Key benchmark indices pared intraday gains in early afternoon trade after the Finance Minister P Chidambaram said fiscal deficit will be contained at 4.6% of GDP for the year ending 31 March 2014 (2013/14) and the current account deficit (CAD) will be contained at $45 billion in 2013/14. The barometer index, the S&P BSE Sensex, was up 31.56 points or 0.15%, off close to 80 points from the day's high and up about 60 points from the day's low. The market breadth, indicating the overall health of the market was negative.
PSU bank stocks reversed intraday gains. Index heavyweight Reliance Industries (RIL) declined. Another index heavyweight and cigarette maker ITC also edged lower. Metal stocks also edged lower.
Finance Minister P Chidambaram said fiscal deficit will be contained at 4.6% of GDP for the year ending 31 March 2014 (2013/14). He added that current account deficit (CAD) will be contained at $45 billion in 2013/14. He said that the government and the RBI 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. 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.
The government will allocate Rs 2.24 lakh crore to defence in 2014/15, up 10% year on year. 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 2.5 lakh crore in 2014/15.
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 cars, sports utility vehicles (SUVs) 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 that reduction in excise duty from 12 percent to 10 percent 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.
The government has envisaged number of steps to deepen the Indian Financial markets, Chidambaram said.
At 12:50 IST, the S&P BSE Sensex was up 31.56 points or 0.15% to 20,398.38. 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 6.50 points or 0.11% to 6,054.85. 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, 1,199 shares dropped and 1,010 rose. A total of 152 shares were unchanged.
Among the 30-share Sensex pack, 16 stocks rose and rest fell. Tata Power Company (up 4.67%), Dr. Reddy's Laboratories (up 1.78%) and Hero MotoCorp (up 1.76%) edged higher from the Sensex pack.
Metal stocks edged lower. Sesa Sterlite, JSW Steel, Hindalco Industries, Hindustan Zinc, Bhushan, Tata Steel, National Aluminum Company and Hindustan Copper fell by 0.15% to 1.95%.
Steel Authority of India (Sail) fell 1.79% after announcing Q3 results. The company's net profit rose 9.97% to Rs 532.60 crore on 7.14% increase in total income to Rs 11667.52 crore in Q3 December 2013 over Q3 December 2012. The result was announced after market hours on Friday, 14 February 2014.
Sail said that the board of directors of the company at its meeting held on 14 February 2014, inter alia, has approved interim dividend of Rs 2.02 per equity share for the year ending 31 March 2014.
NMDC declined 4.27% as the stock turned ex-dividend today, 17 February 2014 for the second interim dividend of Rs 5.50 per share for the year ending 31 March 2014.
Index heavyweight Reliance Industries (RIL) declined 1.1%.
Another index heavyweight and cigarette maker ITC dropped 0.08%.
PSU bank stocks reversed intraday gains. Canara Bank, State Bank of India, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank fell 0.21% to 1.18%.
An amount of Rs 11200 crore has been provided for capital infusion in Public Sector Banks (PSB's)in the Interim Budget 2014-15. The Union Finance Minister Mr. P Chidambaram made this announcement while presenting the Interim Budget in the Parliament today.
The Finance Minister informed that the Public Sector Banks have opened 5207 branches so far and nearing the goal of installing an ATM at every branch. Chidambaram said that bankers have assured that they will be able to contain the NPAs, recover more loans and build healthier balance sheets as the economy turns.
Chidambaram has announced a Moratorium period for all education loans taken-up to 31 March 2009 and outstanding on 31 December 2013. Government will take over the liability for outstanding interest as on 31 December 2013, but the borrower would have to pay interest for the period after 1 January 2014. Nearly 9 lakh students borrowers will benefit to the tune of approximately Rs 2600 crore.
Presenting the Interim Budget in the LokSabha today, the Union Finance Minister Shri Chidambaram said that a sum of Rs 2600 crore will be provided in the current financial year itself and this amount will be transferred to the Canara Bank. Mr. P. Chidambaram said that the Central scheme for interest subsidy was introduced in 2009-10 in respect of education loans disbursed after 1 April 2009. However, students who had borrowed before 31 March 2009 struggled to pay interest during the period of study and they deserved some relief.
Chidambaram informed that ten years ago, only a few thousand students- mostly the well-connected- got education loans. At the end of December 2013, Public Sector Banks had 25,70,254 student loan accounts and the amount outstanding was Rs. 57700 crore.
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.
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