impact of budget 2010 on capital market
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Impact of budget 2010 on Capital
Market
Presented byPooja shukla
Abhishek jangid
Amit gampawar
Saurav sharma
Aditya gupta
Roopam singh
Navneet sharma
What’s in store for this year?
Double Digit growth path.
Harness economic growth to consolidate the recent
gains in making development more inclusive.
Address the weaknesses in government systems,
structures and institutions at different levels of
governance.
RBI to give additional banking licenses to private
sector players. NBFC’s could also be considered, if
they meet the RBI’s eligibility criteria.
Contd.
Rs.16,500 crores provided to ensure that the Public
Sector Banks are able to attain a minimum 8% Tier-I
capital by March 31, 2011.
Government to provide further capital to strengthen
the RRBs.
Extension of existing interest subvention of 2 per cent
for one more year for exports covering
handicrafts, carpets, handlooms and small and
medium enterprises.
Impact on your wallet……
If you are in stock market then definitely
you will be keen to know how the much
awaited 2010 budget will impact on your
stock holdings. After doing detailed
analysis through different mediums we
have tried to answer your questions in
much appropriate and easy way. Below is
the sector wise analysis post budget
Trend in Stock Market- Respect
to budget
Indian Markets have seen a sharp rally from
the budget period of Feb.2009 to the present
Feb. 2010. The SENSEX in the month of Feb.
2009 closed at 8891 and the NIFTY at
2763.65.
Comparing the present value of Sensex
around 16200 and Nifty around 4900 both the
indices have gained nearly 82.20% & 77.30%
respectively.
The Indian markets have seen a big round of
recovery on account of the stimulus packages
being announced by our government and
other measures being taken last year to help
the economy recover.
Contd.
The Indian economy is in a better condition now and
the Government may now plan out on how will it If you
read the fiscal deficit numbers that have rollback the
stimulus package. come out for the year, we are
running at fiscal deficit of close to 11%.
What is Fiscal deficit ?
The difference between total revenue and total
expenditure of the government is termed as
fiscal deficit.
It is an indication of the total borrowings
needed by the government.
A deficit is usually financed through borrowing
from either the central bank of the country or
raising money from capital markets by issuing
different instruments like treasury bills and
bonds.
Budget 2010 & Capital Market
Lower fiscal deficit in the financial year
ahead, resulting in a lower government
borrowing, soothed the stock market’s
nerves.
Stock markets gave a rousing welcome to
the Budget and rose immediately as the
FM presented his speech.
2 % hike in excise duty for sectors like
cement, capital goods and autos.
Automobile sector
It is not that much impacted, this sector has
shown solid signs of recovery thanks to
stimulus package which is intact thereby no
negative comings in this sector.
The industry is expected to grow 12-13% in
2010-11 in value terms, led by commercial
vehicle and passenger car sales.
Commercial vehicle volumes are estimated
to rise 15-17% in 2010-11 due to sustained
economic growth. Exports will grow 13-
14%.
Automobile sector
Stocks Before
Budget
After budget % change
TATA Motors 715.55 739.05 +3.28
MARUTI 1310 1336 +1.98
BAJAJ AUTO 1698 1907 +12.31
HERO HONDA 1690 1701 +0.65
ASHOK LEYLAND 50.25 46.50 -7.46
TVS MOTORS 69.05 63.10 -8.62
Banking and Finance sector
It is also having some positive impact.
The government has proposed a Rs 16,500-crore Tier-I capital infusion in 2010-11, whichis significantly higher than Rs 1,200 croreprovided in 2009-10.
This will further meet credit demands whichare expected to increase owing to economyrecovery and increase in exports.
Banks could hike deposit rates in to meetcredit demand, leading to a 20% growth indeposits.
Contd.
Appropriate Banking facilities to be
provided to habitations having population
in excess of 2000 by March, 2012.
Insurance and other services to be
provided using the Business
Correspondent model. By this
arrangement, it is proposed to cover
60,000 habitations.
Augmentation of Rs.100 crore each for the
Financial Inclusion Fund (FIF) and the
Financial Inclusion Technology
Fund, which shall be contributed by
Government of India, RBI and NABARD.
FINANCE SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
RELIANCE
CAPITAL
761 735.65 -3.33
HDFC 1654 1700 +2.78
KOTAK FINANCE 750.70 714 -4.89
INDIABULL
FINANCE
107 100 -6.54
BANK SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
SBI 1952.65 1911.60 -2.10
BANK OF INDIA 335.45 323.70 -3.50
ICICI 832 845.35 +1.60
AXIS BANK 1067 1104.60 +3.52
Cement sector
As long as infrastructure activities goes
on increasing cement sector will boom.
In order to meet demands companies
have increased manufacturing capacity
thereby lowering operating cost.
However 2% hike in excise duty will have
an negative impact. So overall you can
say positive effect.
CEMENT SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
ACC 912.80 906.80 -0.66
AMBUJA
CEMENT
109.35 105.40 -3.61
ULTRATECH
CEMENT
998.65 1033.85 +3.52
INDIAN CEMENT 124.20 116.60 -6.11
Agriculture Sector
Rs. 400 crores provided to extend the
Green Revolution
Rs. 300 crores provided to organize 60,000
“pulses and oil seed villages” in rain-fed
areas
Rs. 200 crores provided for sustaining the
gains already made in the green revolution
areas through conservation farming
FCI to hire godowns from private parties for
a guaranteed period of 7 years
Agriculture credit flow through banks to be
set at a target of Rs.3,75,000 Crores
Contd.
For farmers loans upto 3 lakh at 7% p.a.
Agriculture sector has grown by 2.4%.
Record rice production at 98.04 million
tonnes.
14 national agricultural projects approved.
Central assistance for storm water
drainage project increase to Rs.500 crore
from 200 crore.
Rajeev Gandhi Krishi vikas yojana
allocation up by 30%.
AGRICULTURE SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
Jain irrigation 774.60 854.25 +10.28
National agro
industries
21.25 20.70 -2.59
Rallis 1139.85 1314.70 +15.34
Infra-structure
Huge investments have been projected
for coming years.
Additional deduction available for
investment in long-term infrastructure
bonds for individuals will improve fund
availability. Additionally, concession on
import duty for monorail projects would
reduce capital cost for players.
So all positives for infrastructure
sector.
Contd.
Rs 1,73,552 crore provided for
infrastructure development which accounts
for over 46% of the total plan allocation.
Allocation for road transport increased by
over 13% from Rs. 17,520 to 19,834
crores.
Rs 16,752 crore provided for
Railways, which is about Rs.950 crore
more than last year.
INFRA STRUCTURE
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
DLF 303.75 288.85 -4.91
UNITECH 74.55 69.15 -7.24
INDIABULLS
REAL ESTATE
175.05 161.20 -7.91
HDIL 315.25 291.15 -7.64
PARSWANTATH
DEVELOPERS
118.20 115.80 -2.03
Consumer sectors
Demand for colour TVs, refrigerators,
washing machines ,LCDs etc is ever
increasing. Increase in tax saving slab will
decrease tax paying liabilities thereby
further boosting up disposable income and
ultimately consumer sector.
All positives for this sector too.
CONSUMER SECTOR
STOCK BEFORE
BUDGET
AFTER
BUDGET
% CHANGE
Dr. REDDYS LAB 1103.80 1141.95 +3.46
SUN PHARMA 1547.80 1571.95 +1.56
RANBAXY 441.60 454.05 +2.82
CIPLA 322.35 312.65 -3
GLENMARK 256.30 260.05 +1.46
FORTIS
HEALTHCARE
151.55 156.30 +3.17
Power sector
The budgetary allocation for the sector,
excluding Rajiv Gandhi Grameen
Vidyutikaran Yojana (RGGVY), has been
raised to Rs 5,130 crore from Rs 2,230
crore.
A clean energy cess of Rs 50 per tonne will
be levied on domestic and imported coal.
There will be a marginal pressure, though,
on companies which sell power in the open
market.
Solar, small hydro and micro power projects
at a cost of about Rs.500 crore to be set up
in Ladakh region of Jammu and Kashmir.
POWER SECTOR
STOCK BEFORE
BUDGET
AFTER BUDGET % CHANGE
RELIANCE
POWER
142.40 138.90 -2.46
SUZLON 73.35 69.50 -5.25
TATA POWER 1242.65 1258.90 +1.30
NTPC 202.73 204.35 +0.80
BHEL 2378.70 2376.55 -0.09
SIEMENS 643.75 669.15 +3.95
Steel Industry
The most promising sector has shown
faster than expected recovery from
economic downturn. Increase in
infrastructure and automobiles has
increase its demand and supply scenario.
Profitability of steel companies is
expected to continue in coming years. So
lot of positives for steel sector.
STEEL SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
TATA STEEL 549.85 576.40 +4.83
SESA GOA 378.95 372.10 -1.81
JINDAL STEEL 633.60 617.25 -2.58
SAIL 206.63 209.50 +1.38
GUJARAT NRE
COKE
72.45 76.65 +5.80
Telecom sector
Subscriber base expected to increase
but continuous fall in profits due to
lowering tariff plans and increase in
minimum alternate tax to 18% from 15%
will negatively impact the profitability of
telecom service providers.
So negative impact on this sector.
TELECOM SECTOR
STOCK BEFORE
BUDGET
AFTER BUDGET % CHANGE
RELIANCE
COMMUNICATIO
N
170.50 160.55 -5.84
BHARTI- AIRTEL 314.40 281.10 -10.59
IDEA CELLULAR 58.85 59 +0.25
TATA
COMMUNICATIO
N
301.05 298.75 -0.76
Oil and Gas sector
Subsidy on petroleum products will be
disbursed as cash to oil marketing
companies (OMCs).
Increase in customs duty across crude oil
and petroleum products would translate in
higher duty protection for refiners.
The resultant increase in refinery gate
prices for retail auto and cooking fuels, if
absorbed by OMCs, would translate in a
rise of almost Rs 11,000-14,000 crore in
under-recoveries in 2010-11.
Contd.
Bio-diesel custom duty lowered.
To develop and set up national gas grid.
Tax incentives will be provided on capital
expenditure on the laying and operating
of cross country natural gas, crude or in
pipe line networks for excise duty on
naphtha reduced to 14%.
OIL SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
ONGC 1102.10 1105.90 +0.34
BPCL 556.90 592.65 +6.41
HPCL 338.95 362.55 +6.96
INDIAN OIL
CORP.
309 326.55 +5.68
Textile sectors
The extension of 2% interest subvention on
pre- and post-shipment export credit till March
31, 2011, will help small exporters reduce
interest costs.
The hike in excise duty on man-made fibres
and yarns will increase polyester prices by Rs
1.50 to Rs 2 a kg, but the manufacturers will
be able to pass the hike, as polyester
continues to be cheaper than cotton.
The government announced a one-time grant
of Rs 200 crore to Tamil Nadu for the
installation of a zero-discharge system to
reduce environmental pollution at the Tirupur
cluster. This will help knitwear exporters in the
TEXTILE SECTOR
STOCK BEFORE
BUDGET
AFTER BUDGET % CHANGE
ALOK IND. 26.15 23.70 -9.37
RAYMONDS 212.70 227.90 +7.15
WELSPUN
INDIA.
77.10 78.90 +2.33
BOMBAY
RAYON.
212.05 204.40 -3.61
Precious Metal
On gold and platinum from Rs.200 per 10
grams to Rs.300 per 10 grams .
On silver from Rs.1,000 per kg to Rs.1,500
per kg .
Basic customs on Rhodium - a precious
metal used for polishing Jewellery reduced
to 2 per cent .
The excise duty on refined gold made from
such ore or concentrate reduced from 8%
to a specific duty of Rs.280 per 10 grams.
PRECIOUS METAL
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
Hindustan zinc 1073.10 1087.80 +1.37
National
aluminum
379.80 375.30 -1.84
Hindalco
industries ltd
140.75 155 +10.12
Defence Sector
Allocation for Defence increased to Rs.
1,47,344 crore including Rs 60,000
crore for Capital expenditure.
About 2,000 youth to be recruited as
constables in five Central Para Military
Forces from Jammu and
Kashmir in the year 2010.
DEFENCE SECTOR
STOCKS BEFORE
BUDJET
AFTER BUDGET % CHANGE
BEML 1095 1115.20 +1.84
L & T 1447.85 1487.20 +2.72
Zen technology 216.60 210.90 -2.63
Rural sector
Rs. 66,100 crore provided for Rural
Development.
Allocation for Mahatma Gandhi National
Rural Employment Guarantee Scheme
stepped up to Rs.40,100 crore in 2010-11.
Unit cost under Indira Awas Yojana
increased Rs.45,000 in the plain areas and
to Rs.48,500 in the hilly areas.
Contd.
Allocation to Backward Region Grant
Fund enhanced by 26 per cent from
Rs.5,800 crore in 2009-10 to Rs 7,300
crore in 2010-11.
Additional central assistance of Rs 1,200
crore provided for drought mitigation in
the Bundelkhand region.
An amount of Rs.48,000 crore allocated
for rural infrastructure programmes under
Bharat Nirman.
RURAL SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
Nestle India 2747.15 2642.25 -3.81
Britannia
Industries
1639 1632.10 -0.42
ITC 250.85 248.40 -0.98
Marico 99.80 100 +0.20
Medical Sector
Uniform, concessional basic duty of 5 per
cent, CVD of 4 per cent with full
exemption from special additional duty
prescribed on all medical equipments.
Full exemption currently available to
medical equipment and devices such as
assistive devices, rehabilitation aids etc.
Specified inputs for the manufacture of
orthopedic implants exempted from import
duty.
MEDICAL SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
Dishman Pharma 207.75 203.50 -2.05
GlaxoSmithKline
Pharmaceuticals
1576.85 1681.75 +6.65
Pfizer Ltd. 924.35 935 +1.14
IT Sector
There have been no specific
announcements made which should affect
the IT sector directly but the UIDAI (Unique
ID Authority of India) project has been
approved and Rs. 1900 crores have been
allocated to it. The project will most likely be
handled by Indian IT companies so this
should be good.
Also, Rs. 31000 crores have been
earmarked for school education reforms in
2010-2011; which will probably be a boost
for the IT sector in the long term.
IT SECTOR
STOCKS BEFORE
BUDGET
AFTER BUDGET % CHANGE
KPIT Cummins
Infosystem
113.60 110.45 -2.77
Infosys 2497.50 2577.05 +3.19
Polaris software 160.20 155.15 -3.15
Wipro 659.75 671.05 +1.71
Conclusion
Increased borrowing from the government will make the
corporate difficult to borrow.
As government increased expenditure in infrastructure,
defence and other expenditure this will have indirect
positive impact on the industries.
Government push for rural development is going to see a
new growth area opening up for the FMCG companies as
their disposal income will increase .
Companies working in the rural sector will definitely will be
the prime beneficiary in the coming years.
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