Nifty fails to hold 7,000
After a knee jerk reaction to increase in Securities Transaction Tax (STT) on equity options and levy of tax on dividend for high networth individuals in the Union Budget 2016-17, Indian stocks settled with modest losses as the government stuck to the 3.5% fiscal deficit target for 2016-17. The barometer index, the S&P BSE Sensex, fell 152.30 points or 0.66% to settle at 23,002, its lowest closing level since 25 February 2016. The 50-unit Nifty 50 index lost 42.70 points or 0.61% to settle at 6,987.05, its lowest closing level since 25 February 2016. The Sensex settled a tad above the psychologically important 23,000 level. The Nifty settled below the psychologically important 7,000 level.
The Sensex lost 659.69 points or 2.84% at the day's low of 22,494.61 in early afternoon trade, its lowest level since 9 May 2014. The barometer index rose 188.92 points or 0.81% at the day's high of 23,343.22 in afternoon trade, its highest level since 23 February 2016. The Nifty lost 203.95 points or 2.9% at the day's low of 6,825.80 in early afternoon trade, its lowest level since 9 May 2014. The index rose 64.85 points or 0.92% at the day's high of 7,094.60 in afternoon trade, its highest level since 23 February 2016.
Index heavyweight and cigarette major ITC edged higher in volatile trade, shrugging off a hike in excise duty on tobacco products in Union Budget 2016-17. Stocks of PSU banks were mixed after the finance minister Arun Jaitley announced Rs 25000 crore for recapitalization of PSU banks in FY 2017. Shares of car major Maruti Suzuki India edged lower after Jaitley proposed to levy an infrastructure cess of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs. Shares of oil exploration and production (E&P) companies edged lower after the Finance Minister announced that the cess on domestically produced crude oil will be changed from Rs 4,500 per metric tonne to 20% ad valorem.
Among the sectoral indices on BSE, the S&P BSE IT index (down 2.11%), the S&P BSE Teck index (down 2%), the S&P BSE Capital Goods index (down 1.99%), the S&P BSE Consumer Durables index (down 1.75%), the S&P BSE Oil & Gas index (down 1.5%), the S&P BSE Telecom index (down 1.16%), the S&P BSE Industrials index (down 1.15%), the S&P BSE Auto index (down 1.08%), the S&P BSE Power index (down 1.06%), the S&P BSE Consumer Discretionary Goods & Services index (down 1.05%), the S&P BSE Utilities index (down 0.96%) underperformed the Sensex. The S&P BSE Bankex (up 1.07%), the S&P BSE Finance index (up 0.9%), the S&P BSE Realty index (up 0.27%), the S&P BSE Healthcare index (up 0.23%), the S&P BSE Metal index (up 0.15%), and the S&P BSE FMCG index (up 0.1%), the S&P BSE Basic Materials index (up 0.03%) and the S&P BSE Energy index (down 0.27%) outperfomed the Sensex.
The market breadth indicating the overall health of the market was negative. On BSE, 1,398 shares declined and 1,085 shares rose. A total of 156 shares were unchanged. The BSE Mid-Cap index rose 0.03%, outperforming the Sensex. The BSE Small-Cap index shed 0.07%. The decline in this index was lower than Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 4639 crore, higher than turnover of Rs 1923.55 crore registered during the previous trading session.
Index heavyweight and cigarette major ITC edged higher in volatile trade, shrugging off a hike in excise duty on tobacco products in Union Budget 2016-17. The stock rose 1.17% at Rs 294.40. The stock hit a high of Rs 301.50 and a low of Rs 268 in intraday trade. Jaitley announced increase in the excise duties on tobacco products other than beedi by about 10 to 15% in the Union Budget 2016-17.
Shares of oil exploration and production (E&P) companies edged lower after the Finance Minister announced that the cess on domestically produced crude oil will be changed from Rs 4,500 per metric tonne to 20% ad valorem. ONGC (down 10.07%), Cairn India (down 5.57%) and Oil India (up 2.58%) declined. Reliance Industries rose 1.74%. The industry has been lobbying to link the cess on oil to an ad valorem rate and was expecting it to be in the range of 8-10%.
Shares of public sector oil marketing companies (PSU OMCs) edged higher after the finance minister Arun Jaitley announced mission to provide LPG connection in the name of women members of poor households. BPCL (up 0.89%), HPCL (up 3.7%) and Indian Oil Corporation (up 0.81%) rose. Jaitley said that the government has allotted Rs 2000 crore in this year's Budget to meet the initial cost of providing these LPG connections.
Steel stocks were mixed as Jaitley announced higher investment on infrastructure sector in Union Budget 2016-17. Steel Authority of India (up 1.15%) and JSW Steel (up 2.71%) rose. Jindal Steel & Power (down 0.84%) and Tata Steel (down 0.2%) fell. Jaitley said that the total outlay for infrastructure for 2016-17 stands at Rs 2.21 lakh crore.
Stocks of PSU banks were mixed after the finance minister Jaitley announced Rs 25000 crore for recapitalization of PSU banks in FY 2017. Punjab National Bank (down 2.14%), Union Bank of India (down 1.61%), Bank of India (down 0.72%) and Bank of Baroda (down 0.11%) edged lower. Indian Overseas Bank (up 2.08%), State Bank of India (up 1.38%) and United Bank of India (up 1.41%) edged higher. If additional capital is required by these banks, the government would find the resources for doing so, he said.
The Finance Minister announced that several steps have already been taken with regards to the problem of stressed assets in PSU banks. The banks are putting in special efforts to effect recoveries, the finance minister said. The Banks Board Bureau (BBB) will be operationalized during 2016-17 and a roadmap for consolidation of PSU banks will be spelt out, Jaitley said. For speedier resolution of stressed assets, the debt recovery tribunals will be strengthened with focus on improving the existing infrastructure, including computerised processing of court cases, to support reduction in the number of hearings and faster disposal of cases, Jaitley said.
It may be recalled that as per Indradhanush framework for transforming PSU banks, the government has proposed capital infusion of Rs 70000 crore in public sector banks over four years through FY 2019, with Rs 25000 crore each for FY 2016 and FY 2017 and Rs 10000 crore each for FY 2018 and FY 2019. The government has already infused Rs 20000 crore in FY2016 so far. PSU banks continue to reel under a severe asset quality pressure, which worsened sharply in Q3 December 2015 after the Reserve Bank of India (RBI) advised banks to classify certain weak loan accounts as NPAs and make provision as a part of an Asset Quality Review (AQR) of the banking system.
Meanwhile, the government yesterday, 28 February 2016, announced constitution of the Banks Board Bureau (BBB) with a view to improve the governance of PSU banks. The Bureau will recommend for selection of heads of PSU banks and financial institutions and help banks in developing strategies and capital raising plans. The Bureau will have three ex-officio members and three expert members in addition to Chairman. All the members and Chairman will be part time, a government statement said yesterday, 28 February 2016. The Bureau will start functioning from 1 April 2016.
IDBI Bank surged 5.84% at Rs 58.90 after finance minister Arun Jaitley in his Budget speech said that the government has option to reduce stake in IDBI Bank below 50%. The process for transformation of IDBI Bank has already started, the FM said. IDBI recently received a green signal from stock market regulator Securities and Exchange Board of India (Sebi) to raise up to Rs 3771 crore through a qualified institutional placement (QIP), a move which will dilute the government's holding in the bank. The government holding in the bank stands at 80.16% (as on 31 December 2015). LIC of India and its various schemes held 7.25% stake in IDBI Bank (as per the shareholding pattern as on 31 December 2015).
Stocks of private sector banks gained in volatile trade. ICICI Bank (up 3.6%), Kotak Mahindra Bank (up 2.64%), IndusInd Bank (up 2.5%), HDFC Bank (up 1.92%) and Yes Bank (up 0.66%) edged higher. Axis Bank (down 2.49%) edged lower.
Multi Commodity Exchange of India surged 5.67% at Rs 814 after the Finance Minister said that Securities and Exchange Board of India (Sebi) would develop new derivative products in the commodity derivatives market. Jaitley said that the transaction in foreign currency of sale of commodity derivatives taking place on a recognised association established in international financial services centre shall not be liable to commodity transaction tax.
Coal India shrugged off hike in clean energy cess in the Budget. The stock rose 0.4% at Rs 312.60. The stock hit a high of Rs 318 and a low of Rs 306.55 in intraday trade. Jaitley in his Budget 2016-17 proposed to increase clean energy cess on coal to Rs 400 per ton from existing Rs 200 per tonne. It may be recalled that in Union Budget 2015-16, the government had raised the clean energy cess on coal to Rs 200 per tonne from Rs 100 per tonne as the government intends to encourage renewable energy generation. The clean energy cess has been renamed as Clean Environment Cess.
Auto stocks were mixed after finance minister Jaitley in his Budget 2016-17, proposed to levy an infrastructure cess of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs.
Maruti Suzuki India (down 4.23%), Hero MotoCorp (down 2.23%), Bajaj Auto (down 1.2%) and Tata Motors (down 0.41%) fell. Ashok Leyland (up 2.98%), Mahindra & Mahindra (up 0.01%), Eicher Motors (up 0.23%) and TVS Motor Company (up 1.4%) rose.
Lupin rose 1%. With respect to media reports titled "Lupin Plans to Step Up Japanese Play," Lupin after market hours today, 29 February 2016, clarified that Kyowa Pharmaceutical Industry Co., Japan, (Kyowa), which is a wholly-owned subsidiary of Lupin, has a plant at Sanda, Japan. In order to meet the rapidly growing demand of generics, the Kyowa board has proposed the setting-up of a 2 billion tablets capacity plant at Tottori, Japan which would be designed to efficiently handle mass volume products and provide flexibility in allowing easy future expansion.
The Finance Minister announced raising the rate of Securities Transaction Tax (STT) on equity options to 0.05% from 0.017%. The Finance Minister slapped tax at the rate of 10% on gross amount of dividend received by individuals, HUFs and firms receiving dividend in excess of Rs 10 lakh per annum. Companies will continue to pay the Dividend Distribution Tax (DDT) on dividend payment, as per the existing tax law. The finance minister announced a plan of phasing out corporate tax exemptions. The benefit of accelerated depreciation will be limited to maximum 40% from 1 April 2017. The benefit of deductions for Research would be limited to 150% from 1 April 2017 and 100% from 1 April 2020. The benefit of section 10AA to new SEZ units will be available to those units, which commence activity before 31 March 2020. The weighted deduction under section 35CCD for skill development will continue up to 1 April 2020.
Jaitley proposed reduction in the corporate income tax rate for the next financial year for companies with turnover not exceeding Rs 5 crore (in the financial year ending March 2015) to 29% plus surcharge and cess from the current 30% plus surcharge and cess. The finance minister announced that new manufacturing companies which are incorporated on or after 1 March 2016 are proposed to be given an option to be taxed at 25% plus surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.
The finance minister said that the government is committed to implement the General Anti Avoidance Rules (GAAR) from 1 April 2017. The finance minister announced a slew of changes in customs and excise duty rates.
The Budget has major focus on agriculture and farm sectors. The government has provided Rs 47912 crore for agriculture, farmers' welfare and irrigation for 2016-17, which is nearly twice the allocation of the current year. The outlay for infrastructure sector has been raised. The government has allotted Rs 2.21 lakh crore for infrastructure development, which is increase of 22.5% over the current fiscal.
The finance minister has stuck to previously announced the fiscal deficit targets. Fiscal target of fiscal deficit of 3.5% of GDP for FY 2016-17 has been retained. The government has also kept the fiscal deficit target of 3.9% of GDP for the current fiscal year. Simultaneously, Jaitley announced the setting up a Committee to review the Fiscal Responsibility and Budget Management (FRBM) Act. A time has come to review the working of the FRBM Act, especially in the context of the uncertainty and volatility, which have become the new norms of global economy, Jaitley said in his Budget speech.
A comprehensive Code on Resolution of Financial Firms will be introduced as a Bill in the Parliament during 2016-17. This Code will provide a specialised resolution mechanism to deal with bankruptcy situations in banks, insurance companies and financial sector entities. This Code, together with the Insolvency and Bankruptcy Code 2015, when enacted, will provide a comprehensive resolution mechanism for India's economy, Jaitley said in his Budget speech. The RBI Act 1934, is being amended to provide statutory basis for a Monetary Policy Framework and a Monetary Policy Committee through the Finance Bill 2016.
Jaitley said that a new policy for management of government investment in public sector enterprises, including disinvestment and strategic sale, has been approved. The government will encourage central public sector enterprises (CPSEs) to divest individual assets like land, manufacturing units, etc. to release their asset value for making investment in new projects, Jaitley said. The NITI Aayog will identify the CPSEs for strategic sale. The government would adopt a comprehensive approach for efficient management of government investment in CPSEs by addressing issues such as capital restructuring, dividend, bonus shares. The Department of Disinvestment is being re-named as the Department of Investment and Public Asset Management (DIPAM), he said.
The existing 24% limit for investment by the foreign portfolio investors (FPIs) in CPSEs, other than banks, will be increased to 49% to obviate the need for prior approval of the government for increasing the FPI investment. The general insurance companies owned by the central government will be listed on the bourses.
Meanwhile, in overseas stock markets, European stocks declined following a negative trend in Chinese stocks. Chinese stocks dropped as some investors were disappointed by a lack of specific measures to boost growth during the Group of 20 meeting in Shanghai. In China, the Shanghai Composite index closed 2.86% lower. In Hong Kong, the Hang Seng index closed 1.3% lower. In Japan, the Nikkei 225 Average closed 1% lower. Trading in US stock index futures pointed to a slide in US stocks at the opening bell today, 29 February 2016.
The Sensex lost 1,868.69 points or 7.51% in February 2016 as most markets in Asia fell amid global financial market turmoil. The Sensex has fallen 3,115.54 points or 11.92% in calendar year 2016 so far (till 29 February 2016). From a 52-week low of 22,600.39 hit on 12 February 2016, the Sensex has risen 401.61 points or 1.77%. The Sensex is off 7,022.74 points or 23.38% from a record high of 30,024.74 hit on 4 March 2015.
The Sensex lost 659.69 points or 2.84% at the day's low of 22,494.61 in early afternoon trade, its lowest level since 9 May 2014. The barometer index rose 188.92 points or 0.81% at the day's high of 23,343.22 in afternoon trade, its highest level since 23 February 2016. The Nifty lost 203.95 points or 2.9% at the day's low of 6,825.80 in early afternoon trade, its lowest level since 9 May 2014. The index rose 64.85 points or 0.92% at the day's high of 7,094.60 in afternoon trade, its highest level since 23 February 2016.
Index heavyweight and cigarette major ITC edged higher in volatile trade, shrugging off a hike in excise duty on tobacco products in Union Budget 2016-17. Stocks of PSU banks were mixed after the finance minister Arun Jaitley announced Rs 25000 crore for recapitalization of PSU banks in FY 2017. Shares of car major Maruti Suzuki India edged lower after Jaitley proposed to levy an infrastructure cess of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs. Shares of oil exploration and production (E&P) companies edged lower after the Finance Minister announced that the cess on domestically produced crude oil will be changed from Rs 4,500 per metric tonne to 20% ad valorem.
Among the sectoral indices on BSE, the S&P BSE IT index (down 2.11%), the S&P BSE Teck index (down 2%), the S&P BSE Capital Goods index (down 1.99%), the S&P BSE Consumer Durables index (down 1.75%), the S&P BSE Oil & Gas index (down 1.5%), the S&P BSE Telecom index (down 1.16%), the S&P BSE Industrials index (down 1.15%), the S&P BSE Auto index (down 1.08%), the S&P BSE Power index (down 1.06%), the S&P BSE Consumer Discretionary Goods & Services index (down 1.05%), the S&P BSE Utilities index (down 0.96%) underperformed the Sensex. The S&P BSE Bankex (up 1.07%), the S&P BSE Finance index (up 0.9%), the S&P BSE Realty index (up 0.27%), the S&P BSE Healthcare index (up 0.23%), the S&P BSE Metal index (up 0.15%), and the S&P BSE FMCG index (up 0.1%), the S&P BSE Basic Materials index (up 0.03%) and the S&P BSE Energy index (down 0.27%) outperfomed the Sensex.
The market breadth indicating the overall health of the market was negative. On BSE, 1,398 shares declined and 1,085 shares rose. A total of 156 shares were unchanged. The BSE Mid-Cap index rose 0.03%, outperforming the Sensex. The BSE Small-Cap index shed 0.07%. The decline in this index was lower than Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 4639 crore, higher than turnover of Rs 1923.55 crore registered during the previous trading session.
Index heavyweight and cigarette major ITC edged higher in volatile trade, shrugging off a hike in excise duty on tobacco products in Union Budget 2016-17. The stock rose 1.17% at Rs 294.40. The stock hit a high of Rs 301.50 and a low of Rs 268 in intraday trade. Jaitley announced increase in the excise duties on tobacco products other than beedi by about 10 to 15% in the Union Budget 2016-17.
Shares of oil exploration and production (E&P) companies edged lower after the Finance Minister announced that the cess on domestically produced crude oil will be changed from Rs 4,500 per metric tonne to 20% ad valorem. ONGC (down 10.07%), Cairn India (down 5.57%) and Oil India (up 2.58%) declined. Reliance Industries rose 1.74%. The industry has been lobbying to link the cess on oil to an ad valorem rate and was expecting it to be in the range of 8-10%.
Shares of public sector oil marketing companies (PSU OMCs) edged higher after the finance minister Arun Jaitley announced mission to provide LPG connection in the name of women members of poor households. BPCL (up 0.89%), HPCL (up 3.7%) and Indian Oil Corporation (up 0.81%) rose. Jaitley said that the government has allotted Rs 2000 crore in this year's Budget to meet the initial cost of providing these LPG connections.
Steel stocks were mixed as Jaitley announced higher investment on infrastructure sector in Union Budget 2016-17. Steel Authority of India (up 1.15%) and JSW Steel (up 2.71%) rose. Jindal Steel & Power (down 0.84%) and Tata Steel (down 0.2%) fell. Jaitley said that the total outlay for infrastructure for 2016-17 stands at Rs 2.21 lakh crore.
Stocks of PSU banks were mixed after the finance minister Jaitley announced Rs 25000 crore for recapitalization of PSU banks in FY 2017. Punjab National Bank (down 2.14%), Union Bank of India (down 1.61%), Bank of India (down 0.72%) and Bank of Baroda (down 0.11%) edged lower. Indian Overseas Bank (up 2.08%), State Bank of India (up 1.38%) and United Bank of India (up 1.41%) edged higher. If additional capital is required by these banks, the government would find the resources for doing so, he said.
The Finance Minister announced that several steps have already been taken with regards to the problem of stressed assets in PSU banks. The banks are putting in special efforts to effect recoveries, the finance minister said. The Banks Board Bureau (BBB) will be operationalized during 2016-17 and a roadmap for consolidation of PSU banks will be spelt out, Jaitley said. For speedier resolution of stressed assets, the debt recovery tribunals will be strengthened with focus on improving the existing infrastructure, including computerised processing of court cases, to support reduction in the number of hearings and faster disposal of cases, Jaitley said.
It may be recalled that as per Indradhanush framework for transforming PSU banks, the government has proposed capital infusion of Rs 70000 crore in public sector banks over four years through FY 2019, with Rs 25000 crore each for FY 2016 and FY 2017 and Rs 10000 crore each for FY 2018 and FY 2019. The government has already infused Rs 20000 crore in FY2016 so far. PSU banks continue to reel under a severe asset quality pressure, which worsened sharply in Q3 December 2015 after the Reserve Bank of India (RBI) advised banks to classify certain weak loan accounts as NPAs and make provision as a part of an Asset Quality Review (AQR) of the banking system.
Meanwhile, the government yesterday, 28 February 2016, announced constitution of the Banks Board Bureau (BBB) with a view to improve the governance of PSU banks. The Bureau will recommend for selection of heads of PSU banks and financial institutions and help banks in developing strategies and capital raising plans. The Bureau will have three ex-officio members and three expert members in addition to Chairman. All the members and Chairman will be part time, a government statement said yesterday, 28 February 2016. The Bureau will start functioning from 1 April 2016.
IDBI Bank surged 5.84% at Rs 58.90 after finance minister Arun Jaitley in his Budget speech said that the government has option to reduce stake in IDBI Bank below 50%. The process for transformation of IDBI Bank has already started, the FM said. IDBI recently received a green signal from stock market regulator Securities and Exchange Board of India (Sebi) to raise up to Rs 3771 crore through a qualified institutional placement (QIP), a move which will dilute the government's holding in the bank. The government holding in the bank stands at 80.16% (as on 31 December 2015). LIC of India and its various schemes held 7.25% stake in IDBI Bank (as per the shareholding pattern as on 31 December 2015).
Stocks of private sector banks gained in volatile trade. ICICI Bank (up 3.6%), Kotak Mahindra Bank (up 2.64%), IndusInd Bank (up 2.5%), HDFC Bank (up 1.92%) and Yes Bank (up 0.66%) edged higher. Axis Bank (down 2.49%) edged lower.
Multi Commodity Exchange of India surged 5.67% at Rs 814 after the Finance Minister said that Securities and Exchange Board of India (Sebi) would develop new derivative products in the commodity derivatives market. Jaitley said that the transaction in foreign currency of sale of commodity derivatives taking place on a recognised association established in international financial services centre shall not be liable to commodity transaction tax.
Coal India shrugged off hike in clean energy cess in the Budget. The stock rose 0.4% at Rs 312.60. The stock hit a high of Rs 318 and a low of Rs 306.55 in intraday trade. Jaitley in his Budget 2016-17 proposed to increase clean energy cess on coal to Rs 400 per ton from existing Rs 200 per tonne. It may be recalled that in Union Budget 2015-16, the government had raised the clean energy cess on coal to Rs 200 per tonne from Rs 100 per tonne as the government intends to encourage renewable energy generation. The clean energy cess has been renamed as Clean Environment Cess.
Auto stocks were mixed after finance minister Jaitley in his Budget 2016-17, proposed to levy an infrastructure cess of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs.
Maruti Suzuki India (down 4.23%), Hero MotoCorp (down 2.23%), Bajaj Auto (down 1.2%) and Tata Motors (down 0.41%) fell. Ashok Leyland (up 2.98%), Mahindra & Mahindra (up 0.01%), Eicher Motors (up 0.23%) and TVS Motor Company (up 1.4%) rose.
Lupin rose 1%. With respect to media reports titled "Lupin Plans to Step Up Japanese Play," Lupin after market hours today, 29 February 2016, clarified that Kyowa Pharmaceutical Industry Co., Japan, (Kyowa), which is a wholly-owned subsidiary of Lupin, has a plant at Sanda, Japan. In order to meet the rapidly growing demand of generics, the Kyowa board has proposed the setting-up of a 2 billion tablets capacity plant at Tottori, Japan which would be designed to efficiently handle mass volume products and provide flexibility in allowing easy future expansion.
The Finance Minister announced raising the rate of Securities Transaction Tax (STT) on equity options to 0.05% from 0.017%. The Finance Minister slapped tax at the rate of 10% on gross amount of dividend received by individuals, HUFs and firms receiving dividend in excess of Rs 10 lakh per annum. Companies will continue to pay the Dividend Distribution Tax (DDT) on dividend payment, as per the existing tax law. The finance minister announced a plan of phasing out corporate tax exemptions. The benefit of accelerated depreciation will be limited to maximum 40% from 1 April 2017. The benefit of deductions for Research would be limited to 150% from 1 April 2017 and 100% from 1 April 2020. The benefit of section 10AA to new SEZ units will be available to those units, which commence activity before 31 March 2020. The weighted deduction under section 35CCD for skill development will continue up to 1 April 2020.
Jaitley proposed reduction in the corporate income tax rate for the next financial year for companies with turnover not exceeding Rs 5 crore (in the financial year ending March 2015) to 29% plus surcharge and cess from the current 30% plus surcharge and cess. The finance minister announced that new manufacturing companies which are incorporated on or after 1 March 2016 are proposed to be given an option to be taxed at 25% plus surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.
The finance minister said that the government is committed to implement the General Anti Avoidance Rules (GAAR) from 1 April 2017. The finance minister announced a slew of changes in customs and excise duty rates.
The Budget has major focus on agriculture and farm sectors. The government has provided Rs 47912 crore for agriculture, farmers' welfare and irrigation for 2016-17, which is nearly twice the allocation of the current year. The outlay for infrastructure sector has been raised. The government has allotted Rs 2.21 lakh crore for infrastructure development, which is increase of 22.5% over the current fiscal.
The finance minister has stuck to previously announced the fiscal deficit targets. Fiscal target of fiscal deficit of 3.5% of GDP for FY 2016-17 has been retained. The government has also kept the fiscal deficit target of 3.9% of GDP for the current fiscal year. Simultaneously, Jaitley announced the setting up a Committee to review the Fiscal Responsibility and Budget Management (FRBM) Act. A time has come to review the working of the FRBM Act, especially in the context of the uncertainty and volatility, which have become the new norms of global economy, Jaitley said in his Budget speech.
A comprehensive Code on Resolution of Financial Firms will be introduced as a Bill in the Parliament during 2016-17. This Code will provide a specialised resolution mechanism to deal with bankruptcy situations in banks, insurance companies and financial sector entities. This Code, together with the Insolvency and Bankruptcy Code 2015, when enacted, will provide a comprehensive resolution mechanism for India's economy, Jaitley said in his Budget speech. The RBI Act 1934, is being amended to provide statutory basis for a Monetary Policy Framework and a Monetary Policy Committee through the Finance Bill 2016.
Jaitley said that a new policy for management of government investment in public sector enterprises, including disinvestment and strategic sale, has been approved. The government will encourage central public sector enterprises (CPSEs) to divest individual assets like land, manufacturing units, etc. to release their asset value for making investment in new projects, Jaitley said. The NITI Aayog will identify the CPSEs for strategic sale. The government would adopt a comprehensive approach for efficient management of government investment in CPSEs by addressing issues such as capital restructuring, dividend, bonus shares. The Department of Disinvestment is being re-named as the Department of Investment and Public Asset Management (DIPAM), he said.
The existing 24% limit for investment by the foreign portfolio investors (FPIs) in CPSEs, other than banks, will be increased to 49% to obviate the need for prior approval of the government for increasing the FPI investment. The general insurance companies owned by the central government will be listed on the bourses.
Meanwhile, in overseas stock markets, European stocks declined following a negative trend in Chinese stocks. Chinese stocks dropped as some investors were disappointed by a lack of specific measures to boost growth during the Group of 20 meeting in Shanghai. In China, the Shanghai Composite index closed 2.86% lower. In Hong Kong, the Hang Seng index closed 1.3% lower. In Japan, the Nikkei 225 Average closed 1% lower. Trading in US stock index futures pointed to a slide in US stocks at the opening bell today, 29 February 2016.
The Sensex lost 1,868.69 points or 7.51% in February 2016 as most markets in Asia fell amid global financial market turmoil. The Sensex has fallen 3,115.54 points or 11.92% in calendar year 2016 so far (till 29 February 2016). From a 52-week low of 22,600.39 hit on 12 February 2016, the Sensex has risen 401.61 points or 1.77%. The Sensex is off 7,022.74 points or 23.38% from a record high of 30,024.74 hit on 4 March 2015.
No comments:
Post a Comment