Lowest closing level for Sensex, Nifty in more than one week

Key benchmark indices fell for the second straight day to reach their lowest closing level in more than one week after Finance Minister Pranab Mukherjee in Union Budget 2012-13 set only modest targets for trimming a ballooning fiscal deficit and as there was lack of any big-bang reform announcement in the Budget. Intraday volatility was high. The barometer index, BSE Sensex, shed 209.65 points or 1.19%, off about 400 points from the day's high and up close to 30 points from the day's low. The government forecast that the fiscal deficit will decline to 5.1% of gross domestic product next fiscal year from 5.9% in the current year.

From a recent high of 17,919.30, the BSE Sensex has lost 453.10 points or 2.52% in two trading sessions. The barometer index has fallen 286.48 points or 1.61% in March 2012 so far (till 16 March 2012). The index has surged 2011.28 points or 13.01% in calendar 2012 so far (till 16 March 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2330.34 points or 15.39%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2344.94 points or 11.83%.



Coming back to today's trade, Sun Pharmaceutical Industries tumbled over 7%. Oil exploration stocks dropped after the government raised cess on crude petroleum oil production to Rs 4,500 per metric tonne from Rs 2,500 per tonne in Union Budget 2012-13. Cigarette and tobacco related stocks rose in choppy trade after government announced increase excise duty on 'demerit' goods including certain cigarettes. Car major Maruti Suzuki India hit 52 week high.

Mukherjee announced 20% reduction in Securities Transaction Tax (STT) on delivery transactions to 0.1% in Union Budget 2012-13. The finance minister raised the income tax exemption limit from the current level of Rs 1.8 lakh to Rs 2 lakh. He announced new income tax slabs in the budget. There was no change in corporate tax rate.

The finance minister (FM) raised services tax and excise duty to 12% from 10%. The FM said all services will be taxed except those in the negative list.

The FM announced Rajiv Gandhi Equity Saving Scheme to allow for income tax deduction of 50 per cent to new retail investors, who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakh. The scheme will have a lock-in period of 3 years. The finance minister (FM) also said that qualified foreign investors will be allowed to invest in corporate debt markets.

Implementation of the Direct Tax Code (DTC), the proposed reforms in the direct tax system, will miss the deadline of 1 April 2012, Finance Minister Pranab Mukherjee said. The government was taking steps for early implementation of the policy, he said. However, the finance minister did not give any time-frame for the implementation of the proposed reform.

Mukherjee also said that the government was working for the early implementation of proposed reforms in the indirect tax system -- Goods and Services Tax (GST). The finance minister said the government would set up a GST network by August 2012 that will facilitate access to information in a transparent manner.

The FM said that the government intends to bring down subsidy to 1.75% of GDP in the next 3 years. The government has proposed to keep the subsidy bill under 2% of GDP in 2012-13. The FM said that direct transfer of subsidy for kerosene into bank accounts of beneficiaries has been initiated in Alwar district of Rajasthan and will be rolled out in other areas gradually.

The FM has set a target of raising Rs 30000 crore from disinvestment in 2012-13. The finance minister reiterated that the government will retain at least 51% cent ownership and management control in state-run firms.

The BSE Sensex lost 209.65 points or 1.19% to 17,466.20, its lowest closing level since 7 March 2012. The index declined 249.27 points at the day's low of 17,426.58 in mid-afternoon trade. The index jumped 195.15 points at the day's high of 17,871 in mid-morning trade.

The S&P CNX Nifty shed 62.60 points or 1.16% to 5,317.90, its lowest closing level since 7 March 2012. The index hit a low of 5,305 and a high of 5,445.65 in intraday trade.

The BSE Mid-Cap index fell 0.68% and the BSE Small-Cap index declined 1.12%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 3565 crore, higher than Rs 2767.92 crore on Thursday, 15 March 2012.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,802 shares declined and 1,053 shares rose. A total of 122 shares were unchanged.

From the 30-share Sensex pack, 21 stocks fell and the rest rose.

India's largest pharma firm by market capitalisation Sun Pharmaceutical Industries tumbled 7.09% to Rs 545.05 and was the top loser from the Sensex pack. The stock had risen 5.15% in past five trading sessions.

Oil exploration stocks declined after the government raised cess on crude oil production to Rs 4,500 per metric tonne from Rs 2,500 per tonne in Union Budget 2012-13. State-run oil exploration firm ONGC slumped 4.66%. ONGC to lose about Rs 5500 crore on hike in cess on crude oil by Rs 2000 per tonne. Cairn India fell 6.02%. Index heavyweight Reliance Industries (RIL) declined 3.27%. Oil India shed 4.38%.

As per annual report, ONGC produced about 27278278 tonne of crude oil in FY 2010-11. Assuming no increase in crude oil production, the incremental cess on crude oil produced by ONGC is about Rs 5455 crore based on production for FY 2010-11. Similarly, Oil India produced about 3598305 kilolitre of crude oil in FY 2010-11. This translates into incremental cess on crude oil of nearly Rs 720 crore for Oil India, based on production for FY 2010-11. As crude oil prices are priced based on the landed cost of imports, upstream oil producers may have to absorb the hike in cess on crude oil produced domestically.

PSU OMCs rose after the finance minister announced proposal for a direct cash transfer on LPG and kerosene subsidy. HPCL, and Indian Oil Corporation rose by between 0.33% to 1.38%. BPCL fell 0.29%.

Cigarette and tobacco stocks were in demand. The FM proposed an increase in excise duty on 'demerit' goods such as certain cigarettes, hand-rolled bidis, pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco. Golden Tobacco (up 2.55%), VST Industries (up 9.18%), and Godfrey Phillips India (up 2.98%), edged higher.

Cigarette maker ITC rose 3.65% to Rs 216.10. The stock hit a record high of Rs 224.95 in intraday trade today, 16 March 2012.

Commercial vehicle makers were mixed the government proposed change in excise duty on chassis for building of commercial vehicle bodies to at an ad valorem rate instead of mixed rate currently. Tata Motors fell 0.93%. Ashok Leyland rose 0.55%.

Small-car maker Maruti Suzuki India rose 0.52% to Rs 1373.65 after the government proposed increase in excise duty on large cars in Union Budget 2012-13. The stock hit a 52-week high of Rs 1428.20.

Atlas Cycles rose 20% and Hercules Hoists gained 12.95% after the Finance Minister proposed increase in basic customs duty on bicycles from 10% to 30% and on bicycle parts from 10% to 20%.

Cement stocks rose after the Finance Minister rationalized excise duty on packaged cement. India Cements, Ambuja Cements and Jaiprakash Associates rose by between 0.1% to 3.31%. ACC fell 0.25%.

Fertiliser stocks declined across the board. National Fertilizer, GNFC, GSFC, RCF, Tata Chemicals and Chambal Fertiliser & Chemicals fell by between 0.87% to 3.61%.

The Finance Minister said the government has taken steps to finalise pricing and investment policies for urea to reduce India's import dependence in urea. Finance Minister proposed full exemption from basic customs duty for import of equipment for expansion or setting up of fertiliser projects upto March 31, 2015.

PSU stocks edged lower in a weak market. NMDC, Shipping Corporation of India, Bhel and Sail shed by between 2.99% to 7.84%.

Retail stocks were mixed after the Finance Minister in the budget said efforts are continuing to arrive at a broad based consensus in consultation with the state governments for allowing FDI in multi-brand retail up to 51%. Shoppers Stop, Store One Retail, Trent, and Brandhouse Retail rose by between 1.12% to 7.72%. Pantaloon Retail, Provogue India, V2 Retail, and Koutons Retail fell by between 0.01% to 5.78%.

State run banks fell in a weak market. SBI, Bank of India, Bank of Baroda and Punjab National Bank dropped by between 2.92% to 4.09%. The finance minister said that to protect the financial health of Public Sector Banks and Financial Institutions, Rs 15,888 crore is proposed to be provided for capitalisation.

Realty stocks were mixed after the finance minister said government will allow external commercial borrowing (ECB) for low cost housing projects. DLF, Sobha Developers and Prestige Estates rose by between 0.15% to 3.04%. Unitech, HDIL and D B Realty fell by between 1.68% to 5.81%.

Jewellery makers declined after the Finance Minster Pranab Mukherjee proposed increased in basic customs duty on imports of gold and other precious metals. Titan Industries and Rajesh Exports fell by between 0.28% to 1.47%.

Standard Chartered PLC hit an upper circuit limit of 20% after the Finance Minster Pranab Mukherjee allowed two-way fungibility of Indian Depositary Receipts. Two-way fungibility allows investors to buy Indian listed shares and sell them in the foreign market and vice versa, which improves liquidity.

Steel stocks edged lower. Bhushan Steel, Tata Steel, JSW Steel and Jindal Steel & Power dropped by between 0.71% to 4.23%.

Union Budget 2012-13 has been positive for the steel sector in general, and the carbon steel/non alloy steel producers in particular. While hike in excise duty from 10% to 12% will increase the excise incidence, they can be passed on to the end customers. On the other hand, basic customs duty on flat rolled products like HR and CR coils of non alloy steel has been hiked from 5% to 7.5%. This should increase the landed cost of imports, and should marginally improve the pricing power of the domestic carbon steel producers like Steel Authority of India, JSW Steel, Tata Steel etc.

Steel producers will also benefit from cut in basic customs duty on capital goods, plant and equipment imported for setting up or substantial expansion of iron ore pellet plants or iron ore benefication plants from 7.5% to 2.5%. Removal of customs duty on steam coal, and cut in countervailing duty on steam coal from 5% to 1% will also bring down the cost of steam coal for the steel producers in general, and players with captive power plants in particular.

Power stocks fell across the board. NTPC, Tata Power Company, Torrent Power, Reliance Infrastructure and Reliance Power shed by between 0.54% to 3.62%.

The finance minister said External Commercial Borrowings (ECB) to be allowed to part finance rupee debt of existing power projects. Coal India has been advised to sign fuel supply agreements with power plants, having long-term PPAs with DISCOMs and getting commissioned on or before March 31, 2015.

Infrastructure stocks declined in a weak market. L&T, Patel Engineering, NCC and Hindustan Construction Company dropped by between 2.93% to 5.17%.

The Finance Minister said during Twelfth Plan period, investment in infrastructure will go up to Rs 50 lakh crore with half of this expected from private sector. He said the first infrastructure debt fund with an initial size of Rs 8000 crore was launched earlier this month. He also said that tax free bonds of Rs 60,000 crore will be allowed for financing infrastructure projects in 2012-13.

GAIL (India) declined 1.96%. Finance Minister Pranab Mukherjee announced an exemption of customs duty on imports of liquefied natural gas in Union Budget 2012-13

Lanco Infratech clicked highest volume of 1.69 crore shares on BSE. SpiceJet (1.35 crore shares), Kingfisher Airlines (1.15 crore shares), Cals Refineries (1.05 crore shares) and Suzlon Energy (76.96 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 267.15 crore on BSE. ITC (Rs 138.56 crore), Karur Vysya Bank (Rs 124.54 crore), Multi Commodity Exchange of India (MCX) (Rs 108.43 crore) and Tata Motors (Rs 76.52 crore) were the other turnover toppers in that order.