Weekly Report 5-03-2011

The Union Budget turned out to be a savior for the Indian capital markets, at least for the week, with Nifty posting smart gains before finishing flat on Friday. At the moment, it is not clear whether the post-Budget rally will sustain or the market will soften a bit. either of the two scenarios could unfold. So, it would pay to stay cautious. The trend may be volatile and the indices will stay within a trading range. The Nifty is likely to trade between 5300 and 5650 in the short term.

Event wise, next week will be a little low key. IIP data for January is likely to show improvement from December. Among the other important domestic data points to watch out for in the coming days include: Monthly Inflation Report on March 14 and the RBI mid-quarter review on March 17.

Globally, one should look out for economic reports on Japan's Q4 GDP, UK's industrial production, Bank of England's interest rate decision, US retail sales and US consumer sentiment.

How can one forget the ongoing turmoil in the Middle-East and North Africa. Geopolitical risk and its fallout on crude oil prices will continue to have a bear sentiment across world markets. Also, the US jobs data will be analysed carefully to ascertain the state of the US economy, especially the weak labour market.

Budget 2011-12 details

TAXES

* Standard rate of excise duty held at 10 percent; no change in CENVAT rates

* Personal income tax exemption limit raised to Rs 180,000 from Rs 160,000 for individual tax payers
* For senior citizens, the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh.
* Citizens over 80 years to have exemption limit of Rs 5 lakh.
* To reduce surcharge on domestic companies to 5 percent from 7.5 percent.
* A new revised income tax return form 'Sugam' to be introduced for small tax papers.
* To raise minimum alternate tax to 18.5 percent from 18 percent
* Direct tax proposals to cause 115 billion rupees in revenue loss
* Service tax rate kept at 10 percent
* Customs and excise proposals to result in net revenue gain of 73 billion rupees >>> More >>

Highlights of Union Budget 2011-12

GDP estimated to have grown at 8.6% in 2010-11

Exports grown by 9.6%, imports by 17.6% in April-January 2010-11 over corresponding period last year

Indian economy expected to grow at 9% in 2011-12.

Five-fold strategy to deal with black money. Group of Ministers to suggest ways for tackling corruption

Public Debt Management Agency of India Bill to come up next financial year

Direct Tax Code (DTC) to be effective from April 01, 2012

Phased move towards direct transfer cash subsidy to BPL people for better delivery of kerosene, LPG and fertilizer mooted

Rs.40,000 crore to be raised through disinvestment in 2011-12

FDI policy to be liberalized further >>> More >>

Historical Performance of Indian Capital Market on Budget Day

Budget Date	Budget Day	Previous Day	Next Day	Pre-Week	Post Week
28-Feb-01	4.36%	-1.05%	0.58%	-2.38%	-11.28%
28-Feb-02	-3.87%	-0.19%	3.27%	-0.98%	1.17%
28-Feb-03	0.19%	0.52%	-0.19%	-0.56%	-3.92%
Jul 8 2004	-2.26%	0.56%	2.10%	0.05%	2.72%
28-Feb-05	2.19%	-0.07%	-0.94%	1.89%	2.67%
28-Feb-06	0.86%	0.80%	1.88%	3.90%	1.96%
28-Feb-07	-4.01%	-1.25%	1.71%	-10.17%	-0.41%
29-Feb-08	-1.38%	-0.01%	-5.12%	-0.22%	-8.25%
06-Jul-09	-5.83%	1.74%	0.90%	-2.11%	1.49%
26-Feb-10	1.08%	-0.01%	2.09%	0.00%	4.07%