MUTUAL FUND: In this year budget it is proposed Govt’s gross market borrowing put at Rs 6 lakh crore. The move will lead to more supply of government bonds to the market leading a spike in government bonds yields and lowering of bond prices.
The FM sets out a fiscal target for FY 2017 at 3.5% while retaining the target of 3.9%.
Impact: A mutual fund investment in debt scheme is likely to see value deterioration. At the same time, borrowing costs for the corporate sector will rise in the capital debt market. The fiscal target is surely good news for debt investors as it will massively aid the possibility of further monetary policy easing by the Reserve Bank of India. A rally may follow in the currency and bond market.
INSURANCE SECTOR: In the budget it is also proposed FDI regime to be eased for insurance, pension, ARCs, stock exchanges.
Potential beneficiaries: Max India, Aditya Birla Nuvo, Bajaj Finserv, Reliance Finserv, SBI, HDFC.