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MASTERMIND: Anil Chopra, Bajaj Capital Group CEO and MD, speaks about market expectation on Budget.

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Keywords: Expectation, Market

Come February 29 and Finance Minister P Chidambaram will be in the hot seat. All eyes are on the FM as he presents his 7th Budget.

How does the investment scenario look like? Will the US recession have an impact on the Indian scene?How are the markets going to react to PC's Budget?

To find out all the answers, IBNLive.com organised an online chat with Anil Chopra, Bajaj Capital Group CEO and Managing Director.

Here we reproduce the full text of his chat.

Madhav: Anil, USA recently had to cut its interest rates twice and Britain followed by cutting 25 basis points. How do you see the base-interest-rate by RBI and FM affect us in India, and what would be its impact on stock-exchange if we happen to cut our interest rate to 50 basis points in next 1year?

Anil Chopra: After the US cut rates drastically, RBI was also expected to follow with at least a 25 bps cut. However, the structures and problems affecting the two economies are different. RBI has chosen to wait and watch for inflation and for clues to suggest a slowdown in growth before choosing to cut rates. High rates in India will primarily lead to increased foreign exchange inflows in India leading to a rising rupee. But in the immediate term this is not the worry as FIIs continue to sell heavily. A rate cut by RBI in the next 1 year is likely to have a positive impact on the stock markets in India depending on the circumstances under which RBI cuts rates. But it will definitely be positive for interest rate sensitive sectors such as Banking, real estate, auto, consumer durables, etc.

saurabh jain:sir do u believe that the risk aversion which is going on will stay for a year or so ?

Anil Chopra: Yes, the current bout of risk aversion is expected to continue for about 12 months as the US financial sector continues to reel under the impact of the sub-prime led slowdown.

mark: What is the outlook of Paper industry - what rate of return can be expected, particularly from stocks like TNPL, BILT, Orient?

Anil Chopra: Paper industry has seen some inorganic expansion by way of overseas acquisitions by the leading players. Also, they have started acquiring plantations in different parts of the world including South East Asia and North America. Paper industry is currently going downhill in North America, its stronghold. But strong demographics and robust growth in India and China should help the paper industry emerge stronger in the near to medium term.

balwindar: what are your views on NTPC in medium term?

Anil Chopra: NTPC is a good investment for the long term. The recent correction has highlighted the bearish sentiments prevalent in the power sector. Presently it trades at a trailing PE of 23 being the leader in thermal power generation and expected to be a beneficiary of the Indo-US nuclear deal. Further corrections should be seen as a buying opportunity with a long term horizon.

Abhishek Jaiswal: What do you think are the reasonable levels at which the market would stabilise?

Anil Chopra: The markets are expected to stabilise at a trailing PE between 18-22.

Akash Singhvi:How do you think will the Investment banking arena perform in the future.? Will it see consolidation in terms of small players being taken over by existing major domestic players or major foreign players entering the indian markets?

Anil Chopra: The overall banking and financial services business including Investment Banking, in India is geared for a round of consolidation in the near future. Such consolidation is good for the industry before it opens up to the world and faces stiff competition from global players who are larger in size and have much deeper pockets. Investment banking has been opened up for foreign players to a certain extent and small domestic players should merge to form bigger entities who can take up the competition.