budget 2021: Covid cess unlikely to move market: Sanjay Dutt, Quantum Securities

As time passes by, Indian investors are left with no other option but to increase exposure in equities whether they are investing through mutual funds or directly, says Sanjay Dutt, Founder & Director, Quantum Securities.


Could a COVID cess or some tinkering in tax on the super rich, be a disturbing movement for the market? Do you think as a sentiment dampener it could disturb the market?
I do not think directionally it would disturb the market. It would be a blip. Ultimately it has all to do with how the economy and how earnings pick up and how companies perform. It is something like what happened when we had that LTCG problem. We lived with it for a few months and after that we all got back our focus on individual companies and opportunities.

Similarly, if you look at the tax cut for manufacturing companies that happened in September 2019, today we have forgotten about it but it was a very huge step. It will be one of those kind of blips we will see in the manufacturing companies tax benefits, tax reduction in fact, we saw a huge rally in about a week or so, then after that we got involved into lot of other things relating to the economy and how things are slowing down and then followed by COVID, etc. Similarly with LTCG the same thing happened.

Fundamentally we need to understand that as time passes by, Indian investors are left with no other option but to increase exposure in equities whether they are investing through mutual funds or directly. This is because returns from other avenues are more or less gone. Even if you put money in a fixed deposit, you do not get anything out of it post tax. People are averse to debt investments also. So equity allocations would keep rising and if equity allocation is going to rise, we definitely are going to have better time in the markets for the next few years and followed by of course the EM allocations which are going to be huge over the next few years into India.