A budget tells us what we can't afford, but it doesn't keep us from buying it.
It’s a Monday morning when hopes run high. The government will present an interim budget today and use every opportunity to send a clear message to the voters.
Whether it can literally afford to do it or not is a different question, for which there are no answers now.
A bias may be there towards job protection and job generation. While indirect tax rates may be changed there is less hope of tinkering with direct tax rates. Import duty hike in steel and excise cuts in cement and auto are on the wish list.
The market will salute a cut in STT (Securities Transaction Tax) if it happens.
The market is expected to open weak on global cues. Depending on the announcements made by the acting finance minister Pranab Mukherjee, wild swings could be seen in specific counters. Banks and Real Estate may be in focus. Moreover, expectations are the RBI may cut rates later this week.
Asian markets fell as Japan’s gross domestic product slumped 12.7% in Q4, the most since 1974. The US markets are closed today for President’s Day. On Friday, US stocks were lower even as the House of Representatives approved the US$787 bn economic stimulus plan. President Obama is expected to sign the debated bill into law today. The Dow Jones fell 82 points, or about 1% to 7850.41, S & P index lost 8 points to 826.84,while Nasdaq composite lost 7 points, or about 0.5% to 1534.36.
The slowdown has been particularly sharp for the manufacturing sector while services have held up quite well. Going forward, the services sector could potentially see slower growth, due to the decline in overall business prospects, according to the CII report released here today.
The CII State of the Economy states that recent data on specific service sector activities gives a mixed picture - while there has been a sharp drop in indicators such as tourist arrivals or air freight and passenger movements, railway traffic and cellular subscriber growth have been holding up. In banking, deposit and credit growth have begun to slow down, though only moderately. Given that the service sector accounts for over 50% of GDP, the trends in this sector will have important implications for growth in the coming year.
In the interim railway Budget, the Railway Minister has focused on building capacity for the future by making the required investments in infrastructure and freight corridor projects. According to Mr. Chandrajit Banerjee, DG, CII, freight corridors, containers and improved passenger amenities that were announced in the budget will go a long way in making India's railway network more modern and efficient. Manufacturing sector experiencing a serious downturn: CII
Among other news reported in the media…
The World Bank will review the eight-year ban imposed on Satyam Computers. Meanwhile, Satyam Computer has initiated preliminary discussion with Life Insurance Corporation of India on funding.
The Andhra Pradesh HC stayed awarding of a Rs1bn road project to Maytas Infra.
Omaxe is in talks with 14 banks for debt restructuring.
Jet Airways could see some action as it has cut international fares by 30%. Public sector oil companies have reportedly cut ATF prices by 3.7%, the tenth reduction since September 2008.
PNB could gain as it is set to raise Rs5bn through issuance of bonds, with February 18 as the proposed date of opening.
Markets ended with smart gains on Friday. The NSE Nifty index which closed below the 2900 mark on Thursday, managed to re-conquer it on the last trading day of the week. The bulls charged forward with support from the global markets and buying witnessed in the heavyweights like Reliance Industries, ICICI Bank, L&T and SBI. Finally, The Sensex rose 151 points to close at 9,617 and the Nifty advanced 55 points to close at 2,948.
Among the 30-components of Sensex, 27 stocks ended in the positive terrain and only 3 stocks ended in the red. The major gainers in the Sensex were M&M, RCom, Tata Steel, ACC, BHEL and Reliance Infra.
On the other hand, major losers were Sun Pharma, Infosys and Ranbaxy.
Shares of Varun Shipping surged by over 3.5% to Rs47 after 7% of equity shares were traded in a single deal. The scrip touched an intra-day high of Rs50.6 and a low of Rs46 and recorded volumes of over 4,00,000 shares on BSE.
DLF gained by 2.7% to Rs160. According to reports, the company announced that it has withdrawn from Rs50bn township project near Kolkata. The scrip touched an intra-day high of Rs162 and a low of Rs155 and recorded volumes of over 47,00,000 shares on BSE.
Shares of ONGC gained by 1.2% to Rs703 after reports stated that the company may sell 15% to 20% in a planned petrochemical project in India’s Gujarat state to Gail. The scrip touched an intra-day high of Rs714 and a low of Rs690 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Reliance Infra surged by over 3.5% to Rs569 after the company announced a fresh program for buyback of shares of Rs7bn. The scrip touched an intra-day high of Rs579 and a low of Rs560 and recorded volumes of over 23,00,000 shares on BSE.
Shares of companies that derive a major chunk of their business from the Railways were in momentum on expectations of favourable announcements in the Interim Railway Budget.
Stone India (up 4.8%), Texmaco (up 11%),
However, the some of the railway stocks gave up their early post the announcement of the interim budget.
Kernex Micro (down 2.3%) Tita Garh Wagons (down 7%), BEML (down 1%) and Kaindee Rail (down 2.3%) were among the ones giving up gains.
The harp upswing on Friday was mainly on hopes of some goodies from the government as the vote-on-account is presented in Parliament on Monday. The US$789 billion stimulus compromise is set to pass and go on to President Obama for his signature. Incidentally, the US Market is closed on Monday for the Presidents Day holiday. So a lot of local factors will come into play for the Indian markets on Monday.