Key benchmark indices moved in a narrow range in positive zone in mid-afternoon trade after the Finance Minister P Chidambaram said at the time of presenting the interim budget for the first four months of 2014/15 that the fiscal deficit will be contained at 4.6% of GDP for the year ending 31 March 2014 (2013/14) and will be pruned further to 4.1% of GDP in 2014/15 and that the that current account deficit (CAD) will be contained at $45 billion in 2013/14. The barometer index, the S&P BSE Sensex, was up 62.60 points or 0.31%, up close to 90 points from the day's low and off about 50 points from the day's high. The market breadth, indicating the overall health of the market was negative.
Most pharma stocks gained. Stocks whose fortunes are linked to orders from the defence sector were mixed after the Finance Minister said that the allocation for defence sector has been enhanced by 10% from the estimated Rs 203672 crore in 2013-14 to Rs 224000 crore in 2014-15.
Finance Minister P Chidambaram said fiscal deficit will be contained at 4.6% of GDP for the year ending 31 March 2014 (2013/14), smaller than the 4.8% originally forecast toward the start of the financial year. The Finance Minister said that current account deficit (CAD) will be contained at $45 billion in 2013/14. He said that the government and the RBI have acted in tandem to curtail inflation. Food inflation is still the main worry, although it has declined sharply from a high of 13.6% to 6.2%, Chidambaram said.
India's merchandise exports are projected to expand 6.3% to $326 billion in 2013/14. However, imports are down, and this does not augur well for either manufacturing or domestic trade, the Finance Minister said. "Our aim must be robust growth in both exports and imports, with trade in balance over a period of time", the Finance Minister said.
The deceleration in investment in manufacturing is particularly worrying, the Finance Minister said. Consequently, there is no uptick yet in manufacturing, he said.
GDP growth in third and fourth quarters of FY 2014 will be at least 5.2% and FY 2014 growth rate will be 4.9%, the Finance Minister said. Chidambaram said that $15 billion will be added to foreign exchange reserves by the end of the fiscal year. Declining fiscal deficit, moderation of CAD, stable exchange rate and increase in project implementation is a result of hard work, he said.
Chidambaram expressed confidence that the economy is more stable today than what it was two years ago. At a time when it appeared that a number of projects would fail because of the logjam, the government took the bold step to set up the Cabinet Committee on Investment and the Project Monitoring Group, he said. Thanks to the swift decisions taken by them, by the end of January 2014, the way was cleared for completing 296 projects with an estimated project cost of Rs 660000 crore, the Finance Minister said.
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The government will allocate Rs 2.24 lakh crore to defence sector in 2014/15, an increase of 10% over the Budget Estimate for 2013/14. The government will provide capital infusion of Rs 11200 crore in state-run banks in 2014/15. Total spending on food, fertiliser and fuel subsidies will be at Rs 2.46 lakh crore in 2014/15. This is higher than the revised estimate of Rs 2.45 lakh crore in 2013-14.
Chidambaram said that in keeping with the conventions, he does not propose to make any announcements regarding changes to the tax laws in the interim budget. The finance minister cut excise duty on cars, sports utility vehicles (SUVs), commercial vehicles and two wheelers for the period up to 30 June 2014 so as to give relief to the automobile industry. The Finance Minister also announced reduction in excise duty from 12% to 10% on all goods falling under chapter 84 and chapter 85 of the Schedule to the Central Excise Tariff Act for the period up to 30 June 2014 with an intention to stimulate growth in the capital goods and consumer non-durables sectors.
The changes in indirect taxes don't need Parliament sanction and can be made through government orders.
The government has envisaged number of steps to deepen the Indian Financial markets, Chidambaram said.
The estimate of plan expenditure is Rs 5.55 lakh crore for 2014/15. Non-plan expenditure is estimated at Rs 12.07 lakh crore. Revenue for the next fiscal year is projected at Rs 11.29 lakh crore, higher than Rs 10.29 lakh crore this year. Fiscal deficit for 2014/15 is expected at 4.1% of GDP.
The objective of a Vote-on-Account is to get Parliament's nod for expenditure to be incurred in the months prior to elections.
The next full-fledged budget will be presented by the new government which comes to power after the Lok Sabha polls in April-May 2014.
At 14:20 IST, the S&P BSE Sensex was up 62.60 points or 0.31% to 20,429.42. The index jumped 114.94 points at the day's high of 20,481.76 in early trade, its highest level since 13 February 2014. The index fell 27.87 points at the day's low of 20,338.95 in mid-morning trade.
The CNX Nifty was up 14.55 points or 0.24% to 6,062.90. The index hit a high of 6,079.35 in intraday trade, its highest level since 13 February 2014. The index hit a low of 6,038.30 in intraday trade.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,380 shares dropped and 1,069 rose. A total of 167 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks rose and rest fell. Tata Power Company (up 4.54%), HDFC (up 1.81%) and Hero MotoCorp (up 1.68%) edged higher from the Sensex pack.
Stocks whose fortunes are linked to orders from the defence sector were mixed after the Finance Minister said that the allocation for defence sector has been enhanced by 10% from the estimated Rs 203672 crore in 2013-14 to Rs 224000 crore in 2014-15. BEML rose 0.99%. Bharat Electronics fell 1.03%.
Most pharma stocks gained. Cipla (up 0.17%), Dr Reddy's Laboratories (up 2.21%) and Lupin (up 1.41%) gained. Ranbaxy Laboratories (down 0.17%) and Sun Pharmaceutical Industries (down 0.45%) declined.
Mahanagar Telephone Nigam rose 3.91% after the company reported a net profit of Rs 428.03 crore in Q3 December 2013 as against net loss of Rs 1182.18 crore in Q3 December 2012. Mahanagar Telephone Nigam (MTNL)'s net sales rose 1.7% to Rs 847.20 crore in Q3 December 2013 over Q3 December 2012.
Allcargo Logistics surged 5.89% after consolidated net profit jumped 58.03% to Rs 57.02 crore on 55.9% growth in total income from operations to Rs 1516.41 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 14 February 2014.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.96, compared with its close of 61.925/935 on Friday, 14 February 2014.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
European stocks edged higher on Monday, 17 February 2014. Key benchmark indices in France and UK rose 0.03% to 0.09%. Germany's DAX fell 0.07%.
Asian stocks edged higher on Monday, 17 February 2014, after China's new credit increased to a record in January, boosting optimism the world's second-largest economy can maintain its growth momentum. Key benchmark indices in China, Hong Kong, South Korea, Indonesia, Taiwan, Japan and Singapore rose by 0.07% to 1.07%.
Japan's economy grew less than forecast in the fourth quarter, according to a report today, underscoring risks to the recovery as a sales-tax increase looms in April. Gross domestic product expanded an annualized 1% from the previous quarter, the Cabinet Office said in Tokyo.
US stocks edged higher on Friday, 14 February 2014, as investors shrugged off a report showing poor industrial output last month as mainly weather-related. The US stock market is closed today, 17 February 2014, for a holiday.
US industrial output unexpectedly fell 0.3% in January but the Federal Reserve said that was partly due to the severe weather that curtailed production in some regions.
Federal Reserve Chairwoman Janet Yellen said last week that US growth has strengthened and that only a "notable change in the outlook" for the economy would prompt policy makers to slow the pace of cuts to the monthly bond-buying program.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.
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