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 ■ firstname.lastname@example.org 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 ■ email@example.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. ■ firstname.lastname@example.org ■ email@example.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 ■ firstname.lastname@example.org 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.