High volatility on the bourses continued as investors scrutinized various announcements in the Union Budget 2015-16 tabled in parliament by Finance Minister Arun Jaitley today, 28 February 2015. Key benchmark indices trimmed losses in mid-afternoon trade after extending losses in afternoon trade. The barometer index, the BSE Sensex, regained the psychological 29,000 mark after falling below that level in afternoon trade. Jaitley said that corporate tax rate is proposed to be reduced from the current 30% to 25% over the next 4 years and that the reduction will be accompanied by rationalization and removal of various kinds of exemptions and incentives which is leading to a large number of tax disputes. The Finance Minister also announced deferring roll out of General Anti Avoidance Rule (GAAR) by two years until 1 April 2017 and said that the GAAR rules will apply to investments made on or after 01 April 2017 when implemented. Jaitely deferred the target of achieving 3% fiscal deficit by a year till FY 2018 from FY 2017 set earlier. The Sensex was currently off 156.76 points or 0.54% at 29,063.36. The market breadth indicating the overall health of the market was weak.
Cigarette makers declined in volatile trade after Finance Minister Arun Jaitley in Union Budget 2015-16 increased excise duty on cigarettes. Defence and realty stocks fell on profit booking after recent rally.
Due to the major event viz. the Budget, stock exchanges are conducting a live trading session today, 28 February 2015, despite it being a Saturday. Trading began at 9:15 IST and will conclude at 15:30 IST.
Key indices have undergone high intraday volatility during the trading session so far. Earlier, key indices had lost ground soon after Jaitley concluded his speech in parliament around 12:30 noon as he tabled Union Budget 2015-16 in the Lok Sabha. Before that the Sensex had alternately moved between positive and negative zone in early afternoon trade when Jaitley was speaking in parliament while presenting proposals. Earlier, the Sensex and the 50-unit CNX Nifty, both, hit their highest level in more than four weeks in mid-morning trade just when Jaitley his speech at 11:00 IST.
At 14:19 IST, the S&P BSE Sensex fell 156.76 points or 0.54% at 29,063.36. The Sensex fell 338.10 points at the day's low of 28,882.02 in afternoon trade. The index jumped 340.20 points at the day's high of 29,560.32, its highest level since 30 January 2015.
The CNX Nifty was down 40.45 points or 0.46% at 8,804.15. The index hit a low of 8,751.35 in intraday trade. The index hit a high of 8,941.10 in intraday trade, its highest level since 30 January 2015.
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The market breadth indicating the overall health of the market was weak. 1,629 shares declined and 958 shares gained. A total of 150 shares were unchanged.
The BSE Mid-Cap index was down 76.03 points or 0.7% at 10,735.43. The BSE Small-Cap index was off 98.77 points or 0.87% at 11,220.79. The fall in these two indices was higher than the Sensex's decline in percentage terms.
Cigarette makers declined in volatile trade after Finance Minister Arun Jaitley in Union Budget 2015-16 increased excise duty on cigarettes.
Godfrey Philips India (down 3.99%) and VST Industries (down 2.75%) edged lower.
Index heavyweight and cigarette major ITC slumped 8.65% to Rs 359.95. The stock hit a high of Rs 409.70 and a low of Rs 350 so far in intraday trade.
Arun Jaitley proposed to increase excise duty on cigarettes by 25% for cigarettes of length not exceeding 65 mm and by 15% for cigarettes of other lengths. Similar increases are proposed on cigars, cheroots and cigarillos. Excise levy on cigarettes and the compounded levy scheme applicable to pan masala, gutkha and other tobacco products also changed, he added.
Defence stocks fell on profit booking after recent rally. Finance Minister Arun Jaitley in Union Budget 2015-16 today, 28 February 2015 announced increased defence budget allocation to Rs 246727 crore.
Among defence stocks, Pipavav Defence and Offshore Engineering Company (down 3.75%), Bharat Electronics (down 1.81%), L&T (down 1.74%), Astra Microwave Products (down 4.72%), Punj Lloyd (down 6.16%), edged lower.
Jaitley said that the requirements for expenditure on defence, internal security and other necessary expenditures are adequately provided. Made in India and the Buy and the make in India policy are being carefully pursued to achieve greater self-sufficiency in the area of defence equipment including air-craft, he added.
As against likely expenditure of Rs 222370 crore for 2014-15, the budget allocation for 2015-16 is increased to Rs 246727 crore for FY 2015-16, he said.
Realty stocks fell on profit booking. Unitech (down 7.18%), Indiabulls Real Estate (down 4.34%), Sobha (down 0.18%), Housing Development & Infrastructure (down 2.09%), DLF (down 1.22%), Godrej Properties (down 1.01%), and Oberoi Realty (down 0.89%) edged lower.
Finance Minister Arun Jaitley in his first full-fledged Union Budget 2015-16 announced today, 28 February 2015 said that government proposes to rationalise the capital gains regime for the sponsors exiting at the time of listing of the units of Real Estate Investment Trusts (REITs) and Infrastructure Investments Trusts (InvITs), subject to payment of Securities Transaction Tax (STT). The rental income of REITs from their own assets will have pass through facility, Jaitley said.
Jaitley said that a step was taken in the last Budget to encourage REITs and InvITs by providing partial pass through to them. These collective investment vehicles have an important role to revive construction activity, Jaitley said.
Multi Commodity Exchange of India jumped 8.14%. Finance Minister Arun Jaitley in his first full-fledged Union Budget 2015-16 today, 28 February 2015 said that the government proposes to merge Forward Markets Commission (FMC) with market regulator Securities and Exchange Board of India (Sebi). While Sebi is the regulator for the capital markets, the FMC oversees commodities markets.
The Finance Minister said that the credibility of the Indian economy has been re-established in the last 9 months and said that the government is targeting a reduction of fiscal deficit to 3% of GDP in 3 years. Jaitley has set fiscal deficit target of 3.9% 2015-16, 3.5% 2016-17 and 3% for 2017-18. The Finance Minister said that the fiscal deficit target of 4.1% of GDP will be met.
The Finance Minister said that GDP growth is expected to accelerate to 8% to 8.5% in FY 2015-16 from 7.4% expected in the current year based on new series. Jaitley announced increase in service tax rate to 14% from 12% plus Education Cess. The new service tax rate shall subsume the Education Cess and Secondary and Higher Education Cess. Jaitley said that the nationwide GST (Goods and Services Tax) will put in place a state-of-the art indirect tax system by 1 April 2016.
Jaitley has announced abolishing wealth tax and replace that with additional surcharge of 2% on super rich with a taxable income of over Rs 1 crore annually.
In his Budget Speech in the Lok Sabha today, Jaitley said Tax 'pass through' is proposed to be allowed to both Category-I and Category-II Alternative Investment funds, so that tax is levied on investors in these funds and not on the funds per se. He also said the Permanent Establishment (PE) norms are to be modified to encourage offshore fund managers to relocate to India. The modification will be to the effect that mere presence of a fund manager in India would not constitute PE of the offshore funds, as this is resulting in adverse tax consequences currently.
To facilitate technology inflow to small businesses at low costs, the rate of income tax on royalty and fees for technical services is to be reduced from 25% to 10%.
To enhance public spending in the economy, government has significantly enhanced the capital expenditure. Jaitley has proposed an increase in investment in infrastructure by Rs 70,000 crore in the year 2015-16 over the year 2014-15 from the Centre's funds and resources of CPSEs. He has increased outlay on both the roads and the gross budgetary support to the Railways by Rs. 14,031 crore and Rs. 10050 crores. The CAPEX of the public sector units is expected to be Rs 3.17 lakh crore, an increase of about Rs 80844 crores over RE 2014-15.
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