OVERVIEW ON ECONOMY
To sustain a growth rate of of 9% per annum at the earliest.
Ensure that Indian agriculture continues to grow at an annual rate of 4%.
BUDGET ESTIMATES
Budget Estimates provide for a total expenditure of Rs.10,20,838 crore
consisting of Rs.6,95,689 crore under Non-plan and Rs.3,25,149 crore under
Plan registering an increase of 37%in Non-plan expenditure and 34% in Plan
expenditure over Budget Estimates (B.E) 2008-09.
Gross Budgetary Support for Annual Plan 2009-10 enhanced by Rs.40, 000
crore over Interim B.E. 2009-10.
Outlay for Defence up from Rs.1, 05,600 crore in B.E. 2008-09 to Rs.1,
41,703 crore in B.E. 2009-10.
Fiscal deficit as a percentage of GDP is projected at 6.8 % for FY10
compared to 2.5 % in B.E. 2008-09 and 6.2 % as per provisional accounts
2008-09.
BUDGET HIGHLIGHTS
INFRASTRUCTURE
India Infrastructure Finance Corpn Ltd (IIFCL) to evolve a takeout financing
scheme in consultation with banks to facilitate incremental lending to
infrastructure sector.
IIFCL to refinance 60 % of commercial bank loans for Public Pvt Parternship
projects in critical sectors over the next 15 to 18 months.
IIFCL and banks in position to support Rs 1,00,000 cr in infrastructure.
NATIONAL HIGH WAYS
Allocation to National Highways Authority of India (NHAI) for the National
Highway Development Programme (NHDP) increased by 23% over B.E.
2008-09.
POWER
Duty on Wind power equipment down to 5% from 7.5%.
Allocation under Accelerated Power Development and Reform Programme
increased by 160 %to Rs.2, 080 crore in B.E. 2009-10 over B.E. 2008-09.
DISINVESTMENT
To retain at least 51 % Government equity in PSUs.
PSU enterprises such as banks and insurance companies will remain in the
public sector.
Estimated disinvestments proceeds of Rs.1120 cr in FY10 which includes
disinvestments in RITES, Cochin Ship Yard, Telecommunications
Consultants India, Manganese Core India, Rashtriya Ispat Nigam and Satluj
Jal Vidyut Nigam.
AGRICULTURE
Target for agriculture credit flow set at Rs.3,25,000 crore for the year 2009-10
vs. Rs.2,87,000 crore In 2008-09 .
To provide additional 1000 crore rupees over interim budget for irrigation
Extended agriculture debt waiver by 6 months.
Interest subvention scheme for short term crop loans up to Rs.3 lakh per
farmer at the interest rate of 7% per annum to be continued.
Additional subvention of 1% to be paid from this year, as incentive to those
farmers who repay short term loans on schedule
EXPORT
Adjustment assistance scheme to provide enhanced Export Credit and
Guarantee Corporation (ECGC) cover at 95%to badly hit sectors extended
upto March 2010.
Interest subvention of 2 % on pre-shipment credit for seven employment
oriented export sectors to March 31, 2010.
PETROLEUM AND DIESEL
To set up an expert group to advise on a viable and sustainable system of
pricing petroleum products.
MEDIA
Customs duty of 5% to be imposed on Set Top Box.
TEXTILE
Excise duty on manmade fibre and yarn to be increased from 4% to 8%.
JEWELLERY
Excise duty on branded articles of jewellery to be reduced from 2% to Nil.
Customs duty on serially numbered gold bars (other than tola bars) and gold
coins to be increased from Rs.100 per 10 gram to Rs.200 per 10 gram.
Customs duty on other forms of gold to be increased from Rs.250 per 10
gram to Rs.500 per 10 gram.
Custom duty on silver, excluding jewellery, hiked by Rs 500/ kg to Rs 1,000/
kg.
FERTILISER
Government intends to move towards a nutrient based subsidy regime so as
to cover larger basket of fertilizers with innovative fertilizer products available
in the market at reasonable prices.
It is intended to move to a system of direct transfer of subsidy to the farmers
in due course.
Excise duty on naphtha to be reduced to 14%.
HEALTH CARE
Allocation under National Rural Health Mission (NRHM) increased by
Rs.2,057 crore.
Customs duty on 10 specified life saving drugs/vaccine and their bulk drugs to
be reduced from 10% to 5% with Nil CVD.
Customs duty on specified heart devices, namely artificial heart and
PDA/ASD occlusion device, to be reduced from 7.5% to 5% with Nil CVD (by
way of excise duty exemption).
ALLOCATION UNDER COMMONWEALTH GAMES
Outlay to be stepped up from Rs.2, 112 crore in Interim Budget to Rs.3,472
crore in regular Budget 2009-10.
GAS
Government will develop long distance gas pipelines to develop national grid.
LNG infrastructure in the country to be expanded.
Tax holiday on commercial production of mineral oil and natural gas on NELP
VIII
AUTO
Specific component of excise duty applicable to large cars/utility vehicles of
engine capacity 2000 cc and above to be reduced from Rs. 20,000/- per
vehicle to Rs.15,000 per vehicle.
Excise duty on petrol driven trucks/lorries to be reduced from 20% to 8%.
Excise duty on chassis of such trucks/lorries to be reduced from ‘20% +
Rs.10000’ to ‘8% + Rs.10000’.
SOFTWARE
Sunset clause for Software Technology Parks of India (STPIs) extended by 1
year.
INDIRECT TAXES
Goods & services tax to come into effect from April 2010
Customs duty on LCD Panels for manufacture of LCD televisions to be
reduced from 10% to 5%.
Customs duty on bio-diesel to be reduced from 7.5% to 2.5%.
DIRECT TAXES
Income tax slabs changed.
Standard deduction increased
For women – Rs. 190,000 Vs. Rs. 180,000
For senior citizen – Rs. 240,000 Vs. 225,000
For other assesses– to Rs. 160,000 from Rs. 150,000
Income Tax rate
160001 - 300000 10%
300001 - 500000 20%
Above 500000 30%
No change in corporate income tax rate.
Surcharge on personal Income Tax removed
Fringe Benefit Tax on the value of certain fringe benefits provided by
employers to their employees to be abolished.
Minimum Alternate Tax (MAT) to be increased to 15 per cent of book
profits from 10 per cent.
Commodity Transaction Tax (CTT) to be abolished.
CONCLUSION: Overall the FY 10 budget seems to be a populist budget favouring
the rural population and the individual taxpayers. However, the capital market
did not welcome the budget as widely expected measures such as removal of
security transaction tax (STT), deregulation of oil sector, FDI in insurance,
reduction in surcharge on corporate tax were not touched upon. Further hike in
Minimum Alternative Tax (MAT) rate from 15% to10% also disappointed the
markets. Though measures like introduction of GST and abolition of fringe
benefit tax were positive steps, but was not enough to cheer the markets.
Monday, July 6, 2009
Saturday, July 4, 2009
Don't expect too much, you won't be disappointed
A test match, not T20
For me, a Test match is still the real thing. T20 is fine for the occasional thrill and I have no quarrel with the place it has carved out in the hearts of cricket lovers. Yet I suspect that any serious cricketer will still measure his career against his Test track record. So it is, or should be, with policy making. The stock market may want instant gratification but it's prudent to shed that T20 frame of mind going into this budget. A dream budget will be like a flamboyant Yuvraj Singh century within a test match, supremely welcome but the bigger goal has to be to win the Test match. Never miss the woods for the trees.
Reams have been written about the significance of this electoral verdict for the Indian economy. This may have raised the bar of expectations for the first Union Budget of this government though interestingly the Sensex hasn't added any weight at all from where it was one day after the election result. That could well mean that investors hope that strong reform signals come through but have not positioned themselves for such an outcome. It's like admiring the shape of a horse and fancying it's chances of winning but not exactly betting on it. You see the difference? The market is going in fairly light, into the event. If it is a complete damp squib, and let’s discuss what would qualify as one, the Nifty could certainly retreat to 3800 kind of levels but that would hardly be a dire scenario. If it has some positive tones but not a lot, the Nifty may not even break 4000. That is, on the budget impact alone. And if it is a complete dream budget, it will certainly rush back to 4600-4700 levels, it's recent peak, and then wait to see what is going on in the global equity environment. That is my best guess of the budget impact; depending on how good or bad it is perceived to be, the nifty will probably go to 4000 or 4700. Only a terribly insipid budget will break it below 4000 or an outstanding one take it beyond 4700. After that the environment takes over. If global markets rally on, the S&P goes to 1100, the Nifty will head to 5000 plus. If global markets correct, something which can certainly not be ruled out and the S&P falls to below 800, then the Nifty too perhaps heads to 3600-3700. The budget is just one event, even something as unexpected as the election result got discounted by the market in one day flat. I doubt very much though that the budget is a 20% binary event. Seems more like 7-8% to me, either way.
But lets leave the market aside for a moment. The budget is, after all, much bigger than just the stock market. The only thing that one expects will shine through the budget speech is positive intent. The budget is not the best forum to push through sensitive policy reform. One cannot forget that it is, after all, a very political document. However, given that Prakash Karat will not be sniping at his heels this time, one certainly hopes that Pranab Mukherjee can unveil a roadmap that he will execute over his five year term. Heavens will not fall if FDI in insurance is not taken to 49% in this budget or if a Rs 40,000 crore divestment target is not set out for the current fiscal. The budget should not be judged on some of these litmus tests alone. Yes, the policy inaction of the last five years has fostered a lot of impatience. Some observers are waiting to stand up say "if you couldn't even do it this time, shorn of the Left, then when will you ever do it?" and there would be a grain of truth in that criticism too. Yet, my only submission is that having waited so long, another year or so will not kill us. The first message that the Congress government wants to send out would be to the people who voted it to power. Not to big business or investors. Sure, the two need not be mutually exclusive but the government will probably prioritise and in doing that, will lean closer to those large sections of our population who do not invest in the stock market. I say, that's fine. What's good for India, is eventually good for the stock market. So if the FM lays stress on issues like education or rural employment generation, collective groans of 'socialist/populist' should not come up from investors. The Finance Minister's job is not to spark a 300 point Nifty rally on budget day. If that happens, it will be a bonus.
So what are the issues on which will hinge the stock market's response. The most immediate items are STT/Capital gains, disinvestment, FDI and GST. Let’s take them one at a time. Long term capital gains tax regime has worked like a dream for investors. Yes, lower STT may benefit traders and arbitrageurs but any move to phase out STT and reintroduce capital gains tax will go down as a big negative. If no change happens, the markets will be fine. Any disappointment from traders will be very short-lived. Unless LTCG comes back, this is not such a make or break item.
Disinvestment. Let’s call it that without confusing it with privatisation. Given that this has been on the backburner for the last five years, the FM may want to start small and then scale up. So the first step may well be to sell small 5-10% stakes in large listed PSU companies and raise some money. This will help raising some money for the fisc but it is a drop in the ocean of our deficit, so macro watchers should not get too excited. It's not as if divestment will bring down our combined fiscal deficit from 12% to 8%. No way. And frankly, these partial stake sales have little positive implication for the stock market. It is simply fresh supply of paper into a market which is already facing too much supply from QIPs, in fact it may even crowd out private listed companies from the capital raising arena. Money is better raised by companies for productive use than by the government for putting in the fiscal deficit blackhole. The other thing that may happen is IPOs for unlis ted government companies. In fact, NHPC and OIL are already in queue. This is positive. New PSUs getting listed at attractive prices will revive the primary market and some of these unlisted PSUs like BSNL and Coal India are so huge that they will end up raising serious money for the government. So the more the FM stresses about new listings, the happier the market will be. If he goes on to lay a firm divestment target for the next five years and that number is substantial, say 4 lakh crore or 80 billion dollars, investors will be very happy. Privatisation is too bold a first step, that’s just being too wishful. That is the stuff of the Economic survey, not the Union Budget. On the subject of capital raising, a firm mention of the 3G auction would be welcome.
On FDI, some caution is warranted. Yes, there is no issue with doing 49% in Insurance and I hope he does that at least but don't expect much more than that. Retail is too sensitive for a first budget. Aviation too may not happen and but that will only make Vijay Mallya unhappy. Eventually, all of this will happen, it has to.
The goods and service tax (GST) is truly important. I hope it does not get postponed by a year, though it is increasingly looking like that. Also, whether it is a dual structure or not is important. This is frankly, the only substantial and material tax reform sought in this budget. Other irritants like FBT or the education cess on corporate tax etc are marginal and any cut in corporate tax rates should not be expected. Nor for personal income taxes. Now of course there will be sector specific stuff like sops for exporters and more taxes for tobacco companies but that’s minutiae. That never makes a budget a dream or a dud. Its much better to focus on the big picture. In that, I truly hope that there is some out of the box thinking. A VDIS (voluntary disclosure of income scheme) like amnesty scheme has been spoken about to channelise resources into infrastructure, something that sounds like a good idea to me. A front on approach to tackle subsidies would be great but given t he recent fuel price hike one suspects that the budget will give the thorny issue of administered price dismantling a pass. Global investors will want to see a firm timeline for bringing our high fiscal deficit under control. The FM cannot be silent on this, but I hope he speaks of a phased reduction aided by higher capital receipts and lower subsidies rather than making it sound as the immediate and top priority. The intent and resolve is important, not immediate steps to rein it in at the cost of growth. Growth is the priority, managing the deficit a compulsion that cannot be ignored, if that note is struck even fiscal hawks may grudgingly agree and rating agencies baying for blood, kept at bay.
Having said all of this, I must confess that I am as ready to be surprised as anyone else, by this budget. I doubt very much though that the impact of the budget will last the week out. Unless there are huge surprises, which I am not betting on, it will be priced in within 48 hours or two trading sessions. It may not be a total non-event like the previous 3 budgets, particularly because of elevated expectations, but it may not be a trend decider for the market. That I continue to believe will be the global market environment, where worryingly some disturbing signs are cropping up.
This weekend I recommend Wimbledon and Yoga. Try not to work yourself into a frenzy with budget expectations, in fact try to temper them. Remember the oldest rule in the book of life: don't expect too much, you won't be disappointed.
For me, a Test match is still the real thing. T20 is fine for the occasional thrill and I have no quarrel with the place it has carved out in the hearts of cricket lovers. Yet I suspect that any serious cricketer will still measure his career against his Test track record. So it is, or should be, with policy making. The stock market may want instant gratification but it's prudent to shed that T20 frame of mind going into this budget. A dream budget will be like a flamboyant Yuvraj Singh century within a test match, supremely welcome but the bigger goal has to be to win the Test match. Never miss the woods for the trees.
Reams have been written about the significance of this electoral verdict for the Indian economy. This may have raised the bar of expectations for the first Union Budget of this government though interestingly the Sensex hasn't added any weight at all from where it was one day after the election result. That could well mean that investors hope that strong reform signals come through but have not positioned themselves for such an outcome. It's like admiring the shape of a horse and fancying it's chances of winning but not exactly betting on it. You see the difference? The market is going in fairly light, into the event. If it is a complete damp squib, and let’s discuss what would qualify as one, the Nifty could certainly retreat to 3800 kind of levels but that would hardly be a dire scenario. If it has some positive tones but not a lot, the Nifty may not even break 4000. That is, on the budget impact alone. And if it is a complete dream budget, it will certainly rush back to 4600-4700 levels, it's recent peak, and then wait to see what is going on in the global equity environment. That is my best guess of the budget impact; depending on how good or bad it is perceived to be, the nifty will probably go to 4000 or 4700. Only a terribly insipid budget will break it below 4000 or an outstanding one take it beyond 4700. After that the environment takes over. If global markets rally on, the S&P goes to 1100, the Nifty will head to 5000 plus. If global markets correct, something which can certainly not be ruled out and the S&P falls to below 800, then the Nifty too perhaps heads to 3600-3700. The budget is just one event, even something as unexpected as the election result got discounted by the market in one day flat. I doubt very much though that the budget is a 20% binary event. Seems more like 7-8% to me, either way.
But lets leave the market aside for a moment. The budget is, after all, much bigger than just the stock market. The only thing that one expects will shine through the budget speech is positive intent. The budget is not the best forum to push through sensitive policy reform. One cannot forget that it is, after all, a very political document. However, given that Prakash Karat will not be sniping at his heels this time, one certainly hopes that Pranab Mukherjee can unveil a roadmap that he will execute over his five year term. Heavens will not fall if FDI in insurance is not taken to 49% in this budget or if a Rs 40,000 crore divestment target is not set out for the current fiscal. The budget should not be judged on some of these litmus tests alone. Yes, the policy inaction of the last five years has fostered a lot of impatience. Some observers are waiting to stand up say "if you couldn't even do it this time, shorn of the Left, then when will you ever do it?" and there would be a grain of truth in that criticism too. Yet, my only submission is that having waited so long, another year or so will not kill us. The first message that the Congress government wants to send out would be to the people who voted it to power. Not to big business or investors. Sure, the two need not be mutually exclusive but the government will probably prioritise and in doing that, will lean closer to those large sections of our population who do not invest in the stock market. I say, that's fine. What's good for India, is eventually good for the stock market. So if the FM lays stress on issues like education or rural employment generation, collective groans of 'socialist/populist' should not come up from investors. The Finance Minister's job is not to spark a 300 point Nifty rally on budget day. If that happens, it will be a bonus.
So what are the issues on which will hinge the stock market's response. The most immediate items are STT/Capital gains, disinvestment, FDI and GST. Let’s take them one at a time. Long term capital gains tax regime has worked like a dream for investors. Yes, lower STT may benefit traders and arbitrageurs but any move to phase out STT and reintroduce capital gains tax will go down as a big negative. If no change happens, the markets will be fine. Any disappointment from traders will be very short-lived. Unless LTCG comes back, this is not such a make or break item.
Disinvestment. Let’s call it that without confusing it with privatisation. Given that this has been on the backburner for the last five years, the FM may want to start small and then scale up. So the first step may well be to sell small 5-10% stakes in large listed PSU companies and raise some money. This will help raising some money for the fisc but it is a drop in the ocean of our deficit, so macro watchers should not get too excited. It's not as if divestment will bring down our combined fiscal deficit from 12% to 8%. No way. And frankly, these partial stake sales have little positive implication for the stock market. It is simply fresh supply of paper into a market which is already facing too much supply from QIPs, in fact it may even crowd out private listed companies from the capital raising arena. Money is better raised by companies for productive use than by the government for putting in the fiscal deficit blackhole. The other thing that may happen is IPOs for unlis ted government companies. In fact, NHPC and OIL are already in queue. This is positive. New PSUs getting listed at attractive prices will revive the primary market and some of these unlisted PSUs like BSNL and Coal India are so huge that they will end up raising serious money for the government. So the more the FM stresses about new listings, the happier the market will be. If he goes on to lay a firm divestment target for the next five years and that number is substantial, say 4 lakh crore or 80 billion dollars, investors will be very happy. Privatisation is too bold a first step, that’s just being too wishful. That is the stuff of the Economic survey, not the Union Budget. On the subject of capital raising, a firm mention of the 3G auction would be welcome.
On FDI, some caution is warranted. Yes, there is no issue with doing 49% in Insurance and I hope he does that at least but don't expect much more than that. Retail is too sensitive for a first budget. Aviation too may not happen and but that will only make Vijay Mallya unhappy. Eventually, all of this will happen, it has to.
The goods and service tax (GST) is truly important. I hope it does not get postponed by a year, though it is increasingly looking like that. Also, whether it is a dual structure or not is important. This is frankly, the only substantial and material tax reform sought in this budget. Other irritants like FBT or the education cess on corporate tax etc are marginal and any cut in corporate tax rates should not be expected. Nor for personal income taxes. Now of course there will be sector specific stuff like sops for exporters and more taxes for tobacco companies but that’s minutiae. That never makes a budget a dream or a dud. Its much better to focus on the big picture. In that, I truly hope that there is some out of the box thinking. A VDIS (voluntary disclosure of income scheme) like amnesty scheme has been spoken about to channelise resources into infrastructure, something that sounds like a good idea to me. A front on approach to tackle subsidies would be great but given t he recent fuel price hike one suspects that the budget will give the thorny issue of administered price dismantling a pass. Global investors will want to see a firm timeline for bringing our high fiscal deficit under control. The FM cannot be silent on this, but I hope he speaks of a phased reduction aided by higher capital receipts and lower subsidies rather than making it sound as the immediate and top priority. The intent and resolve is important, not immediate steps to rein it in at the cost of growth. Growth is the priority, managing the deficit a compulsion that cannot be ignored, if that note is struck even fiscal hawks may grudgingly agree and rating agencies baying for blood, kept at bay.
Having said all of this, I must confess that I am as ready to be surprised as anyone else, by this budget. I doubt very much though that the impact of the budget will last the week out. Unless there are huge surprises, which I am not betting on, it will be priced in within 48 hours or two trading sessions. It may not be a total non-event like the previous 3 budgets, particularly because of elevated expectations, but it may not be a trend decider for the market. That I continue to believe will be the global market environment, where worryingly some disturbing signs are cropping up.
This weekend I recommend Wimbledon and Yoga. Try not to work yourself into a frenzy with budget expectations, in fact try to temper them. Remember the oldest rule in the book of life: don't expect too much, you won't be disappointed.
Friday, July 3, 2009
RAILWAY BUDGET 2009-10
Union Railway Minister Mamata Banerjee today presented the Railway Budget for
2009-2010. The budget focused clearly on upgrading the existing infrastructure and
providing better services to passengers.
Highlights of Railway Budget:
The major highlights of Railway budget is as follows:
Passenger Fares and freight rates kept unchanged
To set up 1000 MW power plant in alliance with NTPC
To acquire 18, 000 wagons in FY10 against 11,000 FY09. Wagon
manufacturers such as BEML, Titagarh wagons, Texmaco will be gained
from wagon orders.
To develop 50 stations as world class stations with international facility. To be
developed in Public private partnership (PPP) mode.
To develop air-conditioned double decker coaches.
To introduce non-stop train services in select cities.
To set up Cargo centers for perishable commodities.
To set up Expert committee for optic fiber cable networks.
The Railways will also set up a coach unit, with a capacity to produce 500
coaches per year via ppp mode.
Set up panel on financing unviable railway projects.
Plans to expand Kolkata metro.
Non-stop New Trains - fast services from point to point to be introduced.
Tatkal charges to be reduced from Rs 100 to Rs 50, to be percentage of fare.
Tatkal Scheme to be reduced from 5 days to 2days.
Monthly Ticket Of Rs. 25/- For Unorganized Sector/Poor Under ‘Izzat’
Scheme.
Seven nursing colleges to be set up on railway land in places including Delhi,
Kolkata and Mumbai.
Freight traffic target at 882 mt for FY10 vs. at 850mt in FY09.
Plan Outlay Of Rs.40,745 Cr proposed For 2009-2010. Out of this, Rs.2, 921
cr will be spent on new lines, Rs.1,750 cr on gauge conversion and Rs.1,102
cr on passenger amenities.
Government to provide additional budgetary support of Rs 5000 crore to
railways in 2009/10.
Overall the budget was positive for markets. Development of new stations,
improvement of infrastructure facilities and purchase of 18000 new Wagons in FY10
will benefit wagon manufacturers and infrastructure companies.
2009-2010. The budget focused clearly on upgrading the existing infrastructure and
providing better services to passengers.
Highlights of Railway Budget:
The major highlights of Railway budget is as follows:
Passenger Fares and freight rates kept unchanged
To set up 1000 MW power plant in alliance with NTPC
To acquire 18, 000 wagons in FY10 against 11,000 FY09. Wagon
manufacturers such as BEML, Titagarh wagons, Texmaco will be gained
from wagon orders.
To develop 50 stations as world class stations with international facility. To be
developed in Public private partnership (PPP) mode.
To develop air-conditioned double decker coaches.
To introduce non-stop train services in select cities.
To set up Cargo centers for perishable commodities.
To set up Expert committee for optic fiber cable networks.
The Railways will also set up a coach unit, with a capacity to produce 500
coaches per year via ppp mode.
Set up panel on financing unviable railway projects.
Plans to expand Kolkata metro.
Non-stop New Trains - fast services from point to point to be introduced.
Tatkal charges to be reduced from Rs 100 to Rs 50, to be percentage of fare.
Tatkal Scheme to be reduced from 5 days to 2days.
Monthly Ticket Of Rs. 25/- For Unorganized Sector/Poor Under ‘Izzat’
Scheme.
Seven nursing colleges to be set up on railway land in places including Delhi,
Kolkata and Mumbai.
Freight traffic target at 882 mt for FY10 vs. at 850mt in FY09.
Plan Outlay Of Rs.40,745 Cr proposed For 2009-2010. Out of this, Rs.2, 921
cr will be spent on new lines, Rs.1,750 cr on gauge conversion and Rs.1,102
cr on passenger amenities.
Government to provide additional budgetary support of Rs 5000 crore to
railways in 2009/10.
Overall the budget was positive for markets. Development of new stations,
improvement of infrastructure facilities and purchase of 18000 new Wagons in FY10
will benefit wagon manufacturers and infrastructure companies.
ECONOMIC SURVEY
The Economic survey presented by the Finance Ministry in parliament today focuses
on containing the fiscal deficit to 3% of GDP and reviving the GDP growth to 7-7.5%
from 6.7% in 2008-09. Some of the policy measures suggested in the survey are as
follows:
Highlights:
Revitalize the disinvestment program and plan to generate at least Rs. 25,000
crore per year.
Selling 5-10% of equity in profitable non-navratnas.
List unlisted public sector undertakings by offloading at least 10% of equity to
the public.
Auction loss-making public service undertakings.
Raise FDI in insurance to 49%
Allow FDI in multi-brand retail
Raise FDI limit in defence industries to 49% from 26%.
Allow 100% FDI in health, weather insurance
Rationalise Dividend Distribution Tax
Remove Commodity Transaction Tax, Securities Transaction Tax, and Fringe
Benefit Tax
Phase out tax surcharge, cess, and transaction tax
Introduce new income tax code
Decontrol sugar and fertiliser industry.
Decontrol petrol and diesel prices.
Cut oil, fertiliser, food subsidy leakages
Auction spectrum and make it freely tradeable.
Separate telecom license from spectrum allocation.
Review customs duty exemptions and move to a uniform duty structure
Drug price control should be limited to essential drugs in which there are less
than five producers. All others should be decontrolled.
Limit LPG subsidies to 6-8 cylinders per year per household.
The economic survey focuses on measures to revive growth and to contain mounting
fiscal deficit. Going forward how the government is going to implement them in the
upcoming budget will determine the direction of the market.
on containing the fiscal deficit to 3% of GDP and reviving the GDP growth to 7-7.5%
from 6.7% in 2008-09. Some of the policy measures suggested in the survey are as
follows:
Highlights:
Revitalize the disinvestment program and plan to generate at least Rs. 25,000
crore per year.
Selling 5-10% of equity in profitable non-navratnas.
List unlisted public sector undertakings by offloading at least 10% of equity to
the public.
Auction loss-making public service undertakings.
Raise FDI in insurance to 49%
Allow FDI in multi-brand retail
Raise FDI limit in defence industries to 49% from 26%.
Allow 100% FDI in health, weather insurance
Rationalise Dividend Distribution Tax
Remove Commodity Transaction Tax, Securities Transaction Tax, and Fringe
Benefit Tax
Phase out tax surcharge, cess, and transaction tax
Introduce new income tax code
Decontrol sugar and fertiliser industry.
Decontrol petrol and diesel prices.
Cut oil, fertiliser, food subsidy leakages
Auction spectrum and make it freely tradeable.
Separate telecom license from spectrum allocation.
Review customs duty exemptions and move to a uniform duty structure
Drug price control should be limited to essential drugs in which there are less
than five producers. All others should be decontrolled.
Limit LPG subsidies to 6-8 cylinders per year per household.
The economic survey focuses on measures to revive growth and to contain mounting
fiscal deficit. Going forward how the government is going to implement them in the
upcoming budget will determine the direction of the market.
Thursday, July 2, 2009
Research . Call for the days . 2/7/2009
RESEARCH -Nifty (FUT) R-4385/4435/4565 S-4314/4260/4185 ; Sensex
(CASH) R-14795/14945/15320 S-14575/14425/14200 ; MARKET OUTLOOK:
POSITIVE BIAS
7/2 RESEARCH: MARKET OUTLOOK: OVERALL MARKET TREND IS LIKELY TO REMAIN UPTREND AND IT CAN BE EXPECTED TO TEST 4692 LEVELS IN SHORT TERM. AS FOR INTRADAY'S TRADE, MARKET MAY OPEN WITH AN UPSIDE GAP AND IT CAN BE EXPECTED TO TRADE HIGHER LEVELS. THE NIFTY HAS RESISTANCE AT 4362 AND 4426. IF IT BREAKS 4440 LEVELS, IT COULD TEST AT 4520 LEVELS. ON THE DOWNSIDE, THE SUPPORT FOR NIFTY IS SEEN AT 4303 AND 4250 LEVELS.
11:13 AM 7/2 RESEARCH- INTRADAY CALL (CASH) : ONGC TGT ACHIEVED
12:33 PM 7/2 RESEARCH: EUROPEAN MARKET UPDATE : FTSE(-0.5%), DAX (-0.7%), CAC (-0.6%)
12:51 PM 7/2 RESEARCH: INTRADAY CALL(CASH): SHORT SELL IVRCLINFRA BELOW 345 TGT 333 SL 350
2:30 PM 7/2 RESEARCH- INTRADAY CALL (CASH) : BUY HDIL ABOVE 234.40 TGT 241 SL 230
--------------------------------------------------
(CASH) R-14795/14945/15320 S-14575/14425/14200 ; MARKET OUTLOOK:
POSITIVE BIAS
7/2 RESEARCH: MARKET OUTLOOK: OVERALL MARKET TREND IS LIKELY TO REMAIN UPTREND AND IT CAN BE EXPECTED TO TEST 4692 LEVELS IN SHORT TERM. AS FOR INTRADAY'S TRADE, MARKET MAY OPEN WITH AN UPSIDE GAP AND IT CAN BE EXPECTED TO TRADE HIGHER LEVELS. THE NIFTY HAS RESISTANCE AT 4362 AND 4426. IF IT BREAKS 4440 LEVELS, IT COULD TEST AT 4520 LEVELS. ON THE DOWNSIDE, THE SUPPORT FOR NIFTY IS SEEN AT 4303 AND 4250 LEVELS.
11:13 AM 7/2 RESEARCH- INTRADAY CALL (CASH) : ONGC TGT ACHIEVED
12:33 PM 7/2 RESEARCH: EUROPEAN MARKET UPDATE : FTSE(-0.5%), DAX (-0.7%), CAC (-0.6%)
12:51 PM 7/2 RESEARCH: INTRADAY CALL(CASH): SHORT SELL IVRCLINFRA BELOW 345 TGT 333 SL 350
2:30 PM 7/2 RESEARCH- INTRADAY CALL (CASH) : BUY HDIL ABOVE 234.40 TGT 241 SL 230
--------------------------------------------------
Wednesday, July 1, 2009
Money Morning 01-07-2009
The consumer confidence figures, that fell short of expectations
(consumer confidence index fell to 49.3 in June from a revised 54.8 in
May), weighed on Wall Street, offsetting Monday's gains. While Dow
Jones fell by 0.97%. NASDAQ dropped 0.49%. Asian bourses are
trading mixed with Nikkei up by 0.09%, Hang Seng down by 0.81% and
Singapore Nifty up by 2 points.
With mixed global cues the domestic markets could trade range bound.
Technically spot nifty may take resistance at 4330/4390/4490 levels and
support at 4230/4170/4010 levels.
POST-MARKET ANALYSIS:
After having opened positive - following global cues, the domestic
bourses pared all its gains and fell into the negative terrain on profit
booking amid volatility. The key benchmark indices Sensex and Nifty
fell 1.97% and 2.27% respectively.
FIIs’ were net buyers in equity and net sellers in derivatives.
ADRs: TATA Motors (-9.36%), Sterlite Industries (-5.54%), Satyam
Computers (-4.60%) & ICICI Bank (-4.22%)
NEWS TO USE:
Positive
WIPRO AND INFOSYS are pursuing contracts worth Rs 2,000 crore
from the country’s defense forces.
INDIAN OIL CORP (IOC) is planning an investment of over Rs 60,000
crore in raising its refining capacity to 80 million tons per annum by
2011-12 from 60.2 million tons at present.
LUPIN has acquired the global rights for an intra-nasal steroid (INS)
product, AllerNaze from Collegium Pharmaceuticals, a mid-size
innovator company in the US.
HCL TECHNOLOGIES LTD announced that it would provide IT
application and infrastructure operations and management for Dr
Pepper Snapple Group, a producer of flavoured beverages.
NEUTRAL
STATE BANK OF INDIA has launched two special loan schemes that assure low interest rates in the
first three years.
TATA CONSULTANCY SERVICES (TCS) will invest Rs 1,300 crore for its capital expenditure in the
current financial year.
State-run oil firms hiked jet fuel prices by 6%, following an increase in crude oil prices in international
markets.
TATA CONSULTANCY SERVICES (TCS) expects muted growth in the next few quarters as the
economic slowdown continues to crimp the outsourcing industry.
Oil prices jumped more than 2 percent to an eight-month high above $73 a barrel as a sudden spike in
Brent buying.
The government is contemplating penal action against RELIANCE INDUSTRIES (RIL) for committing
28 million standard cubic meters of gas per day (mmscmd) from its KG basin block to Reliance Natural
Resources (RNRL) at a price of $2.34 per million British thermal units (mmBtu)) as part of the Ambani
family settlement without the permission of the government.
LIC HOUSING FINANCE has cut lending rates by 50 basis points for its existing customers with effect
from July 1.
TATA POWER COMPANY has signed contracts with the Chennai-based OPG Group relating to its
power plants.
After a release spree in the previous three months, the Centre has suddenly turned cautious on the
sugar front. Only 16.60 lakh tonnes (lt) of sugar will be available for public consumption during July.
Call of the day 1 july 2009
RESEARCH -Nifty (FUT) R-4395/4505/4685 S-4220/4150/3970 ; Sensex
(CASH) R-14795/15095/15581 S-14305/14120/13630 ; MARKET OUTLOOK:
RANGE BOUND 9.10(A)-------------------------------------------------
RESEARCH -Nifty (FUT) R-4395/4505/4685 S-4220/4150/3970 ; Sensex (CASH) R-14795/15095/15581 S-14305/14120/13630 ; MARKET OUTLOOK: RANGE BOUND (ASCIL)
9:40 AM 7/1 RESEARCH-Global Market (in %): DOW JONES (-0.97%), S&P 500 (-0.85%), NASDAQ (-0.49%), FTSE (-1.04%), DAX (-1.56%), NIKKEI (+0.83%), HANG SENG (-0.81%) & SGX NIFTY (+2.5 POINTS)
11:10 AM 7/1 RESEARCH- INTRADAY CALL (CASH) : SHORT SELL YESBANK BELOW 145 TGT 140 SL 147
1:36 PM 7/1 RESEARCH - INTRADAY CALL ( CASH ) : BUY BAJAJ HIND ABOVE 211 TGT 217 SL 207.50
2:11 PM 7/1 RESEARCH - INTRADAY CALL ( CASH ) : BUY DLF ABOVE 324 TGT 333 SL 319
(CASH) R-14795/15095/15581 S-14305/14120/13630 ; MARKET OUTLOOK:
RANGE BOUND 9.10(A)-------------------------------------------------
RESEARCH -Nifty (FUT) R-4395/4505/4685 S-4220/4150/3970 ; Sensex (CASH) R-14795/15095/15581 S-14305/14120/13630 ; MARKET OUTLOOK: RANGE BOUND (ASCIL)
9:40 AM 7/1 RESEARCH-Global Market (in %): DOW JONES (-0.97%), S&P 500 (-0.85%), NASDAQ (-0.49%), FTSE (-1.04%), DAX (-1.56%), NIKKEI (+0.83%), HANG SENG (-0.81%) & SGX NIFTY (+2.5 POINTS)
11:10 AM 7/1 RESEARCH- INTRADAY CALL (CASH) : SHORT SELL YESBANK BELOW 145 TGT 140 SL 147
1:36 PM 7/1 RESEARCH - INTRADAY CALL ( CASH ) : BUY BAJAJ HIND ABOVE 211 TGT 217 SL 207.50
2:11 PM 7/1 RESEARCH - INTRADAY CALL ( CASH ) : BUY DLF ABOVE 324 TGT 333 SL 319
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