Sensex ends below 36000, Nifty marginally lower as LTCG tax proposed

Photo: Shutterstock
Benchmark indices Sensex and Nifty ended marginally lower after Finance Minister Arun Jaitley proposed a long-term capital gains tax.

Budget 2018 has proposed to levy long-term capital gains tax (LTCG) of 10% on gains exceeding Rs 100,000 from sale of equity shares. However, capital gains made on shares until January 31, 2018, would be grandfathered, the finance minister said. Also, there has been no change in the definition of short-term capital gains tax (STCG). 

Signalling, that fiscal prudence has gone off track, Jaitley proposed a fiscal deficit target of 3.3% of GDP for 2018-19. The target he had set for 2018-19 last year was 3%.   

This year's budget focussed more on rural and agri economy. My government is committed to the welfare of the fares. Agriculture is an enterprise and encouraging farmers to earn more," he added.


Views on LTCG by Aashish Somaiyaa, MD & CEO, Motilal Oswal AMC
Equity markets were keeping fingers crossed for imposition of Long Term Capital Gains tax, which has finally come. Having STT and LTCG both is unfair when former was levied expressly in lieu of latter. Happy with the 10% LTCG tax on MFs & the 10% tax on dividends this move will reduce churn and mis-selling. 
LTCG implementation is at least well thought out; no disruptive impact. Therefore, over a period of time this tax incidence will be taken in stride and normal life will continue as far as investments in equities is concerned. 10% is modest and grandfathering earlier gains is a positive. It is not a big negative and markets should eventually digest it
Market rundown by Jayant Manglik, President, Religare Broking
The much-awaited Union Budget turned out to be a balancing act, pleasing some and disappointing others. The announcement of long term capital gains on equity investments combined with possible slippage in meeting fiscal deficit target dampened the sentiment. Personal income tax too should have been addressed, or at least the slabs indexed to inflation. The focus on Bharat as well as farmers was expected and necessary.
We might see an overhang of this event for next couple of sessions and then focus will return to earnings. Signals are in the favor of consolidation in the index while profit taking may continue on the broader front. We reiterate our bullish yet cautious stance and suggest preferring index majors for trading
Top Sectoral loser: Nifty pharma

Sectoral Trend

Sensex top gainers and losers

Market at close

Benchmark indices ended marginally lower after the government imposed a long-term capital gains tax. Budget 2018 has proposed to levy long-term capital gains tax (LTCG) of 10% on gains exceeding Rs 100,000 from sale of equity shares.
The S&P BSE Sensex ended at 35,906, up 58 points while the broader Nifty50 index settled at 11,016, up 10 points.
With LTCG, free ride for markets is over, says Andrew Holland
The main focus of Finance Minister Arun Jaitley, while presenting the Budget 2018, has been on the rural sector and infrastructure development. This was expected from the government in its last full Budget ahead of the general elections scheduled in 2019. 
The assumptions on tax revenues going ahead are reasonable and not aggressive given that the taxpayer base will increase. That said, the fiscal deficit at 3.3% of the GDP (gross domestic product) for 2018–19 is still a challenge. The economy needs to be firing on all cylinders to achieve the set fiscal deficit target. The bond yields are now nearing 7.5%. This clearly indicates that there will be challenges in meeting the fiscal deficit target. READ MORE
Railway, infrastructure related stocks trade mixed post Budget
Shares of railway and infrastructure related companies were trading mixed after Finance Minister Arun Jaitley presented the Budget for the financial year 2018-19 in Parliament on Thursday.
Titagarh Wagons, Kernex Microsystems (India) and Stone India were down 5% each on BSE. GMR Infrastructure, IL&FS Engineering and Construction Company, GVK Power & Infrastructure, Larsen & Toubro (L&T), Siemens, Hind Rectifiers and Zicom Electronic Security Systems were trading higher by up to 9%. READ MORE
LTCG in Budget 2018: Investing in mutual funds? Look at growth schemes
A 10% long-term capital gains (LTCG) tax has not upset the mutual funds industry. Sector officials say that the move will not have any major impact on current inflows in equity and that it will settle down fast. According to them, growth schemes will be more looked for going forward against dividend-paying schemes.  
According to the Finance Bill 2018, "With a view to providing a level playing field between growth-oriented funds and dividend paying funds, in the wake of new capital gains tax regime for unit holders of equity oriented funds, it is proposed to amend the said section to provide that where any income is distributed by a Mutual Fund being, an equity oriented fund, the mutual fund shall be liable to pay additional income tax at the rate of 10% on income so distributed." READ MORE
First impression on Budget 2018 from  Devam Modi, Director of Equirus Securities
There has been a clear attempt to help the farmer, common man and SMEs with various populist schemes. Crucial rural impetus along with continued allocation to infra and a heavy focus on health care. We would have liked to see measures related to IBC or resolution of corporate credit stress. The fiscal deficit miss was broadly expected but is being considered a tad higher. 
Going ahead, the market is more exposed to a commodity spurt and resultant inflation given the populist focus related to agriculture. We do not see chances of rate cuts or yield moderation and remain positive on pockets related to domestic rural, infra and health sectors. Given the combination of elevated valuations and high growth potential, we think there will be a skewed reward for companies who are able to deliver steady growth.
India bonds slump as government raises deficit target
India’s benchmark 10-year bonds slumped on Thursday after the government set a higher-than-expected fiscal deficit target for the year starting in April.
The yield for the benchmark 10-year bond rose 9 basis points to 7.50% after the deficit forecast. It had closed at 7.43% on Wednesday.
Market check

Index Current Pt. Change % Change
S&P BSE SENSEX 36,004.40 +39.38 +0.11
S&P BSE SENSEX 50 11,518.36 +11.48 +0.10
S&P BSE SENSEX Next 50 35,690.14 -123.48 -0.34
S&P BSE 100 11,422.44 +3.37 +0.03
S&P BSE Bharat 22 Index 3,860.49 +16.26 +0.42

Quote on Budget
Hemang Jani, Head Equity Sales & Advisory, Sharekhan
No major disappointment in the budget proposals. On overall basis Long term capital gains tax doesn’t look dampening and revenue growth assumptions are looking realistic. Investors should focus on sectors/stocks having agri or rural theme. Escorts, Ashok Leyland, M&M, PI Inds and UPL will be positive. 
Other picks: Apollo Tyre: Raise in custom duty on truck bus radial tyres from 10 to 15 percent to benefit the company 
ITC: No increase in tax rates on Cigarettes – Qtrly nos have been in-line. 
Insurance shares soar as FM proposes National cover plan
Shares of companies engaged in insurance business such as SBI Life Insurance, ICICI Prudential Life Insurance Company (ICICI Pru) and HDFC  Standard Life Insurance Company have rallied by up to 9% on BSE in intra-day trade after the government proposed a national health protection scheme to benefit 100 million poor families in the Union Budget 2018-19.
To provide Rs 500,000 per family annually for medical reimbursement under National Health Protection Scheme, the finance minister says the plan will protect 500 million poor people and will be world's largest health protection scheme. READ MORE
India bonds slump as government raises deficit target
India’s benchmark 10-year bonds slumped on Thursday after the government set a higher-than-expected fiscal deficit target for the year starting in April.
The yield for the benchmark 10-year bond rose 9 basis points to 7.50 percent after the deficit forecast. It had closed at 7.43 percent on Wednesday.
Quote on Budget

B Gopkumar, Executive Director & CEO , Reliance Securities: A Prudent Balance between Fiscal Discipline and Economic Growth
There are all efforts in Union Budget 2018 to appease rural and EWS population but at the same time Government tried to maintain the fiscal discipline by keeping fiscal deficit target at 3.5% and 3.2% for FY18E and FY19E, respectively. Although deficit targets are higher as compared to previous estimates but considering surge in prices of crude oil these are respectable numbers
Govt has also decided to impose 10% tax on Long Term Capital Gains (LTCG) for equity and equity oriented investments for amount exceeding capital gains of Rs1 lakh. The tax will be applicable based on cost prices prevailing on 31st January 2018, which will prevent any large scale selling in stock markets.
Quote on Budget
G Pradeepkumar, Chief Executive Officer, Union Asset Management Company
The decision to levy LTCG on equity at the rate of 10% is not surprising and is unlikely to have any significant adverse impact on the markets. This still keeps equities as the most attractive asset class from a taxation perspective since the holding period to be eligible for LTCG on most other asset classes is three years. The fact that that gains made up to 31st January 2018 will be grandfathered indicates that the government has thought through the proposal quite clearly.
What 10% LTCG tax on gains over Rs 100k means for investors
Budget 2018 has proposed to levy long-term capital gains tax (LTCG) of 10% on gains exceeding Rs 100,000 from sale of equity shares. However, capital gains made on shares until January 31, 2018, would be grandfathered, the finance minister said. Also, there has been no change in the definition of short-term capital gains tax (STCG).
“The much-anticipated introduction of LTCG is now back with a new avatar. As we know in tax legislation, this could only get worse over a period of time with every successive Budget diluting the original commitment of taxing long-term gains,” said Milind Kothari, managing partner at BDO India. READ MORE
Sectoral Trend
Budget 2018: IT stocks mixed after FM's digital push in education sector
Finance Minister Arun Jaitley presented the Union Budget of 2018 on Thursday. 
IT stocks traded mixed on BSE after the finance minister Arun Jaitley in his Budget speech said that technology will be the biggest driver in improving the quality of education.
TCS (up 1.27%), HCL Technologies (up 0.6%), Persistent Systems (up 0.06%) and Tech Mahindra (up 0.03%) edged higher. Infosys (down 1.42%), Wipro (down 0.13%) and Oracle Financial Services Software (down 0.06%) edged lower. READ MORE
PM Modi on Budget 2018: From food processing to fibre optics, roads to shipping, youth to senior citizen, rural India to Ayushmaan Bharat, Digital India to Start Up India, this budget strengthens hopes and aspirations of crores of Indians
PM Modi on Budget 2018: This budget has devoted attention to all sectors, ranging from agriculture to infrastructure
PM Modi on Budget 2018: This budget has devoted attention to all sectors, ranging from agriculture to infrastructure
PM Modi on Budget 2018: I congratulate Finance Minister Arun Jaitley for the decision regarding MSP. I am sure it will help farmers tremendously
SpiceJet surges as government proposes Udan expansion
SpiceJet has surged 15% to Rs 142 on BSE in intra-day trade after Finance  Minister Arun Jaitley said the low-cost air connectivity scheme, UDAN (Ude Desh ka Aam Nagrik), will connect 56 unserved airports and 31 unserved helipads.
“In the last three years, the domestic air passenger traffic grew at 18% per annum and our airline companies placed orders for more than 900 aircrafts. Regional connectivity scheme of UDAN initiated by the Government last year shall connect 56 unserved airports and 31 unserved helipads across the country. Operations have already started at 16 such airports,” Jaitely said today, as he announced a Budget 2018-19. READ MORE
PM on Budget 2018

Budget is development friendly & had addressed concerns of the poor & middle-class
Finance Scretary to ET NOW
  • LTCG will be addition to STT
  • Total income from STT is only Rs 9000 cr
  • LTCG tax is too small for anyone to be disappointed
  • No decision taken by govt on Budget year
Market Check

Index Current Pt. Change % Change
S&P BSE SENSEX 36,056.46 +91.44 +0.25
S&P BSE SENSEX 50 11,530.29 +23.41 +0.20
S&P BSE SENSEX Next 50 35,700.30 -113.32 -0.32
S&P BSE 100 11,433.05 +13.98 +0.12
S&P BSE Bharat 22 Index 3,870.13 +25.90 +0.67

Rajiv Kumar to ET Now
Commend FM for not taking path of fiscal fundamentalism
Need to see transformation of the Indian economy in areas like agri, health
Quote on Budget

Gaurav Dua, Head of Research, Sharekhan
Union Budget 2018-19 is largely on predicted line of enhanced allocation for rural & social schemes (health and education) though the fiscal target of 3.3% for FY2018-19 is slightly higher than expectations. The proposal to levy long term capital gains tax on equities at rate of 10% is a negative surprise but not the limited rate with grandfathering of purchases up to Jan 31, 2018 would mitigate the adverse impact to a large extent. Overall, we believe that the focus would revert to corporate earnings with little impact of Union Budget on bond yields and equity markets
Budget 2018

FY19 Nominal GDP Growth Seen At 11.5% 
FY19 Revenue Deficit Pegged At 2.2% Of GDP
FY19 Gross Tax Revenue At Rs 22.7 Lk Cr
FY19 GST Collections Seen At Rs 7.44 Lk Cr
FY19 Net Short-term Borrowing At Rs 17,000 Cr
Budget 2018
FM Arun Jaitley: Propose to introduce tax on distributed income by equity oriented mutual funds at 10%
Budget 2018
FM Arun Jaitley: Central Board of Excise and Customs renamed as Central Board of Indirect Taxes and Customs
Quote on Budget

Rakesh Bhargava, director, Taxmann 
Finance Minister clarified that Cryptocurrencies shall not be deemed as legal tender and strict actions might be taken against investors in Cryptocurrencies. However, he also mentioned that Govt. can explore ways for using the blockchain technology for digital transactions. If it is not considered as legal tender, whether any transaction in it will be subject to GST or not is yet to be clarified
Budget 2018

Arun Jaitley: Heath, education cess increased to 4%
Market at 2-week low

Nifty Chart

Sensex tumbles 350 points

Index Current Pt. Change % Change
S&P BSE SENSEX 35,630.95 -334.07 -0.93
S&P BSE SENSEX 50 11,375.71 -131.17 -1.14
S&P BSE SENSEX Next 50 35,110.30 -703.32 -1.96
S&P BSE 100 11,274.16 -144.91 -1.27
S&P BSE Bharat 22 Index 3,804.23 -40.00 -1.04

Sensex losers and gainers

Market Check
S&P BSE Sensex 35,834.59 -0.36%
Nifty 50 10,998.00 -0.27%
S&P BSE 200 4,797.51 -0.31%
Nifty 500 9,671.35 -0.27%
S&P BSE Mid-Cap 17,255.31 -0.63%
S&P BSE Small-Cap 18,725.75 0.05%

Budget 2018
FM Arun Jaitley:
Short -term capital gains tax continues to be at 15%
Budget 2018

Arun Jaitley: Propose to tax LTCG of 10% for gains exceeding Rs 1 lk
Budget 2018
Finance Minister Arun Jaitley announces standard deduction for salaried employees.
Budget 2018
FM Arun Jaitley: Bonds available to insurance companies to be widened to a-rated bonds fm AA-rated bonds
Budget 2018
FM Arun Jaitley: Propose to allow 100% tax deduction to cos registered as farmer-producer firms with turnover of Rs 100 cr
Budget 2018

FM Arun Jaitley:
Corporate tax to be brought down to 25% for cos who has turnover up to Rs 250 crore
Budget 2018

Arun Jaitley: No changes in personal income tax rates
Food processing stocks rally as government to double Budgetary allocation
Shares of companies engaged in food processing business have rallied up to 14% on BSE in intra-day trade after the Finance Minister Arun Jaitely in Budget speech said that the allocation to the Food Processing Ministry is being doubled to boost the sector.
Avanti Feeds has surged 14% to Rs 2,544 on BSE on back of three-fold jump in trading volumes. Godrej Agrovet, Sheetal Cool Products, Foods & Inns, Freshtrop Fruits, Amrit Corp and Sampre Nutritions were up in the range of 5% to 8%. On comparison, the S&P BSE Sensex was up 0.35% at 36,091. READ MORE
Budget 2018

Arun Jaitley: 
Fiscal Deficit target for FY19 is 3.3% of GDP for FY18 at 3.5% of GDP
Budget 2018
FM Arun Jaitley: Infrastructure outlay increased from Rs 4.94 lakh crore to almost Rs 6 lakh crore FY19
Budget 2018

Arun Jaitley: Divestment target for 2018-19 at Rs 80,000 crore
Sensex losers and gainers

Quote on budget

Rakesh Bharagava, Director, Taxmann
Government proposes to revamp the system of sanctioning of loans to SMEs. The information required for sanctioning the loan will be linked with GSTN and all required information can be fetched from GSTN Portal. It will help to grant the loans quickly and will help in reducing processing time
Sectoral Trend 

Budget 2018
FM Arun Jaitley: Propose to expand airport capacity by 5-times to handle 1 billion passengers
Budget 2018

Arun Jaitley: Cryptocurrencies to not be considered as legal tender
Budget 2018

Arun Jaitley: RBI norms to nudge co to access bond markets for fund raising
Budget 2018
FM Arun Jaitley: To eliminate 4,267 unmanned rail crossings at broad gauge network
Quote on Budget
Milind Kothari, Managing Partner, BDO India
True to the commitment, Smart Cities programme is progressing well and with continued budgetary support, these cities will greatly benefit from a new ecosystem of infrastructure leveraged on the thrust of using technology as the backbone. Modernisation of Railway infrastructure, like Smart Cities,  has been a compelling need and the new commitment by the FM would firmly take the Railway in this direction
Budget 2018
FM Arun Jaitley: Will add 90 km of tracks to Mumbal’s local train network at Rs 11,000 crore to also allocate Rs 17,000 crore for Bengaluru metro network
Budget 2018
FM Arun Jaitley:  Sebi to consider mandate for large corps to meet 25% of debt needs from Bond Market
Budget 2018
FM Arun Jaitley: Allocate Rs 7,148 crore to Textile Sector
Budget 2018
FM Arun Jaitley: Govt to provide free LPG connection to 8 cr women under Ujjwala scheme, up from earlier target of 5 cr
Capex at railways pegged at 1.48 lk crore for FY19


Budget 2018
FM Arun Jaitley: Govt to substantially increase allocation under national livelihood mission to Rs 5,750 cr in next fiscal; focus will be on providing maximum livelihood projects in rural areas
Infra projects worth Rs 9 lk crore facilitated: Nifty Infra gains

Budget 2018
FM Arun Jaitley: Women employees' contribution to EPF to be reduced to 8% from 10% for the first 3 years
Budget 2018

Exports seen growing at 15 pc in 2017-18, says Jaitley 
The country's exports are likely to expand by about 15% during the current fiscal. "Our exports are expected to grow at about 15 per cent in 2017-18," he said while presenting Union Budget 2018-19 here. The country's merchandise shipments rose 12.36% to $27.03 billion in December 2017. Cumulatively, exports during April-December 2017-18 grew by 12.05% to $223.512 billion. 
Quote on Budget

Milind Kothari, Managing Partner,  Head-Tax and Regulatory services, BDO India
The announcement in the area of Health care is clearly path-breaking for the sheer size, coverage and the amount committed per family. This ushers India firmly in the next generation of social security as India moves aggressively towards a progressive developing economy
Quote on Budget
Pranay Bhatia, Partner, Tax and Regulatory Services, BDO India
Current focus on developing ground infrastructure and emphasizing education, agriculture, fisheries and allied areas seems to be in the right direction
Nifty losers

Nifty Gainers

Budget 2018

FM Arun Jaitley:
Launching programme, 'RISE' for revitalisation of Infra, education system, total investment of Rs 1 lakh cr for 'RISE'
Budget 2018

FM: National Flagship Health Protection Scheme launched. Aims to benefit 50 crore people. Rs 5 lakh per annum as hospitalisation benefits
Health stocks gain on healthcare push

Quote on Budget

Maulik Doshi, Partner, Transfer Pricing and Transaction Advisory Services, SKP Business Consulting LLP
Government is focusing on moving from "ease of doing business" to "ease of living" - This indicates active focus on macro-economic spending and long term focus of the government
Government promises a Minimum Support Price of 150% of production cost of agricultural produce along with setting up of Gramin Agricultural Markets.  This is a significant measure and would be a shot in the arm for the small and marginalized farmers"
Allocation for associated food processing activities doubled to Rs 1,400 crore.  This would support ancilliary food processing activities and complement the existing players in the food processing industry
Budget 2018

Navneet Education, Camlin Fine Sciences, Zee Learn gain on focus on education
Budget 2018

FM Arun Jaitley:
Economy to grow by 7.2-7.5% in second half of current fiscal
Budget 2018

Arun Jaitley: To set up dedicated affordable housing fund

Nifty Realty extends gains

Budget 2018

FM Arun Jaitley:
Food processing sector growing at 8%; allocation for food processing ministry being doubled to Rs 1400 cr
Rs 16,000 crore for electification: Power stocks up

Suzlon Energy

Budget 2018

FM Arun Jaitley: Rs 2,000 crore fund to be set up for upgrading rural agri markets
FY19 institutional agri credit at Rs 11 lk crore: Agri stocks biggest gainers

Monsanto chart check

Nifty bank hold gains

Markets hold on to pre-budget gains

Index Current Pt. Change % Change
S&P BSE SENSEX 36,158.15 +193.13 +0.54
S&P BSE SENSEX 50 11,562.63 +55.75 +0.48
S&P BSE SENSEX Next 50 35,783.69 -29.93 -0.08
S&P BSE 100 11,464.23 +45.16 +0.40
S&P BSE Bharat 22 Index 3,872.20 +27.97 +0.73

(Source: BSE)
Budget 2018

FM Arun Jaitley: Doubling the allocation of food processing industry from Rs 715 cr to Rs 1400 cr
Nifty Chart

Budget 2018

Cultivation of horticulture crops in clusters can boost production and marketing: Jaitley. Agri-market Development Fund with a corpus of Rs 20 billion to be set up for developing agricultural markets: FM Arun Jaitley.
Budget 2018

FM: MSP For Kharif crops to be 1.5 times cost of produce
Agri stock gain on pro farmer budget

Kaveri Seed Company

Budget 2018

Arun Jaitley: Emphasis on generating higher income for farmers
Budget 2018

Arun Jaitley: On course to achieve strong growth of  8%+
Sectoral Trend

Budget 2018

Arun Jaitley:
India to become the fifth largest economy soon
Sensex top gainers and losers

FM presents Union Budget 2018

S&P BSE Sensex 36,082.55 0.33%
Nifty 50 11,067.40 0.36%
S&P BSE 200 4,822.56 0.22%
Nifty 500 9,721.35 0.24%
S&P BSE Mid-Cap 17,332.08 -0.19%
S&P BSE Small-Cap 18,814.94 0.52%

Budget 2018: Avoid stock-specific bets; forget expert opinion for a day
Every year when the finance minister is giving the Budget speech, stocks begin to react based on announcements. The moment there’s an increase in outlay for irrigation, shares of pipe manufacturers and other allied industries start rising. The same goes for announcements related to fertiliser or the education sector. But a few days later, the same stocks suffer. The reason: the fine print might be quite different from the announcements.  READ MORE

Photo: Shutterstock
Vakrangee tanks 20% for second day; Investors lose Rs 226 billion in 4 days
Vakrangee is locked in lower circuit for the second straight day, down 20% at Rs 292 on BSE with no buyers seen on the counter. The stock is trading at its lowest level since November 9, 2017. READ MORE
Budget 2018

Union Cabinet approved Budget for FY19
Budget 2018: Mutual funds buying in January lowest in 10 months
Equity fund managers were seen slowing their pace of investment in January, ahead of the Union Budget, even as stock prices rallied sharply on the back of huge foreign flow.
Mutual funds (MFs) had made a net investment of Rs 50.03 billion till January 25, their lowest monthly tally since February last year. It was also much below the average monthly investment of Rs 120 billion for this financial year. READ MORE

Nikkei India Manufacturing PMI update
The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) fell from December’s 60-month high of 54.7 to 52.4 in January. This was consistent with a modest improvement in operating conditions across India’s goods producing economy. Notably, the headline PMI Index registered below the long-run average (54.1). Growth was registered across all three broad market groups, led by consumer goods
The stress in the SME and unorganized sector has been receiving attention and some measures to revive mid to small sized businesses affected by disruption could be seen. Housing for all by 2022 has been another stated policy objective and allocations to this segment are likely to continue. Much has been said about doubling farm income and reviving the rural economy. This is the area where a prudent spending balance is needed the most.
After the GST roll out, the possible indirect tax change in the Budget may happen in the form of customs duty tweaks given that GST Council meetings decide on the bigger tax structure. In earlier budgets a road map for bringing corporate tax down was hinted at. Corporates would be watching for some headway on this front. 
India has taken steps toward this but having said that, each economy has its own nuances and such action cannot be simply replicated. Any reduction in corporate tax still remains something that could have a far reaching impact on earnings if implemented.
Escorts surges 6% on healthy growth in January tractor sales
Escorts has rallied 6% to Rs 858, also its all-time high on BSE, after the company reported a healthy 45.6% jump in total sales at 5,316 units for the month of January 2018.
The company had sold 3,652 units during the same month last year. In December 2017, Escorts reported 13% growth in total sales at 3,606 units over the previous year. READ MORE
Having said that, it could change the long-term capital gain classification criteria from one year to two years. But in the same breath, the government must then have a serious relook at STT, abolish Dividend Distribution Tax (DDT) as also reduce GST rates on share transactions to 12 per cent, from 18 per cent. We may also see the Budget plug some loopholes like bonus stripping
In the run-up to every Union Budget announcement, fear of levy of long-term capital gains tax (LTCG), GAAR, haunt the stock market. This year is no different, with fear of an end to the exemption of LTCG on equity investments. I reckon that the government will not like to dent the improving investor sentiment where equity participation still remains low around 5-6% of the household savings. 
There is no doubt that the government will have a tough balancing task to keep the fiscal deficit numbers in control. In the recent Gujarat elections, the BJP got very few votes from the rural community. So in that sense, there is a big political need to increase rural spending and in general increase government spending to keep supporting the economy. However, uncertainty around GST revenues and higher oil prices will constrain the government in terms of how much it can spend without deviating from the fiscal consolidation path
HDFC Securities on Exide
We expect revenue growth momentum to remain strong over FY17-20E, owing to strong auto OEMs & replacement batteries demand and pick up in industrial activities and a gradual shift of replacement demand from the unorganised to the organised segment. However, higher lead prices continue to dent profitability
The stock is trading at 20/18x for FY19/20E EPS. Maintain Buy with target price of Rs 262
We believe that higher allocation will continue in infrastructure categories such as road, railways, ports, and affordable housing, which can lead to job creation. Consistent infrastructure spending should see improvement in private capex, which is seeing some green shoots. Our preferred plays from this space – L&T, NCC, Ahluwalia Contracts, Ashoka Buildcon
Market Check
S&P BSE Sensex 36,167.10 0.56%
Nifty 50 11,083.05 0.50%
S&P BSE 200 4,832.18 0.41%
Nifty 500 9,734.70 0.38%
S&P BSE Mid-Cap 17,352.19 -0.07%
S&P BSE Small-Cap 18,852.84 0.73%

Nomura on L&T
L&T delivered strong results in 3QFY18 largely led by the strong performance of domestic infra and a pick-up in ordering. We expect the momentum to continue, as: Domestic execution to strengthen further as near-term GST transition headwinds are largely behind: GST transition led to delays in execution in the initial months; however, the impact is largely behind us.
We expect domestic execution to strengthen further in FY19-20F. We believe L&T is conservative in its FY18F guidance of flattish order inflow growth. Maintain Buy rating, lift target price to Rs 1,669
Realty up almost 1% ahead of Budget 2018

Metals melt

L&T Q3 earnings impact
Larsen & Toubro (L&T) hit a new high of Rs 1,467, up 3.5% on BSE in early morning trade after the company reported a strong 53% jump in its consolidated net profit at Rs 14.9 billion for the quarter ended December 2017 (Q3FY18). The engineering & construction giant had profit of Rs 9.7 billion in the same quarter last fiscal.


Sectoral Trend

Sensex top gainers and losers

Market at open

At 9:17 am, the S&P BSE Sensex was trading at 36124 up 159 points, while broader Nifty50 index was ruling at 11064 up 36 points.
Top trading ideas by Prabhudas Lilladher for today
CMP: Rs 510.10
TARGET: Rs 570
The stock has witnessed a decent correction from the peak of Rs 580 to bottom out at around Rs 465 levels which is also where the significant 200 DMA lies and has produced a positive bullish candle pattern in the daily chart to signify a positive bias with still further potential to rise in the coming days. Click here for more
Nifty Outlook By Tradebulls
Nifty sheds of its gains ahead of the ‘Big Bang Event’ as it follows the footsteps of the global indices. With no major reversal ahead of the event there is a good probability of the continuation of the existing trend. Historically the event has witnessed approx. 3-3.5% deviation from its mean & hence the probable range ahead of the event is witnessed around 11,400-10,700. Technically the index has been overbought on the daily scale for a while but there are no traces of any developing divergence on the trend strength indicators. Hence it’s likely that a breach above 11,130 could amplify the momentum while any move below 10,830 could be alarming. Traders should not leverage until a decisive breach is not witnessed on either side of the range.
Nifty outlook by Prabhudas Lilladher
Market at these levels is witnessing nervousness, however Nifty has held on to 11000 levels. Mid cap sector from its peak has corrected by 7% & now holding on to its crucial support of 5,300 levels. The support for the day is seen at 10,960 while resistance is seen at 11,100. All eyes would be on LTCG decision on Budget Day which will decide the market mood

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(Source: BSE)
Budget 2018: A 15-year, Rs 35.3-trillion plan to put Railways on track
The Indian Railways is working on a Rs 35.3-trillion investment plan by 2032, pushing up the capital expenditure for the ministry by around 92 per cent annually. Going by the ambitious vision, the average annual investment, including capacity addition and modernization, would touch around Rs 2.5 trillion, up from the Rs 1.31 trillion in 2017-18 READ MORE
Films, rucksacks, cycles, rods: New safety tools for Railways to save lives
Films, rucksacks, cycles and even rods are now tools in the hands of railway staffers who are customising everyday materials to churn out devices to save lives on rail tracks READ MORE
It has been a mixed performance for railway-related stocks at the bourses thus far in calendar year 2018 (CY18) with Larsen & Toubro (L&T), ABB India and Kernex Microsystems rallying up to 25% ahead of the budget 2018 presentation on February 1.
On the other hand, Hind Rectifiers, Titagarh Wagons, BEML, Stone India, Stone India and Zicom Electronic have slipped 3% to 17%. By comparison, the S&P BSE Sensex and Nifty 50 index have gained 6% thus far in CY18 READ MORE
Core sector growth slows to 5-month low of 4% in December
The country's output from eight core sectors rose four per cent in December, slowing from the much larger growth of 7.4 per cent in November.
Released a day before the government is set to announce the national budget, this dip in core sector growth rates have raised questions over a broad-based revival in industrial demand that seemed to have been heralded by the November figures. READ MORE
We expect government spend to remain strong in schemes like MNREGA (jobs), PMAY (housing), PMKSY (irrigation), SBM (clean India), NHM (health), NEM (education), and the crop insurance scheme. Tax rebates are unlikely due to revenue constraints
We believe a fiscal slippage of 20bps of GDP is likely, arising from a shortfall in revenues on account of lower than expected indirect tax and non-tax collections. Yet, an expected fiscal deficit of 3.4% this year will be lower than FY17's 3.5%, implying mild fiscal consolidation despite the implementation of far-reaching structural reforms
Budget 2018: Expect tax benefits, infra push in Jaitley's please-all Budget
The budget 2018-2019, is likely to get some relief for everyone as it is the last full-fledged budget of the BJP-led government ahead of the general elections in 2019 and the government is expected to follow a please-all strategy READ MORE
Capital gains on equities across the globe
Foreign institutional investors (FIIs) have voiced their concern on reintroduction of long-term capital gains tax on equities in the upcoming Union Budget to be announced today. Currently, long term capital gains (LTCG) on sale of listed securities is exempt from tax. Here is a quick look at how capital gains on equities is taxed across the globe CLICK HERE FOR MORE
FY17 GDP growth retained at 7.1%
The Central Statistics Office has sharply raised growth of gross value added to 7.1% in 2016-17, from earlier estimates of 6.6%, due to revision in agriculture and mining expansion. However, it maintained its GDP growth estimate for FY17 at 7.1%, but has upped it FY16 growth estimate to 8.2%, from the earlier 7.9%.
Data, released a day ahead of the Budget for 2017-18, however, painted a rosy picture of gross fixed capital formation, representing investments. READ MORE

We remain enthused by PVR’s pricing power with regards ATP, F&B and advertising. We expect the company to be key beneficiary of anticipated uptick in urban consumption. Screen expansion and movie line up will be key monitorables. We roll over to FY20E and maintain ’BUY/SECTOR OUTPERFORMER’ with target price of INR1,596 (31x FY20E EPS). At CMP, the stock is trading at 36.6x FY19E and 28.4 FY20E EPS
Galaxy Surfactants' Rs 9.37-bn IPO subscribed nearly 20 times on last day
From RIL to HDFC, hot stocks to watch on Thursday CLICK HERE FOR MORE
We do expect the government to focus on rural and capex spending to boost sentiment and revive growth further. However, given the hard-achieved gains on fiscal consolidation, flexibility to go overboard on spending is limited, in our view. Consumption pick-up (especially rural and discretionary), cyclical recovery in corporate facing banks and gradual pick-up in private capex are our key themes to play in CY18.
As the current government will present its last full-year budget before the 2019 General Elections, many in the market expect a heavier dose of populism. However, we believe that the government has limited financial resources to propose any targeted scheme for the poor. We also do not expect much relief on the tax front, except some reduction in the corporate tax rate for medium-sized companies
Markets will keenly watch for the expenditure tilt (we expect focus on agri, infra, and housing), revenue projections (first-ever GST projection, divestment strategy, tweaks in LTCG for equity investment) and finally commitment to adopt FRBM recommendations
Despite a temptation to turn populist before the election year, we expect the government to stick with fiscal prudence and a pragmatic budget in 2018. We expect government to project the fiscal deficit at 3.2% of GDP in FY19 from 3.5% of GDP in FY18
60 stocks that doubled your money since Budget 2017; HEG up 1500%
As the markets prepare for Budget 2018, as many as 60 stocks from BSE 500 have doubled investor’s money since the presentation of the last budget on February 1, 2017. HEG Limited tops this list with a stellar rise of over 1,500%, followed by Indiabulls Ventures that appreciated 1137% READ MORE
Budget to test investors' faith in Modi's government
Investors are eagerly awaiting the federal budget, as the government aims to woo back rural voters and small businesses ahead of state elections.
To keep investors’ confidence, however, Modi’s government will need to be seen containing the fiscal deficit, while also increasing spending in key areas of the slowing economy. Markets will be focused on how much India widens its fiscal deficit beyond the 3% of gross domestic product projected for 2018/19.
But a deficit above 3.2% could hit shares and send bond yields up by 20-25 basis points, depending on the size of the blowout, on fears of populist policy ahead of next year’s elections.
SGX Nifty
Trends on SGX Nifty indicate a negative opening for the broader index in India, a rise of 10 points or 0.24%. Nifty futures were trading around 11,077-level on the Singaporean Exchange.
Asian shares bounce back
Asian shares eked out modest gains on Thursday, clawing back sharp losses from earlier this week, however, rising US bond yields and interest rates could dampen investors’ optimism toward the global economic outlook.
The US Federal Reserve kept interest rates on hold as expected at its first policy meeting in 2018 on Wednesday but flagged interest policy tightening later this year.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1% in early trade, slowly recovering after Tuesday’s 1.4% fall. Japan’s Nikkei also gained, rising 0.5% from a four-week low hit the previous day.
Wall Street ends lower

On Wall Street, the S&P 500 erased earlier gains to end almost flat, up 0.05% at 2,823.81. The Dow Jones Industrial Average was up 0.28%, however, most of the benchmark’s gains were driven by a 4.9% rise in index heavyweight Boeing following its strong earnings. Stripping out Boeing’s rally, the index would have been down 0.18%.
Although rising US yields lent some support for the dollar, the US currency lacked momentum as investors are focusing more on a fresher theme of exit from stimulus in other economies, such as the euro zone.
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