The Finance Minister has given a new direction through his budget but it will take some time to reap the fruits of its benefits, said Dr. R.K. Pandey, Former Executive Director, Delhi Stock Exchange, in seminar on Union Budget 1997: Impact on Captital Market organized by Indian Institute of Finance.

According to Dr. Pandey, although the Finance Minister has given some major benefits in his budget, eg. 5% deduction in corporate taxation, but the benefit of corporate taxation will only be realized if the profits of the companies go up. While replying to a question about why the market has shown upward trend immediately after the budget and thecefornt downward trend. Dr. Pandey explained this phase of the capital market as the correction phase. He said that wide fluctuations was due to short term investment, but if one compares the index of Junuary'97 to the present index there is certainly an upward trend in the market.

Dr. Pandey also commented that the situation of the secondary market is fine but there is greate uncertainty whether funds will be available in the primary market or not, Since at the moment there is a pressure of with drawal of funds rather than injection of funds.

While speaking on this occasion, Prof. J.D.Agarwal, Director, Indian Institute of Finance said, the sensex during the month of March is likely to range between 3700 to 4200. The initial positive reaction immediately after the budget was due to aparent sops given to the corporate sector. The budget was appreciated and admired for removal of surcharge, reduction in corporate tax rates, tex rates and abolition of tax on divided incomes, where as the actual incidence was not visible aparently. The fall in the sensex witnessed recently is due to a more careful analysis of a budget and its likely inference on the profitability of corporat tax yet 10% tax on dividend distribution, 5% tax on transport services, an increase in labour cost due to additional liability on provident fund from 8.33% to 10% negatively affect the corporate world commented Dr. Agarwal.