Bulls have pinned their hopes on finance minister Pranab Mukherjee. Ignoring weak global cues,Dalal Street surged on Friday after railway minister Mamta Banerjee announced a number of new initiatives in the Rail Budget and optimism that the Union Budget on Monday would detail plans to further open up the economy and kick off asset sales gained ground.
With investors covering their short positions ahead of the budget on Monday,the BSE index rose 1.74 per cent,or 254.56 points,to 14,913.05 points after slipping as much as 1.1 per cent at one point in volatile trade. Financial stocks rose on hopes for incentives,while infrastructure-related stocks gained in anticipation of higher government spending.
Said Khambatta Securities director Sunil Shah,This will not be a hard-core economists budget but have a social angle as was displayed on Friday with the Railway Budget talking about a number of populist steps. There might be changes in the securities transaction tax (STT),long-term and short-term capital gains tax and the levy of service tax. Marketmen will be happy even if status quo in all these taxes is maintained,said a dealer.
Others are also hopeful. The Union Budget is likely to be positive for the markets as the economic survey has given some confidence. The government has talked about a number of reforms and the execution of these plans will bolster faith amongst market participants, said SBI MF chief investment officer Navneet Munot.
Divestments are now likely to be on the governments agenda with the president stating that there will soon be a roadmap for listing PSUs. The government plans to raise around Rs 10,000 crore in FY10.
The bottom line is that divestments,which have been on the back burner for a long time will likely see the light of day. Financing Indias infrastructure deficit is likely to be a major focus area. To this end,one could see measures to open up the debt market,given that of the total investment requirements of $517 billion,debt financing is estimated at $247billion. This could include tax exemptions on infrastructure bonds,further raising limits for viability gap funding, said Birla Sun Life Insurance chief investment officer Vikram Kotak.
Rail-related stocks fall
MUMBAI: Shares of companies related to the rail sector plunged by around 5 pc on the BSE as the Railway Budget fell short of expectations. Shares of engineering and wagon manufacturers like BEML,Texmaco and Titagarh Wagons settled down by up to 5 pc . While BEML closed at Rs 1,033,down 4.51 pc on the BSE,Titagrah settled 5 pc lower at Rs 417.35.