SHARETIPSINFO >> Articles Directory >> BUDGET 2009-MISSING THE REGULAR MASALA

 

SMILING MARKET CRIED RED ON BUDGET:
Out 30 BSE Sensex stocks, 29 stocks closed negative. JP Associates was top loser on the index; it was down over 8%. Reliance Infra, Reliance Communication, ICICI Bank, Tata Steel and Reliance Industries were down between 5% and 7%.

TOP LOSERS ON SENSEX:

		LTP	% CHANGE
JP ASSPCIATES		69.55	-7.88
RELIANCE INFRA		533.15	-6.35
ICICI BANK		409.2	-5.79
RCOM		171.15	-5.78
TATA STEEL		184.05	-5.2
RELIANCE IND		1319.05	-5.17
L&T		666.3	-4.96
SBI		1136	-4.86
STERLITE IND		262.55	-4.7
BHEL		1401.3	-4.47

INDUSTRY GROWTH RATE IN LAST 10YEARS:

DEFICIT AT GLANCE AND THEIR IMPACT:

Increased borrowing from the government will make the corporate difficult to borrow. This also makes interest rate cut difficult unless and until central bank goes for printing more money.
Government increased deficit is good for now as corporate are shying from the investment but things could be difficult for the corporate as and when they return for borrowing.

HIGHLIGHTS OF THE INTERIM UNION BUDGET2009-10:
Revenue deficit for 2009-10 estimated at 4% and fiscal deficit at 5.5% of GDP.
Rs 953231crore expenditure proposed for 2009-10.
Rs 131317 crore allocated for flagship programmes.
Defence gets Rs141703 crore in the interim budget.
Indira Gandhi National Widow Pension and Indira Gandhi National Disability Pension Schemes to be launches.
Widows in the age group 18-40 to be given priority in admission to ITIs, women ITIs and national/regional ITIs for women.
NPA of public sector banks declines.
60.12 lakh houses for weaker section constructed under Indira Awaas Yojana.
Rs 100 crore for unique identification authority.
Rs 65300 crore debt waiver and relief given to 3.6 crore farmers.
Farm credit disbursement up 300% since 2003-04, touching Rs2.5 lakh crore in 2007-08.
Rural infrastructure development fund corpus increased to Rs14000 crore in 2008-09.
GDP growth of over 9% for three consecutive years.
15 central universities established, six new IITs start functioning; two more this year.
$32.4 billion FDI received in 2007-08.

STATEMENT OF ACCOUNT:

SOURCE OF FUND	USES OF FUND
1.BORROWING AND OTHER LIABILITIES-29%	1.CENTRAL PLAN-18%
2.CORPORATE TAX-22%	2.INTEREST PAYMENT-20%
3.INCOME TAX-12%	3.DEFENCE-13%
4.CUSTOMS-10%	4.SUBSIDIES-9%
5.SERVICE TAX&OTHER TAXES-6%	5.OTHER NON PLAN EXPENDITURE-14%
6.EXCISE-10%	6.STATE SHARE OF TAX AND DUTIES-15%
7.NON-TAX REVENUE-10%	7.NON PLAN ASSISTANCE TO STATE AND UT GOVT-4%
8.NON-DEBT CAPITAL RECEIPT-1%	8.STATE AND UT PLAN ASSISTANCE-7%

SOURCE OF FUND

USES OF FUND

 

IMPACT OF BUDGET ON DIFFERENT SECTORS:
The interim budget does not have any major announcement that affects the industry. It was straight statement account. Market had lots of expectation from the budget. Industry were expecting major support from the government in this recessionary scenario. However there are certain positive things as govt increased expenditure in infrastructure,defence and other expenditure will have indirect positive impact on the industries.

INFRASTRUCTURE:
The government has taken steps to encourage the private investments in infrastructure via PPP. The government has approved 37 infra projects worth Rs 70,000 crore between August 08 & January 09. It has also allocated Rs 40900 crore for Bharat Nirman Scheme. The corpus Of Rural Infrastructure Development Fund was increased to Rs 14000 crore in 2008-09. IIFCL has given permission to raise Rs 10000 crore from market by March 09. It will be also given permission to raise Rs 30000 crore more if required. The Centre has been given in-principle approval under PPP mode projects worth Rs 67700 crore.

POSITIVE IMPACT:
Nagarjuna Construction, Hindustan construction, IVRCL

DEFENCE: Government has increased allocation in defense at Rs141703crore for FY2010.

POSITIVE IMPACT: BEML, L&T, Zen technology.

TEXTILE, GEM & JWELLERY: The government extends interest subvention for some export loans. It extends 2% interest subsidy on pre & post shipment export credit. The Sunset clause for gems & jewellery, textiles, handicrafts will be extended.

POSITIVE IMPACT: ARVIND MILL, ALOK TEXTILE, TITAN, SURAJ DIAMOND

CEMENT& STEEL: Cement and steel sector is expected to benefit from the increased expenditure on infrastructure development.
Steel sector will have marginal benefit from government measures such as bringing HR coils under restricted and levy of import duty on flat product.

MARGINAL POSITIVE IMPACT

BANKING: Severe liquidity crunch will keep the banking counter underperformer. The relaxation in non-performing loan norms in real estate and corporate sectors may lead to weakening of asset quality and exert greater stress on the sector.

FERTILISER: Fertilizer stocks were impacted as fertilizer subsidy was declared short against expectation. Fertilizer secretary says, has allocated Rs 1, 00,700 crore as fertilizer subsidy as against required amount of Rs 1, 09,000 crore for FY’09. It means total shortfall of Rs 8300 crore in fertilizer subsidy. For total Rs 100700 crore, Rs 80,700 crore allocated in cash and Rs 20,000 crore in bonds. They have already disbursed Rs 75441 crore in cash and Rs 14,000 crore in bonds to fertilizer companies.

NEGATIVE IMPACT: NFL, RCF, NAGARJUNA FERTILISERS.

TRACTOR AND FARM EQUIPMENTS: Tractors and farm equipment item could see boost in the demand due to emphasis on agriculture and rural development. Poor bank finance is the only concern.

POSITIVE IMPACT: M&M, JAIN IRRIGATION

CONCLUSION:
We did not find anything exciting in the budget. The budget was lacking the popularism as we were expecting sops for the battered industry. Government has ensured past plan to go in smoothly.
Defense outlay has increased; it was very well in line with our expectation after the Mumbai attack.
Government push for rural development is going to see a new growth area opening up for the FMCG companies as their disposal income will increase .We are sure not just sure but 100% that next boom will definitely will be coming from agricultural sectors. So the companies working in the rural sector will definitely will be the prime beneficiary in the coming years.

 

WE ASK OUR INVESTOR TO GO BACK TO THE ORIGINAL INDIA…….THE RURAL INDIA…………….BOOM IN MAKING………

 

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