Budget high

Feb 22, 2016, 08:54 IST | Arun Kejriwal

It’s that time of the year again; all eyes at Dalal Street are on Arun Jaitley

The week gone by began on a promising note, markets gained sharply on Monday. There was an equally sharp correction on Tuesday and thereafter the markets were in a normal pattern of up, down and sideways. The week ended with gains of 723.03 points or 3.15 per cent on the Sensex which closed at 23,709.15 points. Nifty gained 229.80 points or 3.29 per cent to close at 7,210.75 points. BSE100, BSE200 and BSE500 gained 3.11 per cent, 2.92 per cent and 2.84 per cent respectively while BSEMIDCAP gained 1.95 per cent and BSESMAALCAP 2.00 per cent.

Finance Minister Arun Jaitley (centre) with MoS, Finance, Jayant Sinha (right) and officials of his ministry take part in the ‘Halwa Ceremony’ to mark the beginning of printing of budgetary documents, in New Delhi on Friday. Pic/PTI
Finance Minister Arun Jaitley (centre) with MoS, Finance, Jayant Sinha (right) and officials of his ministry take part in the ‘Halwa Ceremony’ to mark the beginning of printing of budgetary documents, in New Delhi on Friday. Pic/PTI

Sector highlight
In sectors, the best performer was BSEMETAL up 8.52 per cent followed by BSECAPGOOD 5.95 per cent, BSEPSY 4.21 per cent and BSEREALTY 4.03 per cent. On the losing sector, there was just one BSECONDUR down 1.59 per cent.In individual stocks, there were big gainers with Bank of Baroda up 22.08 per cent followed by metal stocks Vedanta 17.93 per cent, Tata Steel 16.25 per cent and Hindalco 13.28 per cent. Larsen and Toubro gained 9.20 per cent. There were few losers led by BHEL 2.53 per cent, HDFC 2.12 per cent and Cipla 1.05 per cent. Titan Industries was a big loser down 6.16 per cent.

The Indian rupee lost 22 paisa or 0.32 per cent to close at R 68.45. Dow Jones had a good week and gained 418.15 points or 2.62 per cent to close at 16,391.99 points. Markets globally were stronger but the undercurrent is weak and there is a great deal of uncertainty in the minds of investors about which way the markets are headed. The week ahead sees the budget session of parliament beginning with the Railway budget to be presented on February 26. The Union budget would be presented in the following week on Monday, February 29. Prior to these events, the February series would expire on Thursday, February 25. The current value of Nifty at 7,210.75 points is down by 211.70 points or 2.85 per cent compared to the January expiry of 7,422.45 points.

GST on the anvil
There seems a likelihood of Goods and Services Tax (GST) Bill becoming a reality. The new chairman of the GST committee of State Finance Ministers is Amit Mitra of the Trinamool Congress (TMC).

Other regional parties who head some of the states have realised the advantages of GST and the benefit to their state. It could therefore happen that the Congress may walkout or abstain and the other parties vote on the GST bill favourably. Its early days and one needs to keep one’s fingers crossed. Without being optimistic this bill has the potential to become a game changer.

Fingers crossed
With just about a week to go before the budget is presented, it’s time for a list of expectations. This time around there seem to be not too many from Finance Minister Arun Jaitley.

The good things though is the falling crude price has been a bonanza and the government has collected a huge amount from the hike in excise duties on petrol and diesel. He has also saved on the subsidy earlier which no longer exists.

In case the government decides to kick start the economy and launch investment plans for infrastructure, the money is there and this can be done without disturbing the fiscal maths. This comfort would probably be available for the first time in many many years.

Global volatility is a sign of nervousness and would continue in the coming days and weeks. India has the budget coming up, what would be the new laws post them still isn’t certain. There is talk of tinkering with the long term capital gains tax and one is not sure what would actually happen.

If for any reason the Finance Minister chooses to re-introduce the same, one would be sure that March 2016 would see a blood bath the markets have not seen as yet. In all rationality one would expect saner actions and not tinker with the markets when the economy is trying to recover.

The week ahead would be one of expectancy and therefore muted trading with investors waiting for the big announcement. With hardly any expectations and therefore no build-up of positions, the markets are likely to remain volatile and any positive or negative announcement is likely to move markets either way. Trade with extreme caution.

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Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.

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