Investors needn't play defensive, FM's budget will surprise little, says Jim Walker

NEW DELHI: With the hype around the railway budget settling down, the spotlight is back on finance minister Arun Jaitley's briefcase for India. Although it is being pegged as big-bang budget, Jim Walker, Founder and Chief Economist, Asianomics, said investors should not expect too many surprises from Jaitley.

"The rail freight hike is a positive move in the right direction as we have got to balance the books. We are going to see more moves towards that direction over the course of the next 24 hours and my expectation would be that there will be very little in the way of surprises in the budget," he adds.

The pressure's is on Jaitley to roll out pro-growth reforms to boost economic growth and revive investment cycle. The government had also targeted to reduce the fiscal deficit to 4.1% of GDP in FY15, 3.6% in FY16 and 3.1% in FY17.

Among other things, the government has spoken of the need for increasing the capital expenditure to kick start the economy. The steps going to be initiated to do the same are awaited.

Walker further added that it is going to be a fairly steady budget that we should expect from Jaitley, which would revolve around giving more commitment towards fiscal consolidation in the medium term. Most people are talking about a 3.6% fiscal deficit target for 2016, fiscal year 2016 and that is probably what we will hear, he adds.

Even though markets gave a thumbs down to Railway Budget 20156, and a possibility of further correction cannot be ruled out on the Budget Day itself. In that case, investors should use every bit of opportunity to buy quality stocks and build their portfolio.

"It is possible that we may see some correction. I would think that market is not really looking through the last wastages of the slowdown in the Indian economy. Last year was definitely the bottom of the business cycle for India and that is reflected in the fourth quarter earnings," added Walker.

He is of the view that the economy has already turned and the conditions are improving. That is just the wagon effect of non-performing loans and earnings should improve by 2016. So, if there is a further correction, I would take that as a really positive sign to be buying into the correction, added Walker.