Budget Initial View: No theme this budget.. and a missed opportunity !

All in all first things about which impact the Markets:

Cement: Cement business has been hit. They have been saddled with extra 50% excise which they will have to pay in case cement sells over Rs 190. Current price realisation is around Rs 240 per bag. Of this Rs 10 per bag will be now paid to the Government. Can Cement companies increase prices by Rs 10. Inflationary impact of Cement is not high but Government could ban exports. However we think that cement stocks have reacted down and rightly so. For the near term there is a Rs 10 hit to be taken either by the consumer or the Manufacturer given the demand supply situation.

IT companies will have to pay MAT now as its extended for them. Also ESOPs have to

Excise on plywood cut to 8% from 16%- good for Greenply , Century Ply . Greenply already had Uttaranchal operations which have 0% excise..but a cut in excise helps for sure.

Steel companies benefit from lower coking coal prices and the fact that more iron ore will be available domestically. Sesa Goa is negatively impacted from export duty on Iron ore.

Reduction in the duty on major bulk plastics like PVC, LDPE and PP from 10 per cent to 5 per cent and simultaneously the duty on naptha for plastics has been reduced to nil. Negatives for IPCL, Reliance, Bombay Dyeing.

TUF has been extended and thats the positive. The big positive is that it has been extended to 5 years doing away with the uncertainty of its cancellation. Reduction has been again made on customs duty in polyester fibres and yarns from 10% to 7.5%. Consequently, the customs duty on raw-materials such as DMT, PTA and MEG will also be reduced from 10% to 7.5%. 26 parks have been approved so far out of 30 sanctioned under the Scheme for Integrated Textiles Parks (SITP) and proposed to increase the provision for these parks from Rs.189 crore in 2006-07 to Rs.425 crore in 2007-08. Positive for Alok, Arvind, Raymonds, Century, Mahavir etc Small Airlines to get exemption on Aviation Turbine Fuel - clarity needed here but seems positive for Air Deccan and Spice Jet. Import duty of 3% to be levied on private aircrafts - No impact for airlines here

Small Tinkering has been done.. Education cess has been increased to 3% and exe

0 exise duty on biscuits below Rs. 50 / kg. So all biscuits which sell for less than Rs 5 per 100 gm pack will see benefits. This is a big benefit for Britannia , ITC and Parle to fight the unorganised sector.

Its always easy to criticise the Government for what its doing.. There has been an intention to try and reduce inflation. This with lowering duties and some ban on wheat and rice futures. Additionaly some action on cement and the on DMT PTA intermediates, coking coal point to that. However really the theme is missing. There is no major trigger which can be called as one big point which could be hailed as this years achievement. There is no substance. Fiscal deficit for this year has been pegged at 3.3%. Performance for last year is 3.7% against budgeted 3.8% which comes as a surprise as we expected 3.2% already. However thats inconsequential. More details need to be seen as to how the Government has planned its inflows and outflows.