over-taxed currently, and hopes for a reduction in the same. SIAM has sought for a reduction in excise duty on passenger vehicles. Passenger car sales contracted for the fourth straight month in January even as manufacturers hoped for a better start to the new year. As the general sentiment prevailing among investors is that the budget is feudal, it is less likely to have an impact on specific stocks. But it is expected to create an impact at least for the first few days after the announcement.
The full Budget will be presented by the next government, which comes to power after general elections slated for Apr-May. Some specific stocks like Tata Motors Ltd and Mahindra Ltd's stocks are seen trading with a positive bias next week on good results for the quarter ended December.
