Key benchmark indices extended gains after the Economic Survey 2014-15 tabled in Parliament by Finance Minister Arun Jaitley today, 27 February 2015, stated that the government remains committed to fiscal consolidation and that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met. The barometer index, the S&P BSE Sensex, moved past the psychological 29,000 mark. The Sensex was currently up 257.84 points or 0.9% at 29,004.49. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index was up 1.25%. The BSE Small-Cap index was up 1.15%. Both these indices outperformed the Sensex.
Realty stocks edged higher amid expectations that there will be clarity on taxation with to Real Estate Investment Trust (REIT) in Union Budget 2015-16 tomorrow, 28 February 2015.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 2312.15 crore yesterday, 26 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 340.79 crore yesterday, 26 February 2015, as per provisional data.
In the foreign exchange market, the rupee edged lower against the dollar.
Brent crude oil futures edged higher as supply outages in the North Sea and renewed fears of gas supply disruption in Europe supported prices.
In overseas markets, Asian stocks were mixed. In the US yesterday, 26 February 2015, small-cap companies outperformed large as downbeat economic reports and selling pressure from the energy sector weighed on the benchmark S&P 500 index.
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At 12:17 IST, the S&P BSE Sensex was up 257.84 points or 0.9% at 29,004.49. The index jumped 262.13 points at the day's high of 29,008.78 in early afternoon trade. The index rose 90.41 points at the day's low of 28,837.06 in mid-morning trade.
The CNX Nifty was up 92.90 points or 1.07% at 8,776.75. The index hit a high of 8,777.45 in intraday trade. The index hit a low of 8,717.45 in intraday trade.
The market breadth indicating the overall health of the market was strong. On BSE, 1,580 shares gained and 905 shares fell. A total of 87 shares were unchanged.
The BSE Mid-Cap index was up 132.47 points or 1.25% at 10,748.75. The BSE Small-Cap index was up 128.64 points or 1.15% at 11,292.40. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 2272 crore by 12:15, compared with turnover of Rs 1688 crore by 11:15 IST.
Realty stocks edged higher amid expectations that there will be clarity on taxation with to Real Estate Investment Trust (REIT) in Union Budget 2015-16 tomorrow, 28 February 2015. Unitech (up 11.65%), Indiabulls Real Estate (up 5.02%), Housing Development and Infrastructure (up 5.65%), Godrej Properties (up 0.94%), Oberoi Realty (up 3.54%), D B Realty (up 2.95%), Sobha (up 1.66%) and Parsvnath Developers (up 1.76%) gained.
The real estate sector has sought tax clarity with regards to Real Estate Investment Trust (REIT). Abolishing capital gains tax, minimum alternate tax (MAT) applicability and dividend distribution tax (DDT) would make REITs attractive for both retail and institutional investors and bring about much needed liquidity for commercial projects specifically.
DLF gained 2.26% to Rs 153.70, with the stock reversing initial fall. The stock hit high of Rs 154.50 and low of Rs 147.10 so far during the day. DLF before market hours today, 27 February 2015, said that the company has been made aware of adjudication orders passed by Securities and Exchange Board of India (Sebi) under Section 15 of the Sebi Act, 1992 against DLF, its directors and other notices. The company is presently reviewing the said Orders and after taking appropriate legal advice, the company will challenge the said Orders in appeal, DLF said. On similar facts, Sebi had earlier passed an Order dated 10 October 2014 inter alia under Section 11 of the Sebi Act, 1992 against DLF and its directors, which Order was challenged by the company before the Hon'ble Securities Appellate Tribunal. DLF will defend itself to the fullest extent against any adverse findings and measures contained in the Orders passed by Sebi, the company said.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.78, compared with its close of 61.76 during the previous trading session.
Brent crude oil futures edged higher as supply outages in the North Sea and renewed fears of gas supply disruption in Europe supported prices. Brent for April settlement was up 80 cents at $60.85 a barrel. The contract had declined $1.58 a barrel or 2.56% to settle at $60.05 a barrel during the previous trading session.
The Economic Survey 2014-15 tabled in Parliament by Finance Minister Arun Jaitley today, 27 February 2015, stated that the government remains committed to fiscal consolidation and that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met. According to the survey, India needs to create additional fiscal space in order to ensure macro stability and to create buffers for future economic downturns. As per a medium-term fiscal strategy, there is a need to reduce fiscal deficit over the medium term to the established target of 3% of GDP. There is a need to ensure that the government's borrowing over the cycle is only for capital formation. With regard to government expenditure, the Survey advocates a shift away from public consumption by reducing subsidies, towards investment.
The Survey, however, states that eliminating or phasing down subsidies is neither feasible nor desirable.
The Economic Survey taking into consideration the change of base year by the Central Statistics Office of the National Accounts series from 2004-05 to 2011-12, states that growth at market prices for 2015-16 is expected to be 8.1% to 8.5%. As the new government is to present its first full year budget, the Economic Survey states that it appears that India has reached a sweet spot and that there is a scope for Big Bang reforms now.
On investments, the Survey has significantly commented that while private investment must remain the primary engine of long-run growth, the public investment, especially in the railways, will have to play an important role at least in the interim, to revive growth and to deepen physical connectivity. The Economic Survey has expressed a serious concern that several projects have been stalled and such a tendency is increased over the past years. In the same breath, the Survey reports expressed happiness that such stalling of projects seems to have plateaued. It suggested revitalizing public private partnership model of investment.
Meanwhile, the stock exchanges have decided to keep the stock market open on tomorrow, 28 February 2015, just like any other normal trading session when the Finance Minister Arun Jaitley presents the first full-fledged Budget of the Narendra Modi government. Trading will start at 9:15 IST and conclude at 15:30 IST. Jaitley will begin his speech at 11:00 IST in Lok Sabha tomorrow, 28 February 2015 as he tables the Union Budget 2015-16 in the parliament.
Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government's own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.
Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.
Analysts are awaiting further progress on the Goods and Services Tax (GST) during the ongoing Budget session of Parliament after the Constitution Amendment Bill for the introduction of GST was tabled in the Lok Sabha during the winter session of parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
Asian stocks were mixed today, 27 February 2015. Key benchmark indices in South Korea, Indonesia and Singapore were off 0.04% to 0.37%. Key benchmark indices in Japan, Hong Kong and China were up 0.06% to 0.45%. Markets in Taiwan are closed today, 27 February 2015 in observance of Peace Memorial Day.
Japanese industrial production rose 4% in January 2015 -the second straight on-month increase, following the 0.8% increase in December 2014, data showed today, 27 February 2015.
Trading in US index futures indicated that the Dow could fall 19 points at the opening bell today, 27 February 2015. US stocks ended mixed yesterday, 26 February 2015 in another lackluster performance, amid uncertainty about the near-term outlook for the markets.
Investors are now waiting on revised fourth quarter US gross domestic product data due later today, 27 February 2015 for another health check of the world's largest economy.
In economic news, the consumer-price index fell 0.7% in January 2015 from December 2014, the Labor Department said yesterday, 26 February 2015. Prices slipped 0.1% from a year earlier, marking the first year-over-year decline since October 2009. Another data showed that weekly jobless claims rose to 313,000 last week, above the 283,000 in the previous week. Durable goods orders figures for January increased 2.8%, after a 3.4% decline in the prior month.
In Europe, German lawmakers reportedly signaled that they will approve an extension of Greece's bailout with an overwhelming majority in parliament today, 27 February 2015 although many will do so reluctantly amid fears Athens will not deliver on its reform promises. Eurozone finance ministers on Tuesday, 24 February 2015, backed new reforms proposed by Greece in exchange for a four-month financial lifeline that will keep the country afloat and in the single currency for the time being. Several parliaments, including Germany's, must now approve the extension before the current bailout expires tomorrow, 28 February 2015.
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