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Expect stimulus withdrawal in Budget: Jaipuria

Expect stimulus withdrawal in Budget: Jaipuria
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First Published: Thu, Feb 04 2010. 11 33 PM IST

Updated: Thu, Feb 04 2010. 11 33 PM IST
Mumbai: The recommendations of the Kirit Parikh panel on petroleum pricing are positive, but implementing them would pose practical challenges to the government, Jyotivardhan Jaipuria, head of research at wealth management firm DSP Merrill Lynch Ltd, said in an interview. The report has suggested complete de-regulation of petrol and diesel prices, and called for raising cooking gas rates by Rs100 per cylinder and kerosene by Rs6 per litre. Edited excerpts:
What do you make of the Kirit Parikh recommendations?
These are recommendations which are good. The issue is whether in a very practical way we can implement it, and what sort of a time frame we have for the implementation. The government will have to weigh all pros and cons.
If implemented, what kind of impact will the recommended measures have?
Even if they implement a part of it (the report), it would still be positive for all the players of the space, whether upstream or downstream... But...for the consumer, the prices go up. So you have inflation, which will move up. Those are the issues which the government will consider...
How do you feel about at least the near-term progress of the market?
Our view has been that the markets would correct pre-Budget. A couple of reasons why we were negative have come through: One was the high inflation and the other was credit policy. The third one right now is the Budget...we are expecting some part of the fiscal stimulus given in the previous year to be rolled back.
In the run-up to the Budget, typically we see the markets doing well. But this time we might see a bit of reverse phenomenon where the markets are soft in the run-up...because we expect the fiscal stimulus rollback.
So we could still see some weakness from these levels, but we will have some slow fall in the market after the sharp dip we’ve seen over the last few weeks.
cnbctv18@livemint.com
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First Published: Thu, Feb 04 2010. 11 33 PM IST