Volatility continued as key benchmark indices lost ground soon after Finance Minister Arun Jaitley concluded his speech in parliament as he tabled Union Budget 2015-16 in the Lok Sabha. The barometer index, the BSE Sensex, fell below the psychological 29,000 mark. Shares of index heavyweight and cigarette major ITC tumbled after the Finance Minister proposed increase in excise duty on cigarettes in the Budget. The Finance Minister said that the 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. The Sensex was currently off 282.07 points or 0.97% at 28,938.05. The market breadth indicating the overall health of the market was weak, with almost two losers for every gainer on BSE. The BSE Small-Cap and Mid-Cap, indices, were off more than 1% each.
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.
At 13:30 IST, the S&P BSE Sensex fell 282.07 points or 0.97% at 28,938.05. The Sensex fell 282.96 points at the day's low of 28,937.16 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 50.65 points or 0.57% at 8,793.95. The index hit a low of 8,792.80 in intraday trade. The index hit a high of 8,941.10 in intraday trade, its highest level since 30 January 2015.
The market breadth indicating the overall health of the market was weak, with almost two losers for every gainer on BSE. 1,654 shares declined and 849 shares gained. A total of 132 shares were unchanged.
The BSE Mid-Cap index was down 123.46 points or 1.14% at 10,688. The BSE Small-Cap index was off 124.46 points or 1.10% at 11,195.10. The fall in these two indices was higher than the Sensex's decline in percentage terms.
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Most FMCG stocks declined. Jyothy Laboratories (down 1.28%), Britannia Industries (down 0.94%), Dabur India (down 0.89%), Godrej Consumer Products (down 0.61%), Marico (down 0.6%), Tata Global Beverages (down 0.58%), Bajaj Corp (down 0.37%) and GlaxoSmithKline Consumer Healthcare (down 0.05%), edged lower. Procter & Gamble Hygiene & Health Care (up 0.03%), Nestle India (up 0.08%), Colgate(down Palmolive (India) (up 1.98%) and Hindustan Unilever (up 2.39%), edged higher.
Index heavyweight and cigarette major ITC slumped 8.46% to Rs 360.50. The stock hit a high of Rs 409.70 and a low of Rs 358.10 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.
Shares of most consumer durables companies fell. Titan Company (down 2.22%), Blue Star (down 1.39%), Voltas (down 1.27%), Gitanjali Gems (down 0.66%) and Whirlpool India (down 0.1%), edged lower. Rajesh Exports (up 0.24%) and Videocon Industries (up 0.97%), edged higher.
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 Cesses. 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.
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%.
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