India Budget Analysis - July 7 2009
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Tuesday, July 07, 2009
Turnover dips
Nifty July 2009 futures at discount
Nifty July 2009 futures were at 4193, at a discount of 9.15 points as compared to the spot closing of 4202.15. Turnover in NSE's futures & options (F&O) segment was Rs 60,222.63 crore, sharply lower than Rs 96,656.53 crore on Monday, 6 July 2009.
Reliance Industries July 2009 futures were at premium at 1866.15 compared to the spot closing of 1855.45.
Reliance Infrastructure July 2009 futures were at premium at 1164 compared to the spot closing of 1157.50.
ICICI Bank July 2009 futures were near spot price at 694.50 compared to the spot closing of 694.85.
In the cash market, the S&P CNX Nifty gained 36.45 points or 0.88% at 4202.15.
Sensex ends volatile session higher
The Sensex ends the volatile session higher on the back of buying interest seen in select stocks. FMCG and auto stocks also led the upmove. It opened with a gain of 60.25 points, at 14,103.65 on Tuesday despite negative global cues. The index gained ground on the back of sustained buying seen in heavyweights in noon trades, touching a high of 14,251.88. Finally it closed on a firm note.
BSE Midcap index rose 0.92%, while Smallcap index declined 0.33%.
Among the sectoral indices, BSE Auto and FMCG surged over 3% each, Capital goods rose 1.67%, while PSU and Oil & gas dipped over 1% each.
European stocks opened flat after three days of losses for the Dow Jones Stoxx 600 Index. The MSCI Asia Pacific Index slid for a fifth day, the longest stretch of declines since October. UK`s benchmark index FTSE 100 rose 35.67 points, or 0.86%, to trade at 4,231.04.French benchmark index CAC 40 gained 20.72 points, or 0.67%, to trade at 3,102.50 and Germany`s benchmark index DAX advanced 45.30 points, or 0.97% to trade at 4,696.46. (4.24 p.m., IST)
Asian stocks end mixed as commodity shares fell on lower oil and metal prices. Japanese benchmark index Nikkei fell 33.08 points, or 0.34%, to end at 9,647.79. Hong Kong`s Hang Seng index lost 117.14 points, or 0.65%, to close at 17,862.27 and China`s Shanghai Composite declined 35.22 points, or 1.13%, to settle at 3,089.45.
The Sensex ended the day with a gain of 127.05 points, or 0.90% at 14,170.45 after touching a high of 14,251.88 and a low of 14,000.68. The broad-based NSE Nifty gained 36.45 points, or 0.88% at 4,202.15 after hitting a high of 4,231.80 and a low of 4,155.50.
Major gainers in the 30-share index were ITC (6.77%), Jaiprakash Associates (6.65%), Hero Honda Motors (5.80%), Mahindra & Mahindra (5.64%), ACC (5.34%), and Grasim Industries (5.19%).
On the other hand, Reliance Industries (2.02%), Oil & Natural Gas Corporation (1.91%), Reliance Communications (1.73%), Tata Motors (1.24%), Infosys Technologies (1.18%), and State Bank Of India(1.13%) were the major losers in the Sensex.
Overall market breadth was negative. Out of the total 2,630 stocks traded at BSE, 1,071 advanced, 1,461 declined while 98 remained unchanged.
BSE Bulk Deals to Watch - July 7 2009
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
7/7/2009 524412 AAREY DRUGS KUMKUM STOCK BROKER PVT LTD B 35503 39.36
7/7/2009 524412 AAREY DRUGS PATEL NITABEN SHAILESHBHAI B 86000 40.57
7/7/2009 524412 AAREY DRUGS KUMKUM STOCK BROKER PVT LTD S 38398 39.54
7/7/2009 524412 AAREY DRUGS NIKHILBHAI VINAKANTBHAI SHAH S 35000 39.36
7/7/2009 524412 AAREY DRUGS RONAK ASHWIN CHOKSI S 45000 41.39
7/7/2009 530721 ANG AUTO RAJASTHAN GLOBAL SEC LTD B 221511 32.30
7/7/2009 530721 ANG AUTO FIDELITY INDIA FUND S 255111 32.31
7/7/2009 531223 ANJANI SYNTH MANGILAL B. BURAD B 69487 37.19
7/7/2009 531223 ANJANI SYNTH MANGILAL B. BURAD S 62167 37.01
7/7/2009 531682 CAT TECHNOL OUDH FINANCE & INVESTMENT PVT LTD B 225000 7.20
7/7/2009 531682 CAT TECHNOL S V ENTERPRISES B 257834 7.11
7/7/2009 531682 CAT TECHNOL NEWGEN INTERNATIONAL PRIVATE LTD S 211500 7.05
7/7/2009 531682 CAT TECHNOL S V ENTERPRISES S 299307 7.15
7/7/2009 526821 DAI ICH KARK* DAI ICHI KARKARIA LIMITED B 122561 35.89
7/7/2009 526821 DAI ICH KARK* KAUSHIK SHEKHAR S 90000 35.90
7/7/2009 532876 EVERONN SYS FRONTPOINT FINANCIAL HORIZONS FUND L.P S 76444 346.26
7/7/2009 532022 FILAT FASH ANKIT NARENDRA BHAUVA B 35000 96.48
7/7/2009 532022 FILAT FASH SUNIL MERATWAL S 35000 96.49
7/7/2009 531439 GOLDSTON TEC BHAVESH PRAKASH PABARI S 228000 32.00
7/7/2009 526797 GREENPL INDU PARAG VIJAY GANDHI B 100000 100.05
7/7/2009 526797 GREENPL INDU ASHISH DHAWAN B 383681 100.10
7/7/2009 526797 GREENPL INDU GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD S 400000 100.02
7/7/2009 526797 GREENPL INDU PARAG VIJAY GANDHI S 100000 100.45
7/7/2009 508918 GREYCELLS EN INDIA MAX INVESTMENT FUND LTD B 50000 153.75
7/7/2009 508918 GREYCELLS EN ALKA MAHENDRA JAIN S 50000 153.75
7/7/2009 531025 INCA FINLEAS R R P MANAGEMENT SERVICES P.LTD. S 28000 86.50
7/7/2009 522059 INDAGE VIN REKHA RAKESH JHUNJHUNWALA S 91012 75.66
7/7/2009 516078 JUMBO BAG LT RUSHAB RAVJI PATEL B 38862 56.61
7/7/2009 516078 JUMBO BAG LT CHIMANLAL MANEKLAL SECURITIES PVT.LTD B 79908 56.68
7/7/2009 516078 JUMBO BAG LT RUSHAB RAVJI PATEL S 51182 57.16
7/7/2009 516078 JUMBO BAG LT CHIMANLAL MANEKLAL SECURITIES PVT.LTD S 74908 57.09
7/7/2009 502933 KATARE SPG. HIMAT .P. JATANIA B 29000 15.07
7/7/2009 502933 KATARE SPG. RAMESH G GOKANI B 25500 15.13
7/7/2009 502933 KATARE SPG. AMI STOCK & SHARE BROKERS PVTLTD S 48500 15.10
7/7/2009 531731 KUVAM INTL DEEPAK MULCHAND GOSAR B 20000 10.09
7/7/2009 531731 KUVAM INTL SHILPA DHIREN DESAI B 20000 10.09
7/7/2009 531731 KUVAM INTL ANIL KUMAR SINGHAL S 34300 10.09
7/7/2009 531731 KUVAM INTL SANJEEV KUMAR GUTPA S 39900 10.09
7/7/2009 512449 PACE TEXTILES SPA STOCK AND SECURITIES PVT LTD B 182442 31.95
7/7/2009 531802 PRERNA INFR Mukesh Narpatlal Shah S 50000 18.90
7/7/2009 531952 RIBA TEXTILE KUMKUM STOCK BROKER PVT LTD B 39322 54.61
7/7/2009 531952 RIBA TEXTILE PATEL NITABEN SHAILESHBHAI B 54700 55.16
7/7/2009 531952 RIBA TEXTILE KUMKUM STOCK BROKER PVT LTD S 39322 55.08
7/7/2009 533083 RISHABHDEV Naman Securities & Finance Pvt. Ltd. B 90808 19.75
7/7/2009 533083 RISHABHDEV Naman Securities & Finance Pvt. Ltd. S 90808 19.82
7/7/2009 531626 SILVER SMITH B K NARULA B 48249 13.34
7/7/2009 531626 SILVER SMITH DYTOP COMMODEAL LTD S 50400 13.33
7/7/2009 526133 SUPERTEX IND KUMKUM STOCK BROKER PVT LTD B 56728 56.94
7/7/2009 526133 SUPERTEX IND KUMKUM STOCK BROKER PVT LTD S 67728 56.91
7/7/2009 526133 SUPERTEX IND SHAISHIL T JHAVERI S 50000 56.95
7/7/2009 531917 TWINSTA SO E MAYUR NARAYANDAS DARJI S 115041 1.78
NSE Bulk Deals to Watch - July 7 2009
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
07-JUL-2009,ANGAUTO,ANG Auto Limited,RAJASTHAN GLOBAL SECURITIES LTD,BUY,210000,32.10,-
07-JUL-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD.,BUY,166142,3803.55,-
07-JUL-2009,EVERONN,Everonn Systems India Lim,MANSUKH SECURITIES & FINANCE LIMITED,BUY,78162,351.18,-
07-JUL-2009,EVERONN,Everonn Systems India Lim,MBL & COMPANY LTD.,BUY,92446,363.94,-
07-JUL-2009,EVERONN,Everonn Systems India Lim,MULTIPLEX CAPITAL LTD.,BUY,117925,356.64,-
07-JUL-2009,FSL,Firstsource Solutions Lim,JAYPEE CAPITAL SERVICES LTD.,BUY,2965207,22.34,-
07-JUL-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,BUY,1684015,215.74,-
07-JUL-2009,ANGAUTO,ANG Auto Limited,FIDELITY INDIA FUND,SELL,242508,32.14,-
07-JUL-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD.,SELL,166142,3805.85,-
07-JUL-2009,EVERONN,Everonn Systems India Lim,FRONTPOINT FINANCIAL SERVICES,SELL,207961,346.26,-
07-JUL-2009,EVERONN,Everonn Systems India Lim,MANSUKH SECURITIES & FINANCE LIMITED,SELL,78162,351.51,-
07-JUL-2009,EVERONN,Everonn Systems India Lim,MBL & COMPANY LTD.,SELL,92446,363.84,-
07-JUL-2009,EVERONN,Everonn Systems India Lim,MULTIPLEX CAPITAL LTD.,SELL,117925,356.96,-
07-JUL-2009,FSL,Firstsource Solutions Lim,JAYPEE CAPITAL SERVICES LTD.,SELL,2786624,22.24,-
07-JUL-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,SELL,1684015,215.81,-
07-JUL-2009,INDUSFILA,Indus Fila Limited,INDIA INFOLINE INVESTMENT SERVICES PVT LTD,SELL,147572,20.36,-
Post Session Commentary - July 7 2009
Indian market ended on positive zone after showing high instability during the trading session. Stocks managed to maintain gains after Finance Minister Pranab Mukherjee said government spending has to fill a gap left by lower private investment. Firm cues from the European markets also contributed to the upward journey. However, market pared some of its gains during early trading on concerns for huge budget deficit. Meanwhile, stocks witnessed heavy losses yesterday caused by lack of any aggressive economic reforms in the Union Budget 2009-2010. BSE Sensex ended above 14,100 level and NSE Nifty closed around 4,200 mark.
The domestic market started the day on green territory on rebound after previous session’s huge losses led by disappointment over Union Budget. However, the US stocks markets closed in mixed on Monday after a late session rally pushed the Dow into positive territory. Further, benchmark indices soon turned volatile and slipped lower backed by selling pressure at higher level. Despite firm start, investors were careful after yesterday’s fall. Market regained strength during afternoon trade after falling into red but was unable to hold the impetus and again lost ground. Finally, market managed to regain and uphold strength to close the day with gains. From the sectoral front, most of the buying was witnessed in Metal, Auto, FMCG, Capital Goods, Power and Pharma. However, PSU and Oil & Gas stocks remained out of favor as witnessed most of selling from these baskets.
Among the Sensex pack 18 stocks ended in green territory and 12 in red. The market breadth indicating the overall health of the market remained negative as 1461 stocks closed in red while 1071 stocks closed in green and 98 stocks remained unchanged in BSE.
The BSE Sensex closed higher by 127.05 points or (0.90%) at 14,170.45 and NSE Nifty ended up by 36.45 points or (0.88%) at 4,202.15. BSE Mid Caps closed with gains of 45.46 points at 4,964.34 and Small Caps closed losses of 18.60 points at 5,544.27. The BSE Sensex touched intraday high of 14,251.88 and intraday low of 14,000.68.
Gainers from the BSE Sensex pack are ITC Ltd (6.77%), JP Associates (6.65%), Herohonda Motors (5.80%), M&M Ltd (5.64%), ACC Ltd (5.34%), Grasim Industries (5.19%), Maruti Suzuki (4.34%), Bharti Airtel (3.48%), L&T Ltd (2.52%), ICICI Bank (2.51%), Reliance Infra (2.22%) and TCS Ltd (1.94%).
Losers from the BSE Sensex pack are Reliance (2.02%), ONGC Ltd (1.91%), RCom (1.93%), Tata Motors (1.24%), Infosys Tech (1.18%), SBI (1.13%), Tata Power (0.96%) and HUL (0.80%).
On the global markets front the Asian markets that opened before the Indian market, ended mostly lower as weaker metal and oil prices pulled commodity and shipping related stocks. Shanghai Composite, Hang Seng and Nikkei 225 ended lower by 35.22, 117.14 and 33.08 points at 3,089.45, 17,862.27 and 9,647.49 respectively. However, Straits Times index and Seoul Composite gained 6.17 and 5.26 points at 2,272.26 and 1,434.20 respectively. The Japanese equity market was lower for fifth consecutive session on worries about prospect of global economy.
European markets, which opened after the Indian market, are trading in green. In Frankfurt the DAX index is trading up by 43.29 points at 4,695.11 and in London FTSE 100 is trading higher by 45.22 points at 4,240.13.
The BSE Auto stocks advanced by (3.92%) or 174.93 points to close at 4,634.89. Major gainers are Escorts Ltd (8.80%), Exide Industries (7.96%), Herohonda Motors (5.80%), M&M Ltd (5.64%) and Apollo Tyre (5.64%).
The BSE FMCG index increased by (3.83%) or 88.67 points to close at 2,401.16 the finance minister repeated the government''s drive on the agriculture sector. Main gainers are Marico Ltd (12.68%), ITC Ltd (6.77%), United Spr (4.79%), Britania Industries (4.41%) and Godrej Cons (4.05%).
The BSE Capital Goods index gained (1.67%) or 202.09 points to close at 12,301.85. Gainers are Crompton Greaves (3.82%), Alstom Proje (3.25%), L&T Ltd (2.52%), Usha Martin (2.15%) and Bharat Elec (1.79%).
The BSE Power index increased by (0.97%) or 26.67 points at 2,770.50. Torrent Power (7.76%), Lanco Infra (4.90%), Crompton Greaves (3.82%), Reliance Infra (2.22%) and GVK Power (2.09%) ended in positive territory.
The BSE PSU ended lower by (1.75%) or 136.30 points at 7,636.94. Losers are St Trad Corp (6.91%), Rashtriya Chem & Fert (5.95%), MMTC Ltd (5.90%), Hind copper (2.89%) and Dena Bank (2.53%).
The BSE Oil & Gas index lost (1.32%) or 119.28 points at 8,919.94. Scrips that lost are Essar Oil Ltd (2.78%), Aban Offshore (2.27%), Reliance (2.02%), ONGC Ltd (1.91%) and Reliance Pet (1.88%).
Ambuja Cements Ltd gained 4.64% after a block deal of five lakh shares was executed on NSE at Rs 88.50 per share.
Reddy''s Laboratories Limited advanced by 2.46%. The company announced that its Annual Report on Form 20-F, containing its annual consolidated financial statements forth fiscal year ended 31 March 2009 was filed with the United States Securities and Exchange Commission on 6th July 2009.
ITC Ltd zoomed 6.77% to Rs. 210.50 after the government left taxes on cigarettes untouched in the Union Budget 2009-2010.
Maytas Infra Ltd fell 1.14% despite the Karnataka state government awarded two Greenfield airport projects to the company.
Auto, cement, FMCG stocks lead recovery
The key benchmark indices snapped Monday's (6 July 2009) near 6% post-budget losses on a view that a sharply higher government spending in the Union Budget 2009-2010 will aid a recovery in the economy. Higher European stocks and US index futures also supported the domestic bourses.
The BSE 30-share Sensex advanced 127.05 points or 0.9%, off close to 85 points from the day's high and up close to 175 points from the day's low. Index heavyweight Reliance Industries extended Monday's (6 July 2009)'s losses following an increase in the Minimum Alternate Tax (MAT) in the Budget. The market breadth, indicating the overall health of the market, was weak.
As per the provisional data, foreign funds today, 7 July 2009, dumped shares worth a net Rs 921.39 crore. On the other hand, domestic institutions mopped up stocks worth a net Rs 790.16 crore
The market was volatile. The market pared gains after a firm start triggered by higher Asian equities. It regained strength later after falling in the red for a brief period in mid-morning trade. The market once again pared gains in early afternoon trade. Volatility was immense in afternoon trade. Volatility continued in mid-afternoon trade.
Transport minister Kamal Nath said today the government aims to attract $10 billion a year in overseas funding for roads and targets investment of $ 20 billion a year for road building.
Finance Minister Pranab Mukherjee said government spending has to fill a gap left by lower private investment, a day after he sharply raised government spending in the Union Budget 2009-2010 on Monday, 6 July 2009. Higher government spending on infrastructure sector and rural economy will help facilitate recovery in the economy.
Reduction in personal income tax
will leave more money in consumers hand which may boost consumer spending. The basic exemption limit on personal income tax was raised by Rs 15,000 for senior citizens and by Rs 10,000 for others. The 10% surcharge on personal income tax was also abolished in the Budget.
Analysts said continuance of previously provided indirect tax breaks will also help help facilitate a recovery in the economy. There was no across-the-board increase in excise duties after a sharp reduction in duties in two stages since December 2008 which was announced as a part of the government's stimulus package for the economy.
The Finance Minister said today that manufacturing is showing better performance but the economic slowdown is not over yet. He further said tax receipts are on a downward path and there is a need to boost spending. He said India must come back to higher growth path at the earliest.
Absence of any big bang economic reforms in the Union Budget 2009-2010 had triggered a nearly 6% slide on the bourses amid heavy volumes on Monday. The Union Budget 2009-2010 did not contain any major reforms such as a roadmap to increase foreign direct investment in insurance sector and decontrol fuel prices. Lack of financial sector reforms and a clear roadmap on divestment were other sources of disappointment. The government set an very small target of Rs 1120 crore from divestment for the financial year ending March 2010. A surge in fiscal deficit target added to the market's woes. Finance Minister (FM) Pranab Mukherjee set a sharply higher fiscal deficit target to 6.8% for the financial year ending March 2010 after he increased spending on roads, power and aid to the poor.
The market had expected some announcement on decontrol on fuel prices but the FM only said that a panel will be set up to look into the pricing of petrol and diesel. The market was also surprised by the FM keeping a mum on Foreign Direct Investment (FDI) policy at a time when expectations were running high that the government will announce a roadmap for hike in foreign direct investment in insurance sector to 49% from 24%.
The next major trigger for the market is earnings of India Inc. for the quarter ended June 2009. India's second largest IT major by sales Infosys kickstarts the result season on 10 July 2009.
European shares turned positive after a subdued start. Key benchmark indices in France, Germany and UK rose by between 0.46% to 0.8%.
Asian markets were mixed. Key benchmark indices in Singapore, South Korea, Taiwan were up by between 0.27% to 0.98%. The key benchmark indices in Hong Kong, China and Japan fell by between 0.34% to 1.13%.
US index futures reversed early losses. Trading in the US index futures indicated Dow could rise 17 points at the opening bell today, 7 July 2009.
Wall Street ended Monday's session mixed. Gloomy earnings expectations weighed on sentiment. The Dow Jones gained 44.13 points, or 0.5%, to 8,324.87. S&P 500 index rose 2.30 points, or 0.3%, to 898.72. The Nasdaq Composite Index fell 9.12 points, or 0.5%, to 1,787.40.
Back home, the projected FY 2010 fiscal deficit is much higher than the 5.5% deficit forecast by Mukherjee in an interim budget in February 2009, and also higher than the 6.2% deficit recorded by the government in the previous year ended 31 March 2009.
While Standard & Poor's said the fiscal deficit was within the boundary of their expectation, Fitch Ratings said the budget doesn't alleviate pressure on India's ratings. Moody's Investors Service said on Tuesday that India's budget for 2009/10 is consistent with a stable outlook on its sovereign ratings, although it said the commitment to cut a debt overhang was weak.
S&P ranks India's long-term local-currency rating at BBB-, their lowest investment grade. Fitch has a BBB- long-term rating on India, also their lowest investment-grade level. Moody's has a Baa3 foreign currency rating and Ba2 local currency sovereign rating, which is non-investment grade, on India.
The BSE 30-share Sensex was up 127.05 points or 0.9% to 14,170.45. The Sensex rose 208.48 points at the day's high of 14,251.88 in early trade. At the day's low of 14,000.68, Sensex fell 42.72 points in mid-morning trade.
The S&P CNX Nifty was up 36.45 points or 0.88% to 4,202.15. Nifty July 2009 futures were at 4193, at a discount of 9.15 points as compared to the spot closing of 4202.15. Turnover in NSE's futures & options (F&O) segment was Rs 60,222.63 crore, sharply lower than Rs 96,656.53 crore on Monday, 6 July 2009.
BSE clocked a turnover of Rs 5,285 crore, lower than Rs 7,330.76 crore on Monday, 6 July 2009.
The market breadth, indicating the overall health of the market, turned weak from positive breadth in early trade. On BSE, 1,061 shares rose as compared with 1,464 that fell. A total of 97 shares remained unchanged.
From the 30 shares Sensex pack, 18 rose and rest fell.
The BSE Sensex is up 4,523.14 points or 46.88% in calendar year 2009 as on 7 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6,010.05 points or 73.64% as on 7 July 2009.
Coming back to today's trade, the BSE Mid-Cap index was up 0.92% and outperformed the Sensex. The BSE Small-Cap index was down 0.33% and underperformed the Sensex.
The BSE Auto index (up 3.92%), the BSE FMCG index (up 3.83%), the BSE Capital Goods index (up 1.67%), outperformed the Sensex.
The BSE PSU index (down 1.75%), the BSE Oil & Gas index (down 1.32%), the BSE IT index (down 0.38%), the BSE Metal index (down 0.14%), the BSE Realty index (down 0.1%), the BSE Bankex (up 0.46%), the BSE Consumer Durables index (up 0.49%), the BSE TECk index (up 0.5%), the BSE Healthcare index (up 0.57%), the BSE Power index (up 0.97%), underperformed the Sensex.
India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 2.02% to Rs 1,855.35. The Supreme Court today declined to stay the Bombay High Court's verdict in a dispute over the sale of natural gas by Reliance Industries (RIL to Reliance Natural Resources (RNRL).
The Supreme Court didn't grant Reliance Industries' plea to stay the order of the Bombay High Court until the resolution of the case and issued notices to the companies and the Centre. Both companies have to reply to appeals filed by each other by 20 July 2009, when the matter is scheduled to be heard, a bench headed by Chief Justice K.G. Balakrishnan said in New Delhi today. The government must also respond by then, the court said.
RIL, late last week, moved the Supreme court, challenging the Bombay High Court judgment asking it to supply gas to the former at a price that is 44% lower than fixed by the government. In its appeal filed in the Supreme Court on Saturday 4 July 2009, Reliance Industries contended that the high court had erred in deciding the three terms - quantity, tenure and price of gas supply to power plants of Reliance Natural Resources (RNRL) affiliates.
Meanwhile, RIL's tax liability would rise after Finance Minister Pranab Mukherjee increased the rate of minimum alternate tax (MAT) to 15% from 10% of book profit. RIL pays taxes under MAT. RIL's total tax liability stood at Rs 3028 crore in the year ended March 2009 (FY 2009), which included deferred taxes of Rs 900 crore and fringe benefit tax of Rs 54 crore. While higher MAT may result in increase in tax outgo, the scrapping of the fringe benefit tax (FBT) may help mitigate the impact to some extent. The government has scrapped FBT in the Union Budget 2009-2010.
Meanwhile, the government has restored tax holiday to natural gas producers which will benefit RIL. In the last financial year's budget, the government had removed seven-year tax holiday on natural gas production while continuing the same for oil production. However, the tax benefit on natural gas will be available only for future gas discoveries i.e from the forthcoming New Exploration Licensing Policy (NELP) round VIII onwards.
Oil stocks were mixed as crude oil fell for a fifth day in New York today on a stronger dollar and concerns that slow fuel consumption will lead to an increase in US stockpiles. India's largest oil exploration firm by revenue ONGC fell 1.91%. But Cairn India rose 0.3%. The fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms. Oil for August 2009 delivery fell as much as 50 cents, or 0.8%, to $63.58 a barrel in electronic trading on the New York Mercantile Exchange.
Shares of three state-run oil marketing firms BPCL and Indian Oil Corporation rose by between 0.14% to 0.42% on fall in crude oil prices. But HPCL fell 0.19%. Lower crude oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price. The government had recently hiked petrol prices by Rs 4 per liter and diesel prices by Rs 2 per liter.
But contrary to market expectations, the Union Budget 2009-2010 did not include a roadmap for decontrol of fuel prices in the country but only said it will set up a expert panel to look into the matter of fuel pricing.
Capital goods and construction stocks rose after the budget laid major emphasis on infrastructure development. Siemens, Praj Industries, Siemens, ABB, Larsen & Toubro, Bharat Heavy Electricals rose by between 0.21% to 2.52%.
Among construction stocks, Hindustan Construction Company, IVRCL Infrstructure &Projects and Nagarjuna Construction Company rose by between 3.11% to 9.04%.
Finance Minister Pranab Mukherjee on 6 July 2009, provided a thrust on various infrastructure projects in the budget which will benefit construction firms in the form of increased orders. The government announced more spending for urban, water and road projects. The allocation to National Highway development program allocation was increased 23% to Rs 15948 crore.
To ensure that infrastructure projects do not face financing difficulties arising from the current downturn, the government has decided that India Infrastructure Finance Company (IIFCL) will refinance 60% of commercial bank loans for Public Private Partnership (PPP) projects in critical sectors over the next fifteen to eighteen months.
Cement stocks rose on thrust on the infrastructure sector in the Budget which may boost cement demand. ACC, Ambuja Cements, Ultratech Cement and Grasim Industries rose by between 3.87% to 5.34%.
Meanwhile, the differential excise duty structure for the cement industry was kept unchanged. Besides there was no change in the import duty of basic inputs like coal, petroleum coke, gypsum etc.
Steel stocks fell as the Finance Minister did not announce measures to safeguard the domestic industry against cheap imports in the budget. Bhushan Steel, JSW Steel, Steel Authority of India, Jindal Steel fell by between 0.04% to 4.3%.
But, India's largest steel maker by sales Tata Steel rose 0.42% after the company said on Tuesday that steel sales from its Indian operations rose 19 % to 497,000 tonnes in June 2009 over June 2008. The Indian operations account for about a quarter of the group's total annual global capacity of 30 million tonnes, which includes its Anglo-Dutch unit Corus.
Auto stocks rose on retention of lower excise duties in the Budget. Mahindra & Mahindra, Maruti Suzuki India, Hero Honda Motors rose by between 4.34% to 5.8%.
There was no across-the-board increase in excise duties after a sharp reduction in excise duties in two stages since December 2008 which was announced as a part of the government's stimulus package for the economy. A section of the market was fearing rollback of excise duties due to signs of a recovery in the Indian economy.
The specific excise duty applicable to big cars and utility vehicles of engine capacity 2,000 cc and above was reduced to Rs 15000 per per vehicle from Rs 20000 per vehicle.
FMCG stocks rose as the finance minister reiterated the government's thrust on the agriculture sector. FMCG firms derives a substantial revenue from rural sector. Aries Agro, Advanta India, Jain Irrigation, Tata Tea, Marico, United Spirits, Dabur india rose by between 1.13 % to 12.68%.
Finance Minister Pranab Mukherjee, while presenting the Union Budget for 2009-10, said the government will ensure that agriculture grows by at least 4% per year.
The government has announced additional interest rate subvention of 1% to farmers who pay short-term farm loans on schedule. The government has also decided to extend agriculture debt waiver by six months and to provide additional Rs 1000 crore over interim budget for irrigation.
India's largest cigarette maker by sales ITC rose 6.77%, extending Monday's 3.13% gains after the Finance Minister left excise duty on cigarettes unchanged in the Union Budget 2009-2010.
Shares of drug makers rose after the Finance Minister Pranab Mukherjee reduced customs duty on life saving drugs in the Budget. Dr Reddy's Laboratories, Lupin, Piramal Healthcare, Biocon, Sun Pharmaceutical Industries rose by between 1.16% to 4.45%.
Finance minister on 6 July 2009, reduced basic customs duty on influenza vaccine and nine other specified life-saving drugs used for treating breast cancer, hepatitis-B, rheumatic arthritis, etc.
The government has also reduced basic customs duty for two bulk drugs used in manufacturing these medicines from 10% to 5%. Bulk drugs are processed raw materials used in manufacturing the final doses of medicines.
Bank stocks fell as government did not announce financial sector reforms in the Budget. Market expectations on financial sector reforms were high. The government's annual economic survey released ahead of the Budget had called for a phased increase in the foreign direct investment limit in banks. Voting rights in banks should be aligned with equity holdings, the Survey had said
India's biggest bank in terms of branch network State Bank of India (SBI) fell 1.13%. India's second largest private sector bank by net profit HDFC Bank fell 0.1% as its ADR fell 2.2% overnight. But, India's largest private sector bank by net profit ICICI Bank rose 2.51% even as its American depository receipt (ADR) fell 0.9% on Monday, 6 July 2009.
India's biggest dedicated housing finance firm by operating income Housing Development Finance Corporation rose 0.24%. The finance minister did not announce a hike in tax sops for housing loans contrary to market expectations.
Some realty stocks extended Monday's steep losses as finance minister made no major announcement to boost the debt ridden sector reeling under slump in demand for new homes. DLF, Omaxe, Housing Development & Infrastructure, Akruti City fell by between 0.37% to 5.34%.
India's largest cellular services provider in terms of market share Bharti Airtel rose 3.48% after the stock market regulator Securities & Exchange Board of India (Sebi) said Bharti is considering issuing global depositary receipts (GDRs) to South Africa's MTN and its shareholders. Sebi said MTN would need to make an open offer under Indian takeover rules only when the GDRs are converted by the South African firm and its shareholders to local shares with voting rights.
Bharti and MTN have been in exclusive talks that could lead to a merger creating the world's No. 3 wireless group with more than 200 million subscribers and combined revenue of $20 billion.
IT stocks rose as the Finance Minister extended deduction in respect of export profits under the Software Technologies Parks of India (STPI) scheme available under sections 10A and 10B of the Income-tax Act till the financial year 2010-11. IT majors, TCS and Wipro rose by between 1.34% to 1.94%. But, India's second largest IT major by sales Infosys fell 1.18%. In order to tide over the slowdown in exports, the Finance Minister proposed to extend the sun-set clauses for these tax holidays by one more year i.e. for the financial year 2010-11. Last year, the benefit under this section was extended to one year till 2009-2010.
Shares of fertiliser makers fell after the Finance Minister proposed a change in the method of subsidising fertiliser prices. Rashtriya Chemicals and Fertilizers, Nagarjuna Fertilizers & Chemicals, Zuari Industries, Chambal Fertilizers & Chemicals, National fertilizers, Gujarat State Fertilizers Company, Deepak Fertilisers and Petrochemicals Corporation, Tata Chemicals fell by between 0.03% to 8.8%.
Finance Minister Pranab Mukherjee, while presenting the Union Budget for 2009-10, proposed a change in the method of subsidising fertiliser prices by shifting to a 'nutrient based subsidy regime' from a 'product pricing regime'.
Cals Refineries clocked the highest volume of 4.53 crore shares on BSE. Reliance Natural Resources (1.89 crore shares), Unitech (1.72 crore shares), Suzlon Energy (1.51 crore shares) and IFCI (1.14 crore shares) were the other major volume toppers in that order.
Reliance Industries clocked the highest turnover of Rs 278.27 crore on BSE. Educomp Solutions (Rs 245.96 crore), ICICI Bank (Rs 207.19 crore), Reliance Infrastructure (Rs 194.17 crore) and Reliance Capital (Rs 189.48 crore) were the other turnover toppers in that order.
Pre Session Commentary - July 7 2009
Today domestic markets are likely to open positive as little rebound on the early trading hours may happen. Yesterday’s huge losses due to disappointing budget devastated the market sentiments and therefore one could see some cautiousness prevailing across the broader level for a couple of days. The domestic traders may now track the global sentiments as there would hardly be any domestic news to drive the markets.
On Monday, domestic markets shattered with huge losses. After a subdued opening the markets awaited the final countdown of the UPA budget session. However as the Finance Minister Pranab Mukherjee started with budget session heavyweight stocks succumbed to slaughtering that continued till the end. Stocks at broader level were ruthlessly hammered by the disgust and despair of traders. Key sectors like Bankex, Realty, CG, Metal and Power plummeted by 8.17%, 7.28%, 7.02%, 6.57% and 6.36% respectively. BSE Midcap and Smallcap were also slaughtered as they lost 5.17% and 4.50% respectively. Today domestic markets are likely to trade range bound.
The BSE Sensex closed low by 869.65 points at 14,043.40 and NSE Nifty ended with a huge loss of 258.55 points at 4,165.70. BSE Mid Caps closed with losses of 268.34 points and 262.08 points at 4,918.88 and 5,562.87 respectively. The BSE Sensex touched intraday high of 15,097.87 and intraday low of 13,959.44.
Indian ADRs ended mostly down on Monday. In the banking space, HDFC Bank was down 2.2% and ICICI Bank was down 0.9%. In the telecom space, MTNL was down 0.1% and Tata Communication was down 0.6%. In the IT space, Infosys was down 1.1%, Patni Computers was down 0.3%, while Satyam Computers was up 0.1% and Wipro was up 0.1%. In other sectors, Tata Motors was down 0.3%, Dr Reddy''s Labs was down 0.1% while Sterlite Industries was up 0.1%.
Today major stock markets in Asia are trading mixed. Hang Seng is up at 18,117.41. Shanghai Composite is up by 1.869 points at 3,126.536. Japan''s Nikkei is trading down by 27.62 points at 9,653.25. Strait Times is up by 17.67 points at 2,283.76. Seoul Composite is up by 2.06 points at 1,431 and KLSE Composite is low by 6.86 points at 1,065.83.
On Friday, the partially convertible rupee ended at Rs 47.89/91, 5 paise stronger than its previous close at 47.94/95. The rupee gained strength on the back of phenomenal gain in local stock markets.
The FIIs on Monday stood as net buyers in equity and in debt. Gross equity purchased stood at Rs 2,149.60 Crore and gross debt purchased stood at Rs 2,404.80 Crore while the gross equity sold stood at Rs 1,581.30 Crore and gross debt sold stood at Rs 400.30 Crore. Therefore, the net investment of equity reported was Rs 568.40 Crore and net debt was Rs 2,004.50 Crore.
On BSE, total number of shares traded were 54.57 Crore and total turnover stood at Rs 7,330.76 Crore. On NSE, total number of shares traded was 108.03 Crore and total turnover was Rs 21,546.46 Crore.
Top traded volumes on NSE Nifty – Unitech with total volume traded 87241340 shares, followed by Suzlon Energy with 59467327, DLF with 22471754, ITC with 16917635 and ICICI Bank with 14367600 shares.
On NSE Future and Options, total number of contracts traded in index futures was 1203596 with a total turnover of Rs 24,941.52 Crore. Along with this total number of contracts traded in stock futures were 752603 with a total turnover of Rs 21,192.05 crore. Total numbers of contracts for index options were 2172630 with a total turnover of Rs 48,611.82 Crore and total numbers of contracts for stock options were 60300 and notional turnover was Rs 1,911.14 Crore.
Today, Nifty would have a support at 4,056 and resistance at 4,199 and BSE Sensex has support at 13,740 and resistance at 14,195.
Market may extend Monday's losses
The key benchmark indices may extend Monday's (6 July 2009) losses on lack of any big bang economic reforms in the Union Budget 2009-2010. The disappointment over the budget resulted in sell-off on the bourses on Monday, 6 July 2009 that was accompanied by heavy volumes The BSE 30-share Sensex tanked 869.65 points or 5.83% to 14,043.40 on the budget day. As per provisional data released by the stock exchanges, foreign funds on 6 July 2009, dumped shares worth a net Rs 1483.03 crore. On the other hand, domestic funds bought stocks worth a net Rs 815.71 crore.
Investors were disappointed after the Union Budget 2009-2010 did not contain any major reforms such as a roadmap to increase foreign direct investment in insurance sector and decontrol fuel prices. Lack of financial sector reforms and a clear roadmap on divestment were other sources of disappointment. The government set an very small target of Rs 1120 crore from divestment for the financial year ending March 2010. A surge in fiscal deficit target added to the market's woes. Finance Minister (FM) Pranab Mukherjee set a sharply higher fiscal deficit target to 6.8% for the financial year ending March 2010 after he increased spending on roads, power and aid to the poor.
The market was expecting some announcement on decontrol on fuel prices but the FM only said that a panel will be set up to look into the pricing of petrol and diesel. The market was also surprised by the FM keeping a mum on Foreign Direct Investment (FDI) policy at a time when expectations were running high that the government will announce a roadmap for hike in foreign direct investment in insurance sector to 49% from 24%
The next major trigger for the market is corporate earnings of India Inc. for the quarter ended June 2009. India's second largest IT major by sales Infosys kickstarts result season on 10 July 2009.
However, positive Asia may support the market today. Most Asian stocks rose today in a volatile trade as utilities advanced on optimism energy costs will drop. The key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan rose by between 0.25% to 1.19%. The key benchmark indices in China and Japan fell by between 0.22% to 0.68%.
The Wall Street ended Monday, 6 July 2009 session mixed. The gloomy earnings expectations weighed on sentiment. The Dow Jones managed to end positive on some bargain hunting. The Dow Jones gained 44.13 points, or 0.5%, to 8,324.87. S&P 500 index rose 2.30 points, or 0.3%, to 898.72. The Nasdaq Composite Index fell 9.12 points, or 0.5%, to 1,787.40.
Back home, the projected FY 2010 fiscal deficit is much higher than the 5.5% deficit forecast by Mukherjee in an interim budget in February 2009, and also higher than the 6.2% deficit recorded by the government in the previous year ended 31 March 2009.
The finance minister has forecast an increase in plan expenditure by 34% and non-plan expenditure by 37%. The total projected budgetary spending in 2009-10 stands at Rs 10.23 lakh crore. The government has proposed an increase in the allocation for government welfare schemes by 45%. Expenditure on Bharat Nirman has been hiked by 45%. The government has allocated Rs 3,91,000 crore under the National Rural Employment Guarantee Scheme this year. The allocation for rural roads scheme has been raised by 59% in 2009-10.
The 10% surcharge on personal income tax has been scrapped. The FM has scrapped the Fringe Benefit Tax and also suggested removal of the Commodities Transaction Tax (CTT). The Minimum Alternate Tax (MAT) has been hiked to 15% of book profit from 10% of boom profit. The FM has kept the corporate tax rate unchanged. Mukherjee said the government will pursue structural changes in direct and indirect taxes. He said states have agreed on basic structure of goods and services tax which will be introduced from 1 April 2010.
FM has increased personal income tax exemption by Rs 15,000 for senior citizens and by Rs 10000 for others.
The Finance Minister (FM) said the plan is to a return to a path of 9% at the earliest and to deepen and broaden the agenda for inclusive development. The FM forecast a 6.7% GDP growth for FY 2010.
The government has extended agriculture debt waiver by 6 months and provided additional Rs 1000 crore over interim budget for irrigation. Budget will provide additional subvention of 1% to farmers who pay short term farm loans on schedule. He said government will develop long distance gas pipelines to develop national grid and LNG infrastructure in the country.
The finance minister has allocated Rs 4000 crore to incentivise lending to small firms. Budget extended interest subvention to exporters in seven sectors till March 2010 and will provide relief to exporters hit by global financial crisis. FM has extended agriculture debt waiver by 6 months and provided additional Rs 1000 crore over interim budget for irrigation.
The budget has allocated Rs 5000 crore for Mumbai flood project. The government will raise allocation for urban poor schemes to Rs 3,973 crore in 2009-10.
The finance minister proposed to raise the threshold for non-promoter holding in all listed companies. The FM said the government will encourage people participation in divestment of state owned firms. He said a plan will be set up to review domestic fuel prices. He said the government plans to return to fiscal reform targets at the earliest and that institutional reforms are required to control fiscal deficit. The government plans to move towards nutrient based subsidy regime for fertilizers and to offer direct subsidy to farmers.
The FM said significant flow of foreign capital is important and that there are signs of revival in domestic industry and foreign investors have returned. He said the government will continue to provide fiscal stimulus and to provide more flexibility to Infrastructure Finance Company (IIFCL). IIFCL will facilitate 'take out' financing for infrastructure projects. He said allocation for national highways development will rise 23% and has asked states to remove bottlenecks on infrastructure projects.
The government has restored 8% excise duty on manmade fibres. It has meanwhile, scrapped the excise duty on branded jewellery. With regards to the customs duty, the duty on LCD panels has been cut to 5% from 10%. The government has imposed a 5% customs duty on set top boxes. The customs duty on wind power equipment has been cut to 5% from 7.5%.
The finance minister said fiscal deficit target will be closer to 3% of GDP by FY 2011-12 assuming a global economic recovery. He has assumed GDP growth of 8% in FY 2011 and 9% in FY 2012.
Meanwhile, credit rating agency Standard & Poor's (S&P) said India's proposed budget deficit of 6.8% of gross domestic product is within the boundary of the rating agency' expectation. The prospect of a wider fiscal gap had already prompted S&P to change the outlook on India to negative after the government said in its February interim budget that additional stimulus of 0.5% to 1% of GDP may be required, Takahira Ogawa, a Singapore-based director of sovereign ratings at S&P said.
India's meteorological department said on 6 July 2009 good monsoon activity is likely over central India during next 4-5 days with extension into Gujarat and interior Maharashtra from 8th July onwards.
Grey Market Premium - NHPC, Adani Power, Mahindra Holidays
Mahindra Holidays 300 30 to 32
Adani Power 110 to 130 (Approximate) 27 to 30
NHPC 15 to 20 (Approximate) 5 to 7
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