Market may open flat to slightly higher

The market may open flat to slightly higher as most of the Asian stocks edged higher. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 7.50 points at the opening bell.

PSU OMCS will be in focus as oil marketing companies are reportedly considering an increase in the prices of automobile and cooking fuels as early as next week after the budget session goes into a break on March 30. State-owned oil firms are looking at an increase of between Rs 4-5 a litre on petrol, Rs 3-4 a litre on diesel and Rs 50-75 on a cylinder of cooking gas (LPG).

Key benchmark indices fell for the second straight day to reach their lowest closing level in more than one week on Friday, 16 March 2012 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. The BSE Sensex lost 209.65 points or 1.19% to 17,466.20, its lowest closing level since 7 March 2012.



Foreign institutional investors (FIIs) bought shares worth a net Rs 883.59 crore on Friday, 16 March 2012, as per provisional data from the stock exchanges. FIIs have made substantial purchases of Indian stocks recently. Their inflow totaled Rs 6154.87 crore in six trading sessions from 9 to 16 March 2012, as per provisional data from the stock exchanges.

Finance Minister Pranab Mukherjee announced 20% reduction in Securities Transaction Tax (STT) on delivery transactions to 0.1% in Union Budget 2012-13 on Friday, 16 March 2012. 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.

Meanwhile, Railway minister Dinesh Trivedi reportedly quit his job on Sunday after he raised railway fares in the Rail Budget, underscoring the government's inability to take unpopular policy steps and adding to speculation the unsteady ruling coalition will fall apart. Trivedi announced the first increase in passenger fares in eight years on Wednesday, 14 March 2012 a move aimed at shoring up a railway network whose dysfunction has become a major drag on the economy. That news cheered investors but prompted a furious response from Trivedi's own party, Trinamool Congress a powerful regional ally of the ruling Congress party that has stood in the way of economic reform in the past.

Advance tax payment of top 50 companies reportedly rose 11% at Rs 12673 crore in Q4 March 2012 over Q4 March 2011.

Asia markets mostly edged higher on Monday, with several energy firms benefitting from a surge in crude-oil futures. Key benchmark indices in Hong Kong, Japan, Indonesia, Singapore and South Korea rose by between 0.16% to 0.43%. Key benchmark indices in China and Taiwan fell by between 0.21% to 0.37%.

U.S. stocks mostly declined on Friday, with the indices limiting weekly gains and halting the Dow Jones Industrial Averages' longest up ride in more than a year, after an index of consumer confidence unexpectedly fell in March. Other economic reports Friday had the Federal Reserve reporting the output of U.S. factories, mines and utilities held flat in February, while January production was revised to a 0.4% increase from an initial estimate of unchanged.