Lukewarm and sedentary

Lukewarm and sedentary

Eduction Fasion Hollywood Relationship Travel

Lukewarm and sedentary

Posted By beautybykendrac

Ultimately, the stock market remained open on Budget day, as SEBI, after a lot of dil­ly-dallying, gave special permission to exchanges to stay open, despite it being a Saturday. It was good for the investors, as they could take a position even as the Budget speech was on. In fact, Budget day turned out to be a highly volatile trading day, the likes of which we have not seen in the recent past. The mar­ket moved between the green zone and the red zone, creating hope and despair among investors. When the finance minister started making his speech, the Sensex was at 29476. From there, it dipped below 28000 by the time FM was through with his speech. Ultimately, the index recov­ered some lost ground and closed in the green zone at 29361 – a notch below where it stood when the Bud­get speech began, clearly suggesting that the market was giving a thumbs down to the Budget.

Of course, the market was hoping for a Dream Budget from the FM, as the macros were all in favour of the government – there was a fall in the price of international commodities; the stock market was buoyant; and, last but not the least important, a majority in the Lok Sabha had given enough indication that this govern­ment could push big reforms. “The government was playing the game for a test victory, while the market probably expected a T20 spectacle,” suggests Nilesh Shah, managing director, Kotak Mutual Fund. But as we had even stated in our Bud­get analysis last year, the days of big bang reforms are over, as gov­ernments these days have to buy consensus and/or build it, which takes time.

So, the high expectations of the Budget did not fructify. In fact, there is very little in the Budget that can cheer the stock market, as most of
the announcements will evolve over the long term and it would take time for the effect to percolate down to real economy and India Inc’s earn­ings. “The policy framework is being redesigned to transit India from a command economy to co-operative federalism; from job seeker to job creators,” says Shah of Kotak. “This Budget is seeking to create a uni­fied market to generate and percolate overall growth by means of GST. The beneficial impact of the Budget on the economy will be reflected over the next few quarters.”

Normally, a stock market looks for reforms like a disinvestment target, lower taxes and so on. But nothing of that sort was seen in this Budget. After many years, the finance minis­ter did not touch upon the disinvest­ment target in the Budget speech. In the Budget document, it has been put at ?69,500 crore. In the last Bud­get, Jaitley had talked about a reduc­tion of government stake in public sector banks but this time he did not even touch upon it. In the last Bud­get, the FM also talked about merg­ers between public sector banks and
also about non-voting shares to be issued by the public sector in such a way as to ensure that the govern­ment can retain majority control and yet raise money.

But, this time, his silence on these aspects creates doubt whether the government was serious about taking these stated measures mentioned last year. What the finance minister said in the Budget was about holding and investment companies for banks, but again, he did not give any timeline for the same. One is not even sure whether this will happen during the present government’s regime.

Welcome step

So, in a way, there is nothing in this Budget for the stock market to cheer about. Of course, the minister did talk about quite a few macro factors that reassured the audience – such as the reference to GST roll-out by 1 April 2016. Had he not mentioned it, investors would have become ner­vous. Even the GAAR deferral by two years is a welcome step for the stock market. But these two measures were already in the list of things to hap­pen and, hence, a mention of it did not create any positive sentiment.

What has not figured in the Bud­get is the long-term capital gains on equity. There were many who feared that the government would bring in long-term capital gains on equity in line with other capital assets and, thereby, do away with the security transaction tax. But the FM may have thought that the time is not condu­cive for a trade-off, as the tax reve­nue from STT is quite robust. Also, since the stock market was doing well, it made more sense not to dis­turb the equilibrium. Jaitley proudly


announced that India’s stock mar­ket was the second best performing market in the world. He believes that this sentiment would continue and, hence, the budgeting for higher rev­enue from STT. Next year’s target for STT has been put at ?6,531 crore, as against the revised estimate of ?5,992 crore for 2014-15.

It gives one a feeling that the gov­ernment has become a little cautious about pushing reforms, which are


Last Budget to this Budget
Nifty 50 companies performance

Company name % gain
Induslnd Bank 71.0
Lupin 68.1
Axis Bank 64.5
Kotak Mahindra Bank 61.2
Cipla 56.4
Hindustan Unilever 44.0
Maruti Suzuki India 43.0
Tech Mahindra 41.6
Infosys 39.5
Asian Paints 39.5
HCL Technologies 37.2
Tata Motors 30.9
HDFC 30.5
HDFC Bank 30.1
Bharat Petroleum Corporation 28.5
Dr. Reddys Laboratories 26.3
Sun Pharmaceutical Industries 25.4
Ultratech Cement 24.9
ICICI Bank 24.6
Ambuja Cements 23.8
Wipro 21.0
Zee Entertainment Enterprises 20.9
State Bank of India 18.5
ACC 15.1
IDFC 14.3
Power Grid Corporation of India 14.0
Tata Consultancy Services 13.8
Grasim Industries 13.4
Bank Of Baroda 12.2
Mahindra & Mahindra 10.8
Hero MotoCorp 10.1
Bharat Heavy Electricals 7.5
Larsen & Toubro 6.8
Bharti Airtel 6.6
Coal India 6.5
ITC 5.6
NTPC 3.1
Bajaj Auto 0.1
Punjab National Bank -9.4
GAIL (India) -10.8
Reliance Industries -13.2
Hindalco Industries -13.3
Tata Power Company -18.0
Oil & Natural Gas Corporation -19.6
NMDC -19.6
Sesa Sterlite -26.1
Cairn India -27.9
DLF -30.1
Tata Steel -31.9
jindal Steel & Power -34.9



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