CLSA sees risk from potential increase in capital gains taxes on equities

The upcoming Union Budget on February 1 is unlikely to see any tweaks to indirect taxation but a potential increase in capital gains taxes on equities remains a risk, said CLSA.

"If not realised, Indian markets could see a catch-up rally," said CLSA in a note.

CLSA said the upcoming budget will require the government to walk the tightrope between fiscal prudence and the political need to pump-prime the economy ahead of the national elections.


The firm said it expects government spending to be biased in favour of social spending including agriculture, housing and roads.

"This should be positive for rural plays (M&M), housing (HFCs, cement, Crompton and Astral), and contractors (L&T, Nagarjuna and Sadbhav)," said CLSA.

ITC could also benefit if the central government does not change and only marginally raises tobacco taxation, the firm said.