GOOD MORNING!!!
MARKETS BEGAN THE DAY ON A POSITIVE NOTE AHEAD OF BUDGET WHICH WAS EARLIER SUPPORTED WITH POSITIVE US MARKETS. FRONTLINE COUNTERS CAPITALIZED THE MOMENTUM AS FINANCE MINISTER TABLED THE PROGRESSIVE AND BALANCED UNION BUDGET 2011-12 IN THE LOK SABHA. SOON AFTER FM’S SPEECH THE MARKETS RALLIED AROUND 600 POINTS IN A EUPHORIC ATMOSPHERE AS PARTICIPANTS RESORTED TO HEFTY BUYING. HOWEVER, THE INDICES SOON COULDN’T HOLD THE GAINS AND WENT INTO TAILSPIN AS THE FINER PRINT BECAME CLEARER AND THE FORCE OF PROFIT-BOOKING AT HIGHER LEVELS TOOK ITS TOLL. IT WAS COMPLETE ROLLER-COASTER RIDE IN THE MARKETS FOR THE TRADERS. THERE WAS OVER 400 POINTS SWING IN NIFTY WHICH, EVENTUALLY ENDED WITH MODERATE GAINS. THE MARKET BREADTH WAS POSITIVE.
BUDGET HIGHLIGHTS
BUDGET ON THE WHOLE – GST & DTC ROAD MAP ANNOUNCED ( POSITIVE FOR ECONOMY ) - FISC GAP, MKT BORROW NUMBERS BEATS MARKET EXPECTATIONS BUT LOOKS LIKE TOO OPTIMISTIC STILL THERE ARE DOUBTS WHETHER IT WOULD BE MET.
KEY TAKEAWAYS OF UNION BUDGET FOR 2011-12
KEY TAKEAWAYS OF UNION BUDGET FOR 2011-12
GROWTH
* INDIAN ECONOMY SEEN GROWING 9% IN 2011-12, +/- 0.5%
* SEE FY11 GDP GROWTH AT 8.6%
* INDIA ECON GROWTH SEEN 8.75-9.25% FY12
* APR-JAN IMPORTS $273.6 BLN, UP 17.6%
* FY11 SERVICES SECTOR GROWTH SEEN 9.6%
* SEE INDUSTRIAL SECTOR GROWTH 8.1% IN FY11
* FY11 FARM GROWTH SEEN 5.4%
* FY11 FISCAL CONSOLIDATION IMPRESSIVE
* STRONGER FISCAL CONSOLIDATION NEEDED
* FY11 GROWTH SWIFT, BROAD-BASED
* INDIA ECON BACK TO PRE-CRISIS GROWTH TRAJECTORY
* SERVICES SECTOR CONTINUES TO GROW NEAR DOUBLE DIGITS
* DON'T SEE RESOURCES AS BIG PROBLEM, AT LEAST IN SHORT TERM
* IMPLEMENTATION GAP A KEY CHALLENGE
* "MUCH STILL NEEDS TO BE DONE", ESPECIALLY IN RURAL INDIA
* NEED TO IMPROVE SUPPLY OF AGRICULTURE TO MEET DEMAND
* NEED TO ENSURE SUSTAINED PRIVATE INVESTMENT
* ECONOMY RESILIENT TO EXTERNAL SHOCKS
* AUTO SECTOR GROWTH SEEN 30% IN FY11
* TO UP MANUFACTURING SHARE IN GDP TO 25% IN 10 YR VS 16%.
INFLATION
* FOOD INFLATION 9.3% IN JAN BUT STILL REMAINS A CONCERN
* MUST ADDRESS STRUCTURAL CONCERNS ON INFLATION MANAGEMENT
* EXPECT RBI MEASURES TO MODERATE INFLATION IN COMING MOS
* SEE AVERAGE INFLATION TO LOWER IN FY11
* HIGH FOOD PRICES REVEAL SHORTCOMING IN DISTRIBUTION
* WHOLESALE AND RETAIL PRICE DIFFERENCE NOT ACCEPTABLE
* CONSUMERS DENIED FALL IN PRICES USUALLY SEEN IN WINTER
* ONION, MAIZE, POULTRY PRICES HIGH IN SECOND HALF FY10
* INFLATION PERSISTS IN TWO DISTINCTIVE AREAS
* FOOD INFLATION 20.2% IN FEB .
FY12 OUTLAYS
* FY12 TOTAL SPEND 12.5 TRLN RUPEE
* TOTAL EXPENDITURE ESTIMATED AT 1.26 TRLN RUPEES IN FY12
* FY12 NON-PLAN SPEND 8.16 TRLN RUPEES, UP 10.9%
* FY12 PLAN SPEND 4.41 TRLN RUPEES, UP 18.3%
* 1.47 TRLN RUPEES GRANTS IN AID FY12
* TO PROVIDE 10 BLN RUPEES FOR JUSTICE DEPT IN FY12
* ALLOCATED 691.99 BLN RUPEE FOR DEFENCE CAPEX FY12
* ALLOCATED 1.64 TRLN RUPEE FOR DEFENCE FY12
* BACKWARD REGION GRANT FUND ALLOCATION UP AT 98.9 BLN RUPEE
* 1 BLN RUPEE FOR JAMMU, LADAKH PROJECTS FY12
* TO GIVE 80 BLN RUPEES FOR J&K DEVELOPMENT NEEDS
* ALLOCATED 80 BLN RUPEE FOR NORTHEAST, SPECIAL STATES
* ALLOCATED 2 BLN RUPEE FOR CLEAN ENERGY FUND
* 2 BLN RUPEES FOR CLEANUP OF IMPORTANT LAKES, RIVERS
* FY12 EDUCATION SECTOR ALLOCATION 520.57 BLN RUPEES
* ALLOCATION FOR SCHEDULED TRIBES HIKED TO 2.44 BLN RUPEE
* 2011-12 BHARAT NIRMAN ALLOCATION UP TO 580 BLN RUPEES
* ALLOCATED 1.61 TRLN RUPEES FOR SOCIAL SECTOR FY12
* ADDITIONAL 5 BLN RUPEE TO NATIONAL SKILL DEVELOPMENT FUND
* FY12 SARVA SHIKSHA ABHIYAN ALLOCATION 210 BLN RUPEES
* TO GIVE 210 BLN RUPEE FOR LITERACY MISSION FY12, UP 40%
* FY12 ALLOCATION FOR HEALTH 267.60 BLN RUPEES, UP 20%
* TO GIVE PSU BANKS 201.57 BLN RUPEE FOR TIER-I CAPITAL FY12
* TO GIVE 60 BLN RUPEE FY12 TO HELP PSU BKS' TIER 2 CAPITAL
* 3 BLN RUPEE TO STATES TO ROLL OUT E-STAMPING IN 3 YRS .
DIRECT TAX
* REVENUE LOSS FROM DIRECT TAX AT 115 BLN RUPEES
* MAT RAISED TO 18.5%
* SPECIAL ECONOMIC ZONES TO COME UNDER MAT
* CUT SURCHARGE ON DOMESTIC COS TO 5% FROM 7.5%
* 80 YRS AND ABOVE INDIVIDUALS TAX EXEMPT UPTO 500,000 RUPEE
* I-T EXEMPTION FOR SENIOR CITIZENS 250,000 RUPEES
* SENIOR CITIZEN TAX LIMIT NOW FOR 60 YEAR OLDS
* UP TAX EXEMPTION TO 180,000 RUPEES FY12
* NON-TAX RECEIPTS ESTIMATED AT 1.25 TRLN RUPEES IN FY12
* NET TAX TO CENTRE 6.64 TRLN RUPEES IN FY12
* FY12 NON TAX REVENUE 1.25 TRLN RUPEES
* FY12 GROSS TAX RECEIPTS 9.32 TRLN RUPEES, UP 24.9%
* TO INTRODUCE SIMPLER RETURNS FORM FOR PRESUMPTIVE TAX
* NO TAX RETURNS FOR SOME SALARIED PEOPLE SOON
* TWO MORE CENTRAL PROCESSING CENTRES FOR INCOME TAX FY12
* INVEST-LINKED DEDUCTION FOR AFFORDABLE HOUSING PROJECTS
* TAX SOP FOR 20,000 RUPEE INVEST IN INFRA BOND STAYS
* LOW WITHHOLDING TAX OF 5% FOR NOTIFIED INFRA FUNDS
* I-T DEDUCTION FOR INFRA BOND INVEST EXTENDED BY 1 YEAR
* FOREIGN DIVIDEND TAX RATE CUT TO 15% FOR INDIAN COS .
DEFICIT
* FY11 REVENUE DEFICIT SEEN AT 2.3% OF GDP, FY12 AT 1.8%
* AIM FISCAL DEFICIT OF 3% OF STATE GDP BY FY14
* FISCAL DEFICIT TARGET 4.1% OF GDP IN FY13, 3.5% FY14
* PEGS FY12 FISCAL DEFICIT AT 4.6% OF GDP
* FY11 FISCAL DEFICIT REVISED TO 5.1% OF GDP
* CURRENT ACCT DEFICIT AROUND FY09 LEVELS IS A CONCERN
* CURRENT ACCT GAP A CONCERN DUE TO COMPOSITION OF FX FLOW
* COUNTER-CYCLICAL FISCAL STEPS BEST BET VS EXTERNAL SHOCKS .
TAX REFORMS
* DIRECT TAXES CODE TO BE EFFECTIVE APR 1, 2012
* ROLLOUT OF DIRECT TAX CODE TO BE EFFECTIVE APR 1, 2012
* TAKING STEPS TO SIMPLIFY TAX, TARIFF PROCEDURES
* ROLLOUT OF DIRECT TAX CODE, GST TO MARK A WATERSHED
* WILL INTRODUCE GST BILL IN CURRENT SESSION
* PREPARATIONS FOR GST ROLLOUT IN FINAL STAGES
* GST ROLLOUT TO BE KEY FACTOR IN ECON DEVELOPMENT
* NSDL CHOSEN TECH PARTNER FOR GST IMPLEMENTATION
* GST DIALOGUE WITH STATES HAS MADE CONSIDERABLE PROGRESS
* SCHEME PROPOSED FOR QUICKER REFUND OF SERVICE TAX
* TO INTRODUCE SELF-ASSESSMENT IN CUSTOMS FOR FAST CLEARANCE
* PSUS TO ISSUE TAX-FREE BONDS WORTH 300 BLN RUPEE FY12
* PROPOSALS OF NATL RESOURCES PRICING PANEL LIKELY IN 3 MOS
* TO GIVE RAIL 100 BLN RUPEE FOR TAX-FREE INFRA BONDS FY12
* TO GIVE IRFC 100 BLN RUPEE FOR TAX-FREE INFRA BONDS FY12
* TO GIVE NHAI 100 BLN RUPEE FOR TAX-FREE INFRA BONDS FY12
* TO ALLOW 300 BLN RUPEES FOR TAX-FREE INFRA BONDS FY12
INFRASTRUCTURE
* INFRA SECTOR FII CAP FOR BONDS WITH 5 YR RESIDUAL MATURITY
* FII LIMIT IN INFRA SECTOR RAISED TO $25 BLN
* FERTILISER SECTOR INVESTMENT TO BE GIVEN INFRA STATUS
* 50 BLN RUPEES FOR TAKEOUT FINANCING SCHEME
* TAKEOUT FINANCING PLAN IMPLEMENTED IN 7 INFRA PROJECTS
* TO GIVE COMPREHENSIVE PVT-PUBLIC PARTNER POLICY FOR INFRA
* IIFCL FY12 DISBURSEMENT AIM 250 BLN RUPEE VS 200 BLN FY11
* PPP MODEL FOR CREATING PUBLIC INFRASTRUCTURE SUCCESSFUL
* ALLOCATION OF 2.14 TRLN RUPEES FOR INFRA SECTOR FY12
* FARM SECTOR COS TO GET INVEST DEDUCTION FOR CAPEX
* INVEST-LINKED DEDUCTIONS FOR FERTILISER COS .
SUBSIDY
* TO MOVE TO DIRECT TRANSFER OF FERT SUBSIDY IN PHASED WAY
* TO MOVE TO DIRECT TRANSFER OF CASH SUBSIDY ON KEROSENE
* TO MOVE TO DIRECT TRANSFER OF OIL SUBSIDY IN PHASED MANNER
* AIM DIRECT CASH SUBSIDY FOR FERT, KEROSENE BY MAR 2012
* THERE IS LARGE SCALE DIVERSION OF SUBSIDISED KEROSENE OIL
* DIRECT TRANSFER OF CASH SUBSIDY FOR POOR .
DIVESTMENT
* GOVT TO RAISE 400 BLN RUPEES FROM DIVESTMENT IN FY12
* INTEND TO MAINTAIN DIVEST MOMENTUM IN FY12
* BROADBASING OF CENTRAL PSU OWNERSHIP HIGHLY SUCCESSFUL
* RESCHEDULED SOME DIVEST PLANS THIS FY.
FARM & FOOD
* NATIONAL FOOD SECURITY BILL TO BE TABLED THIS YEAR
* FARM CREDIT FLOW TARGET 4.75 TRLN RUPEES FY12
* PROPOSE TO PROMOTE ORGANIC FARMING METHODS
* HAVE TO SUSTAIN FARM PRODUCTIVITY IN LONG TERM
* TO GIVE 3 BLN RUPEE TO UP OUTPUT OF NUTRI-CEREALS
* 3 BLN RUPEES FOR ANIMAL-BASED PROTEIN PRODUCTION
* 3 BLN RUPEE TO BRING 60,000 HA UNDER PALM OIL PLANTATION
* TO LAUNCH NATL PROTEIN MISSION WITH 3 BLN RUPEE CORPUS
* 3 BLN RUPEES FOR HIGHER PRODUCTION OF MILLETS
* TO PROVIDE 3 BLN RUPEES TO RAISE VEGETABLE PRODUCTION
* 4 BLN RUPEES TO EASTERN STATES FOR GREEN REVOLUTION
* SEE 16.5 MLN TN PULSES OUTPUT THIS YEAR
* TO GIVE 3 BLN RUPEES TO PROMOTE PULSES PRODUCTION, MKTING
* TO GIVE 3 BLN RUPEE TO 6,000 VILLAGES FOR PULSES FARMING
* TO SET UP 5 BLN RUPEE WOMEN SELF HELP DEVELOPMENT FUND
* FARM DEVELOPMENT PLAN ALLOCATION HIKED TO 78.6 BLN RUPEE
* REMOVING BOTTLENECKS IN FRUITS, VEGETABLES, POULTRY SUPPLY
* MULLING NUTRIENT-BASED SUBSIDY POLICY FOR UREA
* FARM GOODS STORAGE CAPACITY NEEDS AUGMENTATION
* APPROVAL TO SET UP 15 MORE MEGA FOOD PARKS IN FY12
* TO CREATE 4 MLN TN MORE FOOD GRAIN STORAGE BY MAR 2012
* FOOD INFLATION EXPOSES FLAW IN SUPPLY-CHAIN MANAGEMENT
* STATES NEED TO REVIEW, REVAMP FARM PRODUCE MARKETING ACTS
* COLD STORAGE INVESTMENT TO GET VIABILITY GAP FUNDING .
RURAL, SOCIAL SECTOR
* TO SET UP MORTGAGE RISK GUARANTEE FUND FOR RURAL HOUSING
* 5 BLN RUPEES CAPITAL INFUSION FOR REGIONAL RURAL BKS FY12
* 100 BLN RUPEE TO NABARD FOR SHORT-TERM RURAL CREDIT FUND
* TO INFUSE 30 BLN RUPEES IN NABARD IN PHASED MANNER
* 3% INTEREST SUBVENTION TO FARMERS REPAYING LOANS ON TIME
* INTEREST RATE SUBVENTION FOR FARM LOANS EXTENDED TO FY12
* RURAL HOUSING FUND CORPUS HIKED TO 30 BLN RUPEES VS 20 BLN
* NABARD TO GET 30 BLN RUPEES TO HELP HANDLOOM WEAVERS FY12
* OVER 2,000 POPULATION VILLAGES TO HAVE BANKS
* SIGNIFICANTLY SCALED UP FLOW OF RESOURCES IN RURAL AREAS
* RURAL INFRA DEVELOPMENT FUND RAISED TO 180 BLN RUPEE FY12
* RURAL BROADBAND CONNECTIVITY TO ALL VILLAGES IN 3 YEARS
* 2.2 MLN ANGANWADI WORKERS TO BENEFIT FROM PAY HIKE
* ANGANWADI WORKERS WAGES DOUBLED TO 3,000 RUPEE/MO
* ANGANWADI HELPERS WAGE DOUBLED TO 1,500 RUPEES/MO
* BANKS TO COVER 20,000 VILLAGES FOR OPENING ACCTS FY11
* RIDF CORPUS INCREASED TO CREATE WAREHOUSING CAPACITY
* RIDF CORPUS 180 BLN RUPEES FY12 VS 160 BLN FY11
* CUT BPL PENSION SCHEME QUALIFY AGE TO 60 YRS FROM 65 YRS
* PENSION FOR OVER 80-YR-OLDS HIKED TO 500 RUPEES/MO
* TO GIVE 1 MLN UNIQUE IDS/DAY FROM OCT
* TO SET UP SELF HELP DEVELOPMENT GROUP FUND OF 5 BLN RUPEE
* MINORITIES' LOAN TARGET UP AT 15% OF PRIORITY LOAN FOR BKS
* MULLING FRAMEWORK TO PROTECT INTEREST OF SMALL BORROWERS
* OLD AGE PENSION PLAN ELIGIBILITY AGE CUT TO 60 YR VS 65 YR
* NREGA WAGE RATE TO BE INDEXED TO CONSUMER PRICE INDEX
* UNORGANISED WORKERS TO BENEFIT FROM HEALTH INSURANCE PLAN
* SCHOLARSHIP SCHEME TO BENEFIT 4 MLN SC, ST STUDENTS
* SCHOLARSHIP PLAN FOR SC/ST STUDENTS IN CLASS IX, X
* GOVT CONTRIBUTION IN OLD AGE PENSION RAISED TO 5 YR FROM 3
* TO ENUMERATE CASTE IN SEPARATE CENSUS BEGINNING JUNE
MISCELLANEOUS
* TO INTRODUCE PUBLIC DEBT MANAGEMENT BILL IN FY11
* TO BRING BILL TO ENABLE RBI TO GRANT MORE BANKING LICENSES
* NEW COMPANIES BILL TO BE INTRODUCED IN CURRENT SESSION
* 1% INTEREST SUBVENTION ON HOME LOAN UP TO 1.5 MLN RUPEE
* UPPED PRIORITY HOME LOAN LIMIT TO 2.5 MLN RUPEE VS 2 MLN
* SEE FY11 BUDGET TRANSITION FOR MORE TRANSPARENT INDIA
* TO SET UP INDIA MICROFIN EQUITY FUND OF 1 BLN RUPEES
* TO SET UP 7 NEW MEGA PROJECTS FOR LEATHER FY12
* IMPLEMENTING 5-POINT PLAN TO TACKLE BLACK MONEY MENACE
* FINANCE MINISTRY BEGAN STUDY OF UNACCOUNTED INCOME
* ENFORCEMENT DIRECTORATE STRENGTH INCREASED THREE-FOLD
* ALIGARH MUSLIM UNIV MURSHIDABAD UNIT TO GET 500 MLN RUPEE
* ALIGARH MUSLIM UNIV KERALA CENTRE TO GET 500 MLN RUPEES
* 2 BLN RUPEE ONE TIME GRANT TO IIT KHARAGPUR FY12
* ALLOCATED 100 MLN RUPEES TO DELHI SCHOOL OF ECONOMICS
* NATL KNOWLEDGE NETWORK TO LINK 1,500 INSTITUTES BY MAR '12
* SOME CHALLENGES NEED URGENT ATTENTION IN SHORT TERM
* CORRUPTION IS A PROBLEM WE HAVE TO FIGHT COLLECTIVELY
* HOPE STATES WILL REFORM THEIR FRBM POLICY
* NEED TO SEIZE OPPORTUNITY TO BOOST REGULATORY STANDARDS
* REACHING THE END OF A REMARKABLE FISCAL YEAR
* TO MOVE INSURANCE, PENSION, BANKING BILLS IN PARLIAMENT
* 50 BLN RUPEES TO SIDBI FOR REFINANCING SMALL FIRMS FY12
* NEED TO REVISIT EXACT DEFINITION FOR FINCL BUDGET CONCEPTS
* CENTRAL ELECTRONIC REGISTRY TO PREVENT LOAN SCAMS
* NEW SERIES OF COINS WITH INDIAN RUPEE SYMBOL SOON
* TO AMEND THE INDIAN STAMP ACT
TODAY MARKETS WOULD OPEN POSITIVE TRACKING POSITIVE CLOSE IN AMERICAN MARKETS. IF NIFTY TRADES ABOVE 5350 THEN LIKELY TO MAKE AN UPMOVE TO 5392 AND THEN TO 5425 AND ANY BREAK AND CLOSE ABOVE 5425 WOULD TAKE NIFTY TO 5460 LEVELS AND THEN TO 5500 LEVELS IN A VERY SHORT SPAN. IF NIFTY TRADES BELOW 5300 THEN LIKELY TO MAKE ITS DOWNWARD JOURNEY 5275 AND THEN TO 5240. IF NIFTY DOESN’T HOLD 5240 LEVEL AND TRADES BELOW THEN, NIFTY WOULD COME DOWN TO 5200 LEVELS WHERE IT MAY TAKE GOOD SUPPORT BUT IF NIFTY HAPPENS TO CLOSE BELOW 5200 LEVELS WE CAN BE REST ASSURED THAT NIFTY WOULD COME DOWN MUCH MUCH LOWER THAN ANTICIPATED.
TODAY MARKETS WOULD OPEN POSITIVE TRACKING POSITIVE CLOSE IN AMERICAN MARKETS. IF NIFTY TRADES ABOVE 5350 THEN LIKELY TO MAKE AN UPMOVE TO 5392 AND THEN TO 5425 AND ANY BREAK AND CLOSE ABOVE 5425 WOULD TAKE NIFTY TO 5460 LEVELS AND THEN TO 5500 LEVELS IN A VERY SHORT SPAN. IF NIFTY TRADES BELOW 5300 THEN LIKELY TO MAKE ITS DOWNWARD JOURNEY 5275 AND THEN TO 5240. IF NIFTY DOESN’T HOLD 5240 LEVEL AND TRADES BELOW THEN, NIFTY WOULD COME DOWN TO 5200 LEVELS WHERE IT MAY TAKE GOOD SUPPORT BUT IF NIFTY HAPPENS TO CLOSE BELOW 5200 LEVELS WE CAN BE REST ASSURED THAT NIFTY WOULD COME DOWN MUCH MUCH LOWER THAN ANTICIPATED.
