Finance Ministry's announcement - Mr. Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd

"The Government has announced additional stimulus measures of INR 6 lakh cr today on top of INR 10 lakh cr. announced so far with more announcements likey over the next few days. Today's package tries to address the liquidity issues for the MSMEs, NBFCs and power distribution companies which is positive for banks and NBFCs.

Though more announcements are expected from the FM over the next few days we believe that the total fiscal & monetary package of INR 20 lakh cr. (~10% of GDP) may not be enough and more needs to be done. The US has so far announced fiscal packages of ~USD 3 tn (13.5% of GDP) while the US fed has provided monetary stimulus of ~USD 2.5tn (~11.5%) since the beginning of the crisis. However providing a significantly larger stimulus in line with the US may not be possible given the Government's fiscal constraint. Therefore we believe that the recovery will be slow and gradual for the Indian economy and we continue with our strategy of sticking to high quality business with revenue visibility like FMCG, Pharma, chemicals and agrochemicals and avoid vulnerable sectors like aviation, consumer durables, real estate hospitality sectors."

Source : Equity Bulls

Keywords