Government has not tried to give a band-aid solution but rather a comprehensive solution not only for markets but also for the economy, says Nilesh Shah, MD, Kotak AMC. Excerpts from an interview with ETNOW.

We have been calling it early Diwali, early Christmas, third budget, what do you make of the slew of announcements by Finance Minister Nirmala Sitharaman on Friday?
More than the package, the process of package is what will hearten the markets. This has been done in consultation with many stakeholders. Second, they have not tried to give a band-aid solution but rather a comprehensive solution not only for markets but also for the economy. Many of the steps taken are really long term in nature.

More importantly, they have also announced that in future also we are going to take more steps. So, this whole process gives confidence that we have a finance minister who is listening to the market. She consulted market participants, FPIs, travelled across parts of the country to meet businessmen and based on that consultation, they have taken a comprehensive view and instead of providing band aid solutions like withdrawal of FPI surcharge, they have tried to tackle the current situation in the economy. I am sure this will be giving a lot of confidence to the market as well as economy and that is what it should be.

Just a word on all the measure taken for the markets. Some kind of rollback or easing on long term capital gains tax was also expected, but do you think this is enough to put the markets in a good mood come Monday?
Undoubtedly markets will take a lot of confidence from the measures like withdrawal of surcharge on capital gains. Of course, markets always have that tendency of yeh dil mange more but we have seen small and midcap going way below their historical averages and if economy revives, the large benefits go to small and midcap stocks.

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From a valuation point of view, small and midcaps look to be in a buy zone. It was the sentiment which was impacting investors. With these measures, the sentiment will get boosted but at the same time, remember that we are here to play a test match and one over has gone and that is very good for our team. We should maintain this tempo to free the economy from the constraints.

Clearly, lot of steps have been taken to support the growth but ultimately we are here to win the target set by the Prime Minister of making India a $5-trillion GDP economy. For that, you will require many such overs, one over is not good enough.



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