Stocks
Nifty, Sensex may try to rise – Monday closing report
While the trend is down, Nifty can rally if it closes above 7,050
 
We had mentioned in Friday’s closing report that Nifty, Sensex were not yet out of the woods and that a disappointing budget may push the market down again. The budget has disappointed many investors and the Sensex and Nifty briefly touched their 52-week lows during Monday’s trading. The trends of the major indices during Monday’s trading are given in the table below:
 
 
Union Budget announcements, combined with negative Asian cues, and a dip in the rupee value depressed the Indian equity markets during Monday’s trading. During the Union Budget announcements, the Sensex plunged to a fresh 52-week low of 22,494.61. However, recovered somewhat but still closed negative. Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) touched a fresh 52-week low of 6,825.80 points.
 
The Union Budget 2016-17 was tabled in parliament on Monday. Finance Minister Arun Jaitley disclosed the government's spending on the rural sector, infrastructure and agricultural credit. Market analysts observed that many investors were disappointed, as they expected some out-of-box reform measures. The budget did provide some measures, as well as healthy fiscal deficit targets. Roads and infrastructure sector were supported. There were some big negatives like the hike in securities transaction tax and lower bank recapitalisation levels. Big positives include the hike in rural spending and infrastructure sector.
 
 
Continuing government efforts to deal with the high levels of non-performing assets (NPAs), or bad debts, of state-run banks, Finance Minister Arun Jaitley on Monday allocated Rs25,000 crore towards their recapitalisation in the next fiscal. He made the announcement while presenting in parliament the union budget proposals for the next fiscal. Jaitley plans to provide Rs25,000 crore capital each in the current and next fiscal years, while Rs20,000 crore would be provided during 2017-18 and 2018-19. In July last, the government had presented to parliament a supplementary demand for grants to provide for Rs12,000 crore towards recapitalisation of public sector banks (PSBs). 
 
The Rs25,000 crore this year are being provided through three tranches. Around 40% of the amount is to be given to those banks which require support, and all PSBs will be brought to the level of at least 7.5% core capital by the end of fiscal 2016, the finance ministry has said. 
 
In the second tranche, 40% of capital is to be allocated to State Bank of India, Bank of Baroda, Bank of India, Punjab National Bank, Canara Bank and IDBI Bank. The remaining 20% is to be allocated to the banks based on their performance during the three quarters in the current year. As per estimates, PSBs would need additional capital of up to Rs240,000 crore by 2018 to meet the Basel III capital adequacy norms, put in place to guard against a repeat of the situation following the 2008 US financial crisis. The quantum of exposure of Indian scheduled banks in terms of gross non-productive assets, re-cast loans and write-offs was Rs9.5 lakh crore as of September last year. 
 
Meanwhile, the government on Sunday named former comptroller and auditor general Vinod Rai has been named the first chairman of the Banks Board Bureau that will give advice on how to recover the bad loans of state-run banks. The members co-opted to the board are Anil K Khandelwal, former chairman of Bank of Baroda, HN Sinor, former joint managing director of ICICI Bank and Rupa Kudwa, former managing director and chief executive of Crisil. Taking the first step towards a holding company structure for state-run banks, the government, in August last, announced the setting up of a Banks Board Bureau (BBB) that will recommend appointment of directors in PSBs and advise on ways of raising funds and dealing with stressed assets.
 
In line with budget proposals’ rural focus, Prime Minister Narendra Modi said he dreams of seeing farmers' income getting doubled by 2022 when the country completes 75 years of its independence. Addressing a big gathering of farmers during a 'Kisan Rally' here, Modi highlighted various initiatives undertaken by his government for their welfare. Stating that while most of the governments wait for the election year to roll out welfare schemes and incentives for farmers, Modi said it was not the case with his National Democratic Alliance government. "Farmers look towards governments after God and it is imperative on us to ensure that the farmers are looked after well," the prime minister said.  "I exhort all state governments that they should work on the road map before them and I am sure that my dream and your dream will succeed," he added. The prime minister also described the service, manufacturing and agriculture sectors as the backbone of the Indian economy.
 
The central parity rate of the Chinese currency renminbi, or the yuan, weakened 114 basis points to 6.5452 against the US dollar on Monday, according to the China Foreign Exchange Trading System. In China's spot foreign exchange market, the yuan is allowed to rise or fall by two percent from the central parity rate each trading day, Xinhua reported. The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.
 
Tokyo stocks rose from the off on Monday as hopes following the G20 finance ministers' agreement to help stabilise markets, coupled with the yen's comparative weakness spurred an upbeat market mood. 
 
Aditya Birla-led UltraTech Cement on Sunday announced acquisition of Jaiprakash Associates Ltd's cement plants, with total capacity of 22.4 million tons per annum (mtpa), for Rs.16,500 crore (about $2.5 billion), situated in Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Andhra Pradesh and Karnataka. "The assets will give the company access to the newer markets of Satna, UP East, Himachal Pradesh and coastal Andhra where it does not have a presence as of now. Upon consummation of the proposed transaction, the company's cement capacity will stand augmented to 90.7 mtpa (current 68.3 mtpa)," UltraTech said. It was unclear whether this agreement includes two cement plants of Jaiprakash Associates, the purchase of which were cancelled last week by UltraTech owing to lack of necessary approvals. UltraTech had on Friday said it was calling off that deal with Jaiprakash Associates, which has been selling its assets in a bid to reduce debt and improve its balance sheet. UltraTech Cement closed at Rs2,767.05, down 0.30% on the BSE.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

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Budget will accomplish 'housing for all' dream: PM Modi
New Delhi : Prime Minister Narendra Modi on Monday hailed his Finance Minister Arun Jaitley for the poor-friendly general budget that will also fulfil their dream of owning a house.
 
"Ask a common man, ask a poor man. They have a dream to own a house… and the government can help them fulfil that dream," Modi said in his post-budget comments which were televised on national TV. 
 
Modi said the government in its budget has laid emphasis on "strengthening the houses sector and give a house to poor" in India.
 
"Through this budget, the housing sector will be strengthened and this will boost our dream of 'Housing for All'."
 
In his budget speech in the Lok Sabha, Jaitley said the government will provide assistance to those looking to purchase their first homes.
 
The finance minister announced deduction for additional interest of Rs.50,000 per annum for loans up to Rs.35 lakh sanctioned in 2016-17 for first time home buyers, where house cost does not exceed Rs.50 lakh.
 
The government also proposed to provide relief to millions of families living in rented houses in the country. "Deduction for rent paid will be raised from Rs 20,000 to Rs 60,000 to benefit those living in rented houses," Jaitley said.
 
Modi also said that the general budget was focused on the development of agriculture, farmers, women and rural areas.
 
"The budget clearly calls for electrifying all villages thus giving an impetus to rural infrastructure," he said in his comments.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Nanda Patel

1 year ago

1. poor does not pay tax. (so except subsidy there are no benefits, as one is not in the tax net at all)

2. by the governments definition of "poor". No bank is going to lend them any money (*earn bellow 32Rs/day or 10000 Rs/Year may be double that money as the numbers are from 2007 and still no bank is going to lend them). The income parity is just unfortunate in India.


This budget will benefit the lower middle class( mostly government employees)


*"Not poor if you earn Rs.32 a day: Planning Commission"(http://indiatoday.intoday.in/story/plann...

Fiscal deficit targets kept at 3.9 percent this year, 3.5 in 2017
New Delhi : Declaring that prudence lies in adhering to fiscal targets, Finance Minister Arun Jaitley on Monday retained the "much awaited figure" of fiscal deficit for the current financial year at 3.9 percent of GDP, and at 3.5 percent for 2016-17.
 
Presenting the union budget for the next fiscal in parliament. Jaitley said he had decided that prudence lies in adhering to fiscal targets, but while doing so he has also ensured that the development agenda is not compromised.
 
The finance minister said the estimate of revenue deficit for this fiscal has come down to 2.5 percent from the previous estimates.
 
The government has targeted reducing the fiscal deficit to 3.9 percent of the gross domestic product (GDP) in the current financial year, compared with four percent last year, and reduce it further to 3.5 percent in 2016-17.
 
The fiscal deficit for 2014-15 touched 4.1 percent of the gross domestic product.
 
The revised estimate (RE) of gross tax collections for this fiscal are around Rs.14.60 lakh crore, as against the budget estimate (BE) of nearly Rs.14.50 lakh crore. The budget estimate for the next fiscal on this count has been pegged at Rs.16.30 lakh crore.
 
The government's fiscal deficit target of 3.9 percent for the current fiscal "seems achievable", the 2015-16 Economic Survey said last week.
 
"Significant increase in revenue receipts, led by buoyant indirect tax collection, higher level of capital expenditure on the plan side, lower subsidies and enhanced untied resources transferred to the states following the acceptance of the recommendations of the 14th Finance Commission" were the basis of the government's optimism on this count.
 
"The coming year is expected to be a challenging one from the fiscal point of view because of challenges posed by a lower-than-projected nominal GDP growth," said the survey, which was presented in parliament on Friday.
 
"The chances of India's growth rate in 2016-17 increasing significantly beyond 2015-16 levels are not very high, due to likelihood of persistence of global slowdown," it said.
 
"The implementation of the Pay Commission recommendations and the 'One Rank One Pay' scheme will put additional burden on expenditure," it added.
 
Moody's Investors Service said earlier this month that India's fiscal position will remain weaker than other emerging economies in the near term even if fiscal consolidation continued on course.
 
"Even if the budgetary consolidation continues, India's fiscal metrics will remain weaker than rating peers in the near term, because of the relatively high levels of deficits and debts of India's state and central governments," Moody's said in a report.
 
"The importance of the upcoming budget lies in its message on the government's fiscal consolidation plans," the American agency said.
 
"But at around 63.8 percent of GDP, India's government debt ratio remains high compared with a median of 49.5 percent for Baa3-rated peers. Without continued fiscal consolidation, India's government finances will continue to compare poorly with the peers," it added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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