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					H I N D U STA N T I M E S , N E W D E L H I
S AT U R DAY, M A R C H 1 7 , 2 0 1 2                                                                                                                                                                                                                                                                                | 07

       union budget 2012-13                                                                                                                                                                                                                                                markets
ASSETS                                                                                                            Market capitalisation                                                                                       “The capital market

                                                                  5,000
                                                                                  Number of active
                                                                                  listed companies in                                                                                                     17,139              is not mainly about
                                                                                                                  of listed companies
WITH CLASS                                                                        India

                                                                             110,221        110,121               Figures in current
                                                                                                                                                                                                                              equities alone. A
                                                                                                                                                                                                                              lively market in
Global capital is                                                                                                                                                                                                             corporate securities
seeking out all islands                   FII investment in India (R cr)                                          US$ in billion
                                                                                                                                                                                                                              helps the banking
of discernible demand                         48,800            53,404                                                                                                                                                        system to accurately
such as India which                                                                                                                                                                   4,100 4,763                             price current and
was among the first                                                                                                                                                        3,107                                              future assets.”
                                                                                                                                                1,926
                                                                                                                  1,005 1,089 1,430 1,546 1,616
major economies to                        0
                                                       25,236
                                                                                                                                                                                                                              PM’s speech at the
shrug off the credit                                                                                    -311
                                                                                                                                                                                                                              inauguration of new SEBI
crisis in 2008.                                                                                    till Nov. 30
                                                                                                                                                                                                                              building in Mumbai,
                                                                                                                                                                                                                                                                                                                     ILLUSTRATION:
                                                                                                                                                                                                                                                                                                                          JAYANTO/
                                                                   -47,706
                                                                                                                  Russia S. Korea Germany Brazil         INDIA France         UK       Japan      China     US                October 6, 2006                                                                            PRASHANT
                                           2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12


                                 This market has lost the ability to tell good from the bad. It cares only about its internal technical dynamics.                                                                                                                                            SONALI RANADE,
                                                                                                                                                                                                                                                                                             trader

                                                                                     ILLUSTRATION: RAHUL KRISHNAN




                                                                                                                        Sensex fizzles                                                                                                               BILLIONAIRES’ CLUB

                                                                                                                        after rosy start
                                                                                                                        SENTIMENTS hurt on talks of interest rates to remain high                                                             1             2                  3                  4                  5
                                                                                                                        HT Correspondent                                                              and the auto index which gained
                                                                                                                        ■   letters@hindustantimes.com         INTRA-DAY                     1.19%    1.8% and 0.2% respectively —
                                                                                                                                                                                                      ended in the positive zone.
                                                                                                                        MUMBAI: A lack of incentives for                                                 According to auto analysts
                                                                                                                        attracting private sector capi-                                               two percentage point increase
                                                                                                                        tal investment and a fiscal deficit         17,675.9                          in excise duty for passenger
                                                                                                                                                                    Prev. close                                                               6             7                  8                  9                  10
                                                                                                                        closer to 6% saw the benchmark                        17,466.2                vehicles will not have huge ram-
                                                                                                                        30-share Bombay Stock                               Today’s close             ification, even though only             As the Sensex fell by 209 points, most of
                                                                                                                        Exchange (BSE) Sensex erase             9:00 am                     3:30 pm   Mahindra & Mahindra scrip
                                                                                                                        early gains and end down 209                                                  traded in the green, up 2.7% at         India’s wealthiest saw their wealth erode
                                                                                                                        points, or 1.2%, at 17,466 points.                                            R677, as fears of a hike in diesel       Name                           Wealth on      Wealth on
                                                                                                                           It was a session of dramatic       cal deficit figure, which means         passenger vehicles were belied.
                                                                                                                        intra-day swings for the Sensex,      that interest rates would con-             “Contrary to expectations                                            March 15, 2012 March 16, 2012
                                                                                                                        which gained 195 points in intra-     tinue to remain high, negated           there was no additional diesel tax.
                                                                                                                        day trade to touch a high of          the market sentiment,” said             It was a positive for overall indus-   1 Mukesh Ambani                          1,171,74                    1,133,45
                                                                                                                        17,871 before losing steam and        Nirmal Jain, chairman and man-          try and especially Mahindra, a
                                                                                                                        touching a low of 17,427 points       aging director, India Infoline.         diesel player,” said Surjit Arora,     2 Azim Premji                                83,089                      83,284
                                                                                                                        — a swing of 444 points.                 He also blamed the lack of           analyst, Prabhudas Liladhar                                                         32,894                      31,502
                                                                                                                           “The initial positive reaction     detailing on attracting private            Adding a note of caution, CJ        3 Savitri Jindal
                                                                                                                        stemmed from certain propos-          sector capital inflows into the         George, MD, Geojit BNP Paribas         4 Sunil Mittal                               86,351                      85,063
    EVERY TIME THE STOCK MARKET SCALES A NEW PEAK, WE NEED TO ASK OURSELVES WHY MORE                                    als, such as the measures to          stock market as another reason          Financial Services, said retail
                                                                                                                        encourage retail investment           for the decline in the Sensex. Only     investors should avoid short-
                            OF OUR SAVINGS ARE NOT FINANCIAL.                                                           through tax sops but a high fis-      two indices — the FMCG index            term trades or intra-day trading.      5 Kumar
                                                                                                                                                                                                                                               Mangalam Birla                             61,338                      61,052


    RANJEET S MUDHOLKAR, vice-chairman & CEO,
    Financial Planning Standards Board India
                                                                             Markets unimpressed by STT reduction                                                                                                                            6 Anil Ambani
                                                                                                                                                                                                                                             7 Dilip Sanghvi
                                                                                                                                                                                                                                                                                          57,235
                                                                                                                                                                                                                                                                                          39,797
                                                                                                                                                                                                                                                                                                                      56,255
                                                                                                                                                                                                                                                                                                                      36,997
                                                                             HT Correspondent                           not attract more investors into       delivery,” said Motilal Oswal,          imal and will not help increase
                                                                                                                        stock markets, according to ana-      chairman and managing direc-            the depth of markets,” he said.        8 Shashi and
     Focusing growth: FM
                                                                             ■   letters@hindustantimes.com
                                                                                                                        lysts and broking houses. Some        tor of Motilal Oswal Financial          According to him, a 50-70%               Ravi Ruia                                    4,299                        4,254
                                                                             MUMBAI: The reduction of secu-             even argue for the complete abo-      Services. “We were expecting a          reduction would have been bet-
                                                                                                                                                                                                                                             9 KP Singh                                   26,156                      26,196
     chooses a cautious path                                                 rity transaction tax (STT) from
                                                                             0.125% to 0.1% did not bring
                                                                                                                        lition of STT.
                                                                                                                            “It will have only limited
                                                                                                                                                              big relief in terms of STT reduc-
                                                                                                                                                              tion. That did not happen.”
                                                                                                                                                                                                      ter while complete abolition is
                                                                                                                                                                                                      too ambitious. The government
                                                                                                                                                                                                                                             10 Gautam Adani                              59,943                      58,876


     I
                                                                             much cheer to market partici-              impact as only 10% of the trans-         Independent market analyst           collects around R7,500 crore
         n the Budget, the finance minister has chosen to walk               pants. The 20% reduction on                actions are delivery-based, while     SP Tulsian echoed the same. “I          annually as STT since its intro-            *Wealth in R Cr calculated on the basis of promoter shareholding of listed companies
         a cautious path while the focus on growth is main-                  cash delivery transaction will             90% of transactions are non-          think the reduction is very min-        duction in 2004-05.
         tained. Markets look forward to the Budget as the
         direction of policy is very crucial apart from the pro-
     posals for various sectors.
        The financial planning, however, is a plan for long-term
     achievement of goals and annual policy directions should
                                                                             CORPORATE                                  PLAN TO REMOVE
     only give an adjustment and review opportunity to the
     individuals. Thus, the Budget is a time to have a relook at             BONDS TO AID                               DIVIDEND
                                                                             FOREIGN FUND                               DISTRIBUTION
     your personal investments and modify strategy in view of
     the broad outlook for the economy and individual seg-
     ments of the market. However, broad principles should
     not be altered. Although it is advisable from the financial
     planning perspective that personal investments should be
     made from the angle of optimising taxes, it is pertinent
                                                                             INFLOWS                                    TAX IS POSITIVE
     that the full permissible limits of tax incentives must also            HT Correspondent                           HT Correspondent
     be utilised before moving on to other investment vehicles.              ■   letters@hindustantimes.com             ■   letters@hindustantimes.com
     This infuses long-term tax effi-
     ciency in the personal finance        FULL PERMISSIBLE                  MUMBAI:   The finance minister’s           MUMBAI:   One of the measures
     portfolio of an individual.           LIMITS OF TAX                     budget announcement on                     that will bring cheer to the cor-
        The proposals to increase                                            Friday to allow foreign investors          porate sector and encourage for-
     the income tax exemption slab INCENTIVES MUST                           to invest in corporate bond mar-           eign investments in India is the
     for individuals would translate BE UTILISED                             ket would increase the foreign             removal of the dividend distri-
     to an advantage of R2,060 for         BEFORE MOVING ON                  money in the Indian economy.               bution tax (DDT) in a multi-tier
     taxpayers earning a taxable                                                “The India growth story for             corporate structure.
     salary of up to R5 lakh and           TO OTHER INVEST-                  FII has to look attractive from               In his budget speech on
     R22,660 for the taxable salary
     of R10 lakh and above.
                                           MENT VEHICLES                     time to time and the announce-
                                                                             ment to allow qualified foreign
                                                                                                                        Friday, the finance minister took
                                                                                                                        steps to allow corporate firms
        The budget also incentivises an investment of up to                  investors to invest in corporate           access funds and promote high-
     R50,000 in the “Rajiv Gandhi Equity Saving Scheme”,                     bond market is one such move,”             er foreign investments in more
     which entails tax exemption of 50% of up to R50,000. The                said Sandeep Sikka, chief exec-            areas.
     eligibility is for individuals with income not exceeding R10            utive officer, Reliance Capital.              The minister proposed to lift
     lakh and has a 3-year lock-in period. So an individual with             “While in the long run the FII             the DDT in a multi-tier corpo-
     a gross income of R5.45 lakh may be able to seek exemp-                 inflow would depend on the rel-            rate structure. The regulation
     tion under the rules on the income tax payment. The pro-                ative opportunities in other               for venture capital funds (VCF)
     posals would help the taxpayers to seek higher investment               economies and steps taken by               to invest in the only nine
     advantage by virtue of effective optimisation of tax plan-              the government.”                           specified sectors is proposed for
     ning. This is the objective of financial planning.                         Also the finance minister               removal.
        The reduction of securities transaction tax (STT) will               stressed on deepening the                     The minister proposed to
     help in increasing the volumes in the exchanges in addition             reforms in the capital market              continue to allow repatriation
     to giving some relief to individual investors. The yields in            by allowing two-way free flows             of dividends from foreign sub-
     the bond market are expected to be strong and debt can be               in Indian depository receipts              sidiaries of Indian companies to
     looked as an attractive asset class for the near future.                (IDR). “Permitting two-way fun-            India at a lower tax rate of 15%
        The markets going forward would take into cognisance                 gibility in IDRs subject to a ceil-        as against the tax rate of 30%
     the government’s fiscal prudence in containing deficit and              ing with the objective of encour-          for one more year i.e, up to
     accessing lower borrowings than the previous year. The                  aging greater foreign partici-             March 31, 2013.
     reduced pressure on the cost of finance would eventually                pation in Indian capital mar-                 At present, an Indian com-
     help the RBI to reduce interest rates. This would prove to              ket,” the FM said. The FII                 pany distributing dividend is
     be a great saviour to industry and the markets in the                   inflows in 2011 had been weak              required to pay DDT of 15%
     upcoming business cycle.                                                but they have picked up in                 (plus surcharge and cess) result-
                                                                             January and February.                      ing in an effective rate of 16%.



Gold import news sends rupee up, but
appreciation seen as temporary
HT Correspondent                           India’s current account deficit                                              Friday’s appreciation, as
■   letters@hindustantimes.com          for current financial year is                                                   demand by importers to meet
                                        expected to be 3.6% as a pro-                                                   their quarter and year-end lia-
MUMBAI: The doubling of customs         portion of its GDP and is                                                       bilities will result in forex
duties on both gold and plat-           expected to decline in the next                                                 outflows.
inum, as also on imported jew-          fiscal, 2012-13.                                                                   “The budget itself had little
ellery and an expectation of a             The finance minister also                                                    impact on the rupee’s appreci-
lower current account deficit           doubled the customs duty on                                                     ation — it was more to do with
helped prop up the rupee on             gold bars, coins and platinum                                                   the normal volatility in curren-
Friday versus the dollar, though        to 4% from 2% and on gold jew-                                                  cy trading. While we expect that
analysts said it was a tempo-           ellery to 10% from 5%.                                                          money will continue to flow in,
rary effect that would soon wear           Excise duty on refined gold                                                  the exchange rate is unlikely to
off. The rupee closed the day at        was also doubled to 3% from                                                     deviate too much and will trade
50.18 to a dollar, up 20 paise from     1.5% earlier.                                                                   in a tight band,” said Amar
Thursday’s close.                          “I don’t think you can ascribe                                               Ambani, head of research, India
   Current account deficit              any effect of the budget to the      ■   The pressure is still on               Infoline.
occurs when imports are high-           rupee’s appreciation vis-à-vis                                                     Ambani added that any fur-
er than exports, resulting in a         the dollar on Friday because         a financial consultancy.                   ther increase in global crude oil
net outflow of foreign exchange         there was nothing really in the         A report prepared by India              prices, currently around $120
while doubling of customs duties        budget that would boost forex        Infoline said that rupee may               per barrel, could put pressure
helps in curtailing demand to a         inflows,” said Raghavendra           again demonstrate weakness                 on the rupee to sustain its
certain extent, also preventing         Nath, managing director,             and depreciate further against             recent appreciation versus
an outflow of foreign exchange.         Ladderup Wealth Management,          the dollar, not withstanding               the dollar.

				
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