Markets to remain in jubilant mood with a positive start

The Indian markets after going through a volatile trade on Saturday, the special trading on Budget day, managed a positive close and traders slowly came to the terms of the Budget after analyzing it. Today, the start is likely to be in green and the markets will carry forward the budget euphoria with sector and stock specific action based on budget announcements. Infra stocks will be in action with the announcement of different measures in the budget, there is proposal to set up 5 ultra mega power projects, each of 4000MW and Tax-free bonds for projects in rail road and irrigation. Government has also said to revitalize the PPP model for infra with taking maximum risk. Today, there will also be buzz in the PSU stocks as the government has proposed to mop up Rs 69,500 crore through PSU disinvestment and strategic sale of equities in 2015-16. Apart from the budget announcement of hike in service tax from 12.36 per cent to 14 per cent for travel by air in first and business class, aviation stocks are likely to be under pressure with hike in Jet fuel prices by steep 8.2 per cent. The metal and mining stocks are once again likely to be in lime light with the government telling the nominated authority in charge of e-auctioning coal blocks to re-examine the bid process for the blocks won by alco, JSPL and BS Ispat recently, following certain “prima facie discrepancies” including questions over the bid prices.

The US markets made a soft closing in last session on getting mixed economic data. Slow GDP growth in third quarter made the traders cautious. The Asian markets have made mostly a positive start after the People’s Bank of China cut both its benchmark interest rate and its deposit rate by a quarter point each.

Back home, The special trading called by the marketmen on the Budget day was extremely volatile and at one point of time seemed not going down well with the major bourses tanking by about half a percent after showing gains of around a percent in earlier deals. The Finance Minister pegging fiscal deficit target for FY16 on higher side at 3.9 per cent versus 3.6 per cent earlier, was one of the major factor taking the markets lower for the day. However, things improved in the latter part of the day and traders after analysing the budget impacts, went for selective buying taking the markets to a respectable high. There was not much cues from the global markets except the closing views of the US markets overnight. However, traders seemed completely ignoring the decline in the US markets and rather taking cues from the European markets which had ended higher ahead of the launch of the European Central Bank's quantitative easing program. Different announcements of the Union Budget kept guiding the market movements for the day. The budget 2015-16 was a mixed bag for the corporate, as the rate of corporate tax was announced to be reduced to 25% over next four years, while it was announced rationalize & remove exemptions for corporate over four years. Also, the Service tax increased to 14 per cent. Sectorally, as expected infra received the major thrust, Rs 25,000 crore has been allotted for Rural Infrastructure Development Bank, Rs 5,300 crore to support Micro Irrigation Programme, Tax-free bonds for projects in rail road and irrigation, setting up 5 ultra mega power projects, each of 4000MW, Rs 75 crore for electric cars production. As on whole Rs 70,000 crores has been alloted to Infrastructure sector. The disappointment was for the middle class income tax payers as the FM proposed no change in the rate of personal income-tax. Instead proposed to levy a surcharge at the rate of 12% on  individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative  societies and local authorities having income exceeding Rs 1 crore. There were some indirect measures announced for the tax savings, through which the FM said that an individual can achieve exemption of upto Rs 4,44,200.  Back on street, while the benchmarks bounced back, the broader indices were not that lucky and they made a mixed closing. However, the remarkable point of the trade was Nifty closing at its one month high. Finally, the BSE Sensex gained 141.38 points or 0.48% to 29,361.50, while the CNX Nifty ended with gain of 57.25 points or 0.65% to 8,901.85.