Markets in Asia were higher in early trade today while Wall Street closed in the green overnight following a retreat in crude prices
The gains from the Budget day are expected to continue in the Indian market today with support from its Asian peers in positive terrain in early trade today and Wall Street closing higher overnight on a retreat in crude prices and amid mixed economic data. The SGX Nifty was 45 points higher at 5,388 compared to its previous close of 5,343.
The market opened in the green on Monday and was range-bound till the time finance minister Pranab Mukherjee began his Budget speech. Early announcements drove the indices higher, however, a smaller-than-expected hike in the income-tax exemption limit for individuals and nothing heard on the burning issue of crude prices pushed the indices back to the day's lows. The market gained 550 points to the day's high and the Nifty was up 127 points as the FM concluded his speech. But the gains were short-lived, as profit-booking dragged the indices lower, and they closed around the opening levels.
Finally, the Sensex ended 122 points up at 17,823 and the Nifty was up 30 points at 5,333. Although the indices closed in the positive zone, it hides the massive intraday volatility.
Markets in the US closed with modest gains on Monday leaving behind worries about the impact of the turmoil in the Middle East and amid mixed economic news. Brent crude oil prices, which had touched $120 a barrel last week, cooled down to $112. However, investors were still edgy that the global economic recovery may be threatened if oil prices stay high.
In economy news, the National Association of Realtors Pending Home Sales Index, based on contracts signed in January, declined 2.8% to 88.9 from a downwardly revised index of 91.5 in December, the second straight monthly decline and the slowest pace since October. The Institute for Supply Management (ISM)—Chicago’s business barometer—showed US economic activity jumped to 71.2 in February, its highest reading since July 1988, from 68.8 in January. Besides, government data showed personal incomes climbed 1% and inflation remained below the Federal Reserve’s long-term forecast.
The Dow surged 95.89 points (0.79%) at 12,226.34. The S&P 500 gained 7.35 points (0.56%) at 1,327.23 and the Nasdaq added 1.22 points (0.04%) at 2,782.27.
Markets in Asia were in the green in early trade on Tuesday, tracking the US markets, which closed higher overnight and on easing in crude prices. Meanwhile, Chinese manufacturing growth slowed in February to a six-month low, as the government’s campaign to rein in inflation weighed on industrial activity. The official manufacturing Purchasing Managers Index slowed slightly to 52.2 in February, from 52.9 in January. This apart, Japan’s unemployment rate was unchanged in January while payrolls rose, adding to signs the nation’s recovery is gaining pace after a temporary slowdown.
The Shanghai Composite gained 0.26%, the Hang Seng rose 0.04%, the Jakarta Composite advanced 0.41%, the KLSE Composite surged 0.43%, the Nikkei 225 advanced 0.69%, the Straits Times surged 1.03% and the Taiwan Weighted was 1.07% higher. The Seoul Composite was closed for a local holiday.
Back home, the government has proposed to increase the service tax on life insurance policies to 1.5% from 1%, a move that would increase the premium cost for policyholders. The life insurance industry, which was demanding special treatment in the Budget for increasing investment in insurance polices, was unhappy with the move.
“The proposed service tax will make traditional policies costly for policyholders,” Aviva India CEO and MD TR Ramachandran said.
Various parties describe Budget as “directionless”; suspect ruling alliance has eye on forthcoming elections in five states
New Delhi: Opposition parties have dubbed the Union Budget as a "futile exercise" and "directionless", saying that the measures announced do not bring any relief to the common man and nothing has been done to contain inflation, PTI reports.
Trashing the Budget presentation as a "futile exercise", senior BJP leader Anant Kumar said it has no proposals to contain rising prices and it offered no succour to the aam aadmi. His fellow party leader and finance minister in a previous NDA coalition government, Yashwant Sinha, said the Budget was "completely devoid of reforms".
Communist Party of India leader Gurudas Dasgupta described the finance minister's Budget presentation as a "thoughtless exercise". "It's a nominal Budget with no direction. It is directionless and no effort has been made to raise additional resources and tax rich people. No attempts have been made to increase employment in the Budget. It is a thoughtless exercise," Mr Dasgupta said.
Terming the Budget as insensitive, CPI(M) leader Nilotpal Basu alleged that a large number of poor people were excluded from subsidies. "Where is the question of inclusion in this Budget? The government is taking a cue from global finance regimes," Mr Basu said.
Biju Janata Dal member of Parliament Jay Panda described it as a "mixed Budget" but rued that "no steps were taken by the government to contain inflation".
Asked if the Budget was presented with an eye on forthcoming assembly elections in five states, Samajwadi Party spokesperson Mohan Singh said, "It may be even aimed at the general elections."
Janata Dal (U) chief Sharad Yadav said the government has not proposed any steps to bring back black money or fight corruption. "Even the Rs25,000 crore given for anti-Naxal operations does not seem to be adequate," Mr Yadav said.
Rashtriya Janata Dal chief and former Bihar chief minister Lalu Prasad, however, said he was happy about the Budget, but that he would be happier if certain bills proposed come through. He welcomed the proposals for providing cash subsidy in fertilisers, LPG and kerosene directly to consumers.
Six paragraphs of the finance minister’s Union Budget speech were devoted to legislation and other steps to tackle corruption. Crusaders don’t believe the government has the will to follow cases to the end
Following a year of national outrage over scams and the repeated raps from the Supreme Court about being ineffective in dealing with black money, the government decided to devote six paragraphs in the Union Budget text to this issue. But how much will come out of it? According to crusaders against tax evasion, all these talks boil down to zilch.
"I am happy that the finance minister thought the issue important enough to mention it in the Union Budget," said eminent chartered accountant MR Venkatesh, who has been at the forefront of the battle against tax evasion. "But how much do you take away from all that philosophical talk? Nothing."
Today, finance minister Pranab Mukherjee announced that India, being concerned about the issue, has adopted a five-pronged strategy to tackle it. It has also become a member of several international financial task forces and anti-corruption drives and signed many tax information exchange agreements with many nations and agencies. The minister mentioned that 2009 amendment to the legislation on money laundering was successful and some 1,200 cases had been registered under this law in two years.
KVM Pai, former chief income tax commissioner, has petitioned the Supreme Court on amnesty proposals to retrieve tax information from evaders after the prime minister's office and the Central Board of Direct Taxes refused to answer him. He said that the government is deliberately avoiding the issue.
"How does it matter what commissions we have joined? Where is the money? Has any move been made to recover it? The government is silent," Mr Pai said, after hearing the finance minister's Budget speech. "At the cost of penalty, everyone must give details of transactions with both foreign and domestic banks. That information can be used to retrieve the money." Mr Pai mentioned that much money is also stashed away in banks in the US and the UK, from where information can be easily obtained.
Mr Venkatesh echoed these thoughts and said, "All this philosophical talk that the minister gave about his strategy and noble intensions is nothing new. India should immediately ratify the UN Convention Against Corruption. We don't require more laws, what we need is political will."
It should be noted that while the minister said that the number of cases registered against money laundering has gone up, he did not comment on how many of these cases had been followed through or solved. No announcements were made about retrieving the money stored in tax havens.
Mr Venkatesh said, "Money Laundering legislation is a very draconian legislation. A charge can be slapped on anyone. In most cases, these have been applied to common people. However, the crooks are roaming free. The government is actually aiding them, and not the aam aadmi who it boasts it is working for."