Market may extend recent gains on firm Asian stocks

The market may extend recent gains on firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 74 points at the opening bell.

Railways budget will be presented by the Railways Minister Dinesh Trivedi in the parliament today, 14 March 2012. Shares of companies whose fortunes are linked to orders from Indian Railways will be in focus ahead of the railway budget. Market expectations are that the railways could impose a safety cess on tickets but will not call it a fare hike. Emphasis this time will be on modernisation, infrastructural overhaul and the dedicated freight corridor.



The government will release data on inflation based on the wholesale price index (WPI) for February 2012 today, 14 March 2012. WPI inflation for February 2012 is projected at 6.7% as per the median estimate of a poll of economists carried out by Capital Market. WPI inflation stood at 6.55% in January 2012.

Key benchmark indices edged higher for the third straight trading session to attain their highest closing level in 2-1/2 weeks on Tuesday, 13 March 2012 as firm global stocks boosted sentiment. The BSE Sensex surged 225.95 points or 1.28% to settle at 17,813.62, its highest closing level since 24 February 2012.

Foreign institutional investors (FIIs) made substantial purchases of Indian stocks over the past three trading sessions. FIIs bought shares worth a net Rs 872.69 crore on Tuesday, 13 March 2012, as per provisional data from the stock exchanges. Their inflow totaled Rs 3455.88 crore in three trading sessions from 9 to 13 March 2012, as per provisional data from the stock exchanges

Data on advance tax for the last installment of 15 March 2012 may provide cues on Q4 March 2012 corporate earnings.

Finance Minister Pranab Mukherjee said on Tuesday the government plans to raise Rs 30000 crore by selling stakes in state-run firms in the fiscal year that begins on 1 April 2012. The government has also set a target of Rs 25000 crore from asset sales for the 2013/14 fiscal year, Mukherjee told lawmakers in a written reply. Mukherjee said the projections are based on the medium-term fiscal policy laid out last year.

Industrial production grew 6.8% in January 2012 from a year earlier, sharply higher than a revised 2.5% rise in December 2011, helped by a strong rebound in manufacturing output, data released by the government on Monday, 12 March 2012, showed. Manufacturing output, which has a 75.5% weight in the index of industrial production, rose 8.5% from a year earlier in January. It had risen a revised 2.6% on year in December. Electricity production increased 3.2% from a year earlier in January while capital goods output shrank 1.5%.

The Reserve Bank of India (RBI) after market hours on Friday, 9 March 2012, surprised the markets by slashing the cash reserve ratio (CRR) by 75 basis points to 4.75% from 5.5% to ease liquidity situation. The CRR cut, effective the fortnight beginning 10 March 2012, will inject around Rs 48000 crore of primary liquidity into the banking system. At the 3rd quarter policy review in late January 2012, RBI had announced a cut of 50 basis points in CRR, thereby injecting Rs 32000 crore into the cash-strapped system.

The Reserve Bank of India (RBI) is slated to announce a mid-quarter review of the monetary policy tomorrow, 15 March 2012, a day before the presentation of the Union Budget 2012/13.

The government is working with state governments for early implementation of a goods and services tax (GST), Finance Minister Pranab Mukherjee said on 22 February 2012.

Stating that the United Progressive Alliance (UPA) was committed to honest and efficient governance, President Pratibha Patil on Monday said the country would soon be back on the high growth path of eight to nine percent from the seven percent estimated for the current fiscal. Addressing the joint session of Parliament on first day of the budget session, the President said the long-term fundamentals of the Indian economy remain robust. The government plans to achieve a 9% annual growth target in the five-year plan period ending on 31 March 2017.

Mukherjee will present the annual budget for 2012/13 on Friday, 16 March 2012. The government will present tomorrow, 15 March 2012 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the assembly polls.

Reports indicate that the finance ministry is considering a proposal to increase excise duty from 10% to 12%, although still lower than the level before the 2008 financial crisis. The move is aimed at helping the government improve its fiscal situation but it is expected to push up the cost of almost all manufactured goods from food products to consumer durables and automobiles.

Meanwhile, the parliamentary standing committee on finance on Friday, 9 March 2012, gave its approval to a revised version of the proposed Direct Taxes Code (DTC) Bill, 2010. The committee has recommended a more progressive tax regime, which entails widening of the income-tax slabs, increasing the exemption limit for savings and raising the ceiling for wealth tax. If accepted, these recommendations will increase disposable incomes in the hands of taxpayers, encourage savings and levy a higher tax on the rich, besides reducing compliance costs for the income-tax department.

The DTC Bill, 2010, consolidates and integrates all the direct tax laws and replaces both the Income Tax Act, 1961, and the Wealth Tax Act, 1957. The committee headed by Bharatiya Janata Party leader Yashwant Sinha, which submitted its report to the Lok Sabha speaker on Friday, 9 March 2012, has also recommended abolition of the securities transaction tax (STT). The committee has favoured a corporate tax rate of 30% and also recommended that the government should calibrate the capital gains tax regime for long term and short term.

Securities Transaction Tax (STT) is applicable to the purchase or sale of equity shares, derivatives, units of equity-oriented funds through a recognised stock exchange in India or the sale of a unit of an equity-oriented fund to a mutual fund. STT is payable equally by the purchaser and seller at 0.125% of the transaction value on delivery based transactions. On non-delivery based transactions in equities or units of an equity oriented fund, it is payable by the seller at 0.025%. In case of sale of options in securities, STT is levied at the rate of 0.017% of the option premium to be paid by the seller. In case of sale of options in securities where the option is exercised, STT is levied at 0.125% of the settlement price and is paid by the purchaser. In case of sale of futures in securities, STT at 0.017% is to be paid by the seller.

Asia markets jumped Wednesday, tracking gains on Wall Street on Tuesday where financial firms surged following bank stress tests. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan rose by between 0.53% to 2.03%.

U.S. stocks closed sharply higher on Tuesday, with the Dow Jones Industrial Average closing above the key 13,000 level after Retail sales topped expectations and the Federal Reserve left interest-rates at record lows while providing few clues on further easing measures.

The Federal Reserve's monetary-policy setting committee on Tuesday acknowledged improving conditions in the U.S. labor market while cautioning against the inflationary risks of rising energy prices. Most of the largest U.S. banks passed their annual stress test, according to the Federal Reserve, in a conservative report card that underscored the recovery of the financial sector but called out a few laggards, namely Citigroup. The Fed announced the results in an earlier-than-expected release on Tuesday.