Handling of fiscal consolidation very positive for banks, bond markets: Nilesh Shah, Envision Capital

In a chat with ET Now, ​Nilesh Shah, MD & CEO, Envision Capital, says Rs 25,000 crore is slightly below what the market had expected for bank recapitalisation

ET Now: What do you think about the budget impact on PSU banks?


Nilesh Shah: I think there is a bit of disappointment on the PSU bank front because Rs 25,000 crore is slightly below what the market had expected but I think the big takeaway is fiscal consolidation, sticking to the path of fiscal consolidation. The FY17 3.5 per cent fiscal deficit target is very positive for bond markets, that is very positive for banks in general.

ET Now: Why are markets recovering because what we discussed 20 minutes ago Nilesh was lot of pain, no gain.

Nilesh Shah: Yes. The market right now is focusing 1) on the fiscal consolidation path. 2) There is a continued thrust on infrastructure sectors like road and power. 2) The huge focus on Aadhaar and the fact that now a legalised Aadhaar could help you to roll out debate in a more significant and widespread manner. So it is a combination of all of these factors which has ensured that the market recovers. Clearly India’s big point was its macros and this budget reinforces the strong macros which India is displaying to the rest of the world. Ao from that point of view, it is a huge positive for the markets also.

ET Now: Three hits from the budget this time?

Nilesh Shah: Just two because the market had gone into this budget expecting the fiscal deficit not to be a 3.5 and to be higher and two is that the long-term capital gains would get taxed. Both have not happened. Fiscal prudence is the mantra of this budget and there are no taxes on listed equities. That is fantastic.