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Nifty Gives A Full Salute to Union Budget

Posted on 02-Feb-2017 Comments  0

Nifty Gives A Full Salute to Union Budget


    Nifty crossed the 8700 mark and gained over 155 points on the budget day after a largely reformist and spending oriented budget stole the show. The big gainers were PSUs, banks and housing companies.


   The two big themes of the budget in terms of stocks will be rural consumption and entry level demand. This will be positive for stocks like Maruti, M&M, UPL, Rallis, Kaveri Seeds, Hindustan Lever, ITC etc.

   FIIs were net buyers to the tune of Rs.93 crore while DFIs net bought Rs.1133 crore on Wednesday. FPIs are likely to become more aggressive buyers once there is clarify on the fine print of the Union Budget.

   Markets across the Europe, US and Asia were broadly positive. Of course, the Indian markets were largely immune to global happenings but the strong dollar is seen as a positive by most markets.

   The decision to keep fiscal deficit in check and control government borrowings in the year will be a big positive for treasury holdings of banks. It will be a positive for private banks like IndusInd, Kotak and RBL Bank.


   IT and Pharma stocks are under pressure as  Trump may have raised doubts over their medium term economics. Outlook is seen as negative on Infosys, TCS, Wipro well as Sun Pharma and Lupin Pharma.


   Housing and HFCs could be the big theme after the budget. Low cost builders like Ashiana Housing and Kolte Patil could be in the limelight. Additionally, HFCs like Dewan and LIC Housing could also be in the limelight.

Some Highlighting Points of Budget 2017-18

  • Tax rates halved to 5% for income of Rs 2.5-5 lakh, tax slabs unchanged
  • 10% surcharge on people earning between Rs 50 lakh-1 cr
  • 15% surcharge on annual income above Rs 1 cr to continue
  • Cash transactions above Rs 3 lakh to banned
  • Corporate tax for SMEs with turnover up to Rs 50 cr cut to 25%; 96% companies to benefit
  • Customs duty of LNG halved to 2.5%
  • Fiscal deficit pegged at 3.2% next year, 3% in FY19
  • FIPB to be abolished; further FDI policy liberalisation
  • Government to have time-bound procedure for CPSE listing
  • Railway PSUs -- IRCTC, IRFC, IRCON to be listed
  • Payment Regulatory Board to be set up within RBI to regulate digital payments
  • Demonetisation bold, decisive measure; to help GDP growth, taxes mop up to rise
  • Effect of demonetisation not to spill over to next year
  • GST, demonetisation tectonic changes for economy
  • 3-year period for long-term capital gains tax on immovable property reduced to 2 years; base year indexation shifted from April 1, 1981 to April 1, 2001
  • Divestment target at Rs 72,500 cr, up from 56,500 cr
  • Gross market borrowing pegged at Rs 6.05 lakh cr
  • Duty exempted on POS machines and Iris readers for encouraging digital payments
  • Tax benefits for Start ups to be for 3 out of 7 yrs
  • FPI to be exempt from indirect transfer provision
  • Integrated public sector oil major to be created to match global giants
  • Retail inflation to remain within 2-6 pc
  • Infrastructure investment pegged at Rs 3.96 lakh cr
  • Infrastructure status accorded affordable housing
  • Road sector allocation hiked to Rs 64,000 cr
  • FDI increased 35 pc to Rs 1.45 lakh crore in H1 FY17.
  • Fiscal deficit for this fiscal at 3.2%, down from budget estimate of 3.5%
  • Rs 10,000 cr to be provided to banks for recapitalisation
  • MAT credit will be allowed to be carried forward for 15 years, as against 10 years at present
  • Extensive reach out programme for GST to be launched on April 1.



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