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Stocks cheap; govt spending to boost growth: Credit Suisse

Even as Indian equities have looked slightly expensive on price-to-earnings basis, they are still cheap on a relative basis when compared to global markets and have further scope to expand, according to Credit Suisse India Equity Strategiest Neelkanth Mishra.

Even as Indian equities have looked slightly expensive on price-to-earnings basis, they are still cheap on a relative basis when compared to global markets and have further scope to expand, according to Credit Suisse India Equity Strategiest Neelkanth Mishra.

In an interview with CNBC-TV18’s Latha Venkatesh, Mishra outlined his hits and misses of the Union Budget.

“The additional transfer of funds to states [as outlined in the 14th Finance Commission] was a plus. But clarity is yet to emerge on how states will spend the money,” he said. “The minus was there not enough clarity on how the government plans to achieve its housing-for-all plan by 2022.”

He added the excise duty hike could impact earnings of tobacco and telecom companies by 1.5 percent though he said the service tax hike was expected.

Investors should focus on private banks, NBFCs, construction and cement companies as these would be the first line of beneficiaries with the amount of money the government plans to put into infrastructure in FY16.

“This year (FY15), plan expenditure was compressed 44 percent [in order to achieve the fiscal deficit target]. FY16 will be a normal year and will result substantial increase in spending year-on-year.”

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