Economy Updates Budget 2011-12

AUTO
•    Increase in excise duties by 150-200 basis points
•    Increase in duties/cess on diesel vehicles

BANKS & FINANCIALS
•    Increase in deduction from income for the amount set aside for covering bad and doubtful debts to 50 pct from 7.5 pct
•    Banks to be allowed to issue tax- rebated infra bonds
•    Raise FDI limit in insurance sector to 49 pct from 26 pct
•    Increase in limit of refinancing from  India Infrastructure Finance Company  (IIFCL) to commercial bank loans for PPP projects in critical sectors
•    Tax break on long tenor deposits

INFORMATION TECHNOLOGY
•    Extension of Software Technology Parks of India
•    Act (STPI) by at least one year

OIL & GAS
•    Reduction in customs duty on crude oil, petrol and diesel
•    Reduction in excise duties on petrol/diesel
•    Clarity on 7-year tax holiday for natural gas under Sec 80 IB
•    Flexibility on claiming the 7-year tax holiday
•    Declared goods status to natural gas
•    Abolish 5 percent customs duty on LNG
•    Exemption from service tax for exploration and production

CONSUMER GOODS/FMCG
•    Increase in cigarette excise duty
•    Increase in ad-valorem excise duty to 10 pct from 8 pct
•    Increase in minimum alternate tax (MAT) rate
•    Increase in central value added tax (CENVAT) rate and service tax to 12 pct from 10 pct

POWER
•    Extension of benefits under Section 80IA
•    More funds allocation on Accelerated Power Development and Reform Programme (APDRP) and incentives to states to reform power distribution system
•    Increase in coal cess
•    Clarity on bidding criteria and royalty amount for allocation of coal blocks.

PHARMA & HEALTHCARE
•    Increase weighted deduction on outsourced R&D to 200 pct from 150 pct
•    Extension of weighted deduction on R&D by 5 years
•    Exemption of physician samples from central excise duty
•    Exemption of customs duty for additional medical devices and life-saving drugs
•    Reduction in duty on APIs in line with formulations to 4 pct from 10 pct
•    Extension of tax incentives for hospitals with 100 plus beds to 10 years
•    infrastructure status for healthcare sector

MEDIA & ENTERTAINMENT
•    Concessions in customs duty on set-top boxes
•    Concessions in customs duty on imported plates/ink
•    Cut in DTH license fee by 4 pct to 6 pct
•    Waiver of service tax on transportation of newspapers by rail and road
•    Relaxation in FDI norms

HOTELS
•    Infrastructure status for hotels under Section 80IA

CAPITAL GOODS
•    New import duty on power equipment

CEMENT
•    Increase in excise rates to 12 pct from 10 pct
•    Elimination of import duty on thermal coal, pet coke, gypsum

REAL ESTATE
•    Extension of deadline for notifying special economic zone (SEZ) space to avail tax rebates
•    Increase in tax exemption limit for home buyers
•    Continuation of 1 pct interest subvention scheme for home buyers
•    Setting up of a real estate regulator
•    Clarity on external commercial borrowings (ECB) for sector

Expectations from the Union Budget 2011-12

Government likely to increase food subsidies
The Union Budget for the year 2011-12 is going to presented by finance minister on Monday 28 Feb 2011 and the government is likely to increase subsidies on food, a populist move that hurts public finances but promises political dividends for a ruling coalition trying to cool disquiet over high inflation. Though the govt is moving away from its partly socialised economy, removing subsidies has always been a tough call as they protect millions of poor voters who determine who governs. Its policies have led to big stockpiles of rice and wheat, but the government has often wrestled with the question of how to distribute -- free handouts defer long-term solutions and erratic monsoons and global supplies raise risk in cutting stocks.

Auto parts manufacturers eye tech boost
India's auto parts makers want the government's help to upgrade technology and spur investments to boost capacity, but analysts do not see the budget for 2011-12 to be tabled in parliament on Feb 28 taking many steps in this direction. On the contrary, the expectation is that of a modest increase in excise duty on vehicles that may push up prices. In 2010-11 thus far, component makers have witnessed an increase in sales, but going ahead rising input costs are seen weighing on margins.

Banks hope for nod to sell infra bonds in budget
Indian banks are hoping they get the government's nod to issue tax-free infrastructure bonds and some a tax concession for 2011-12. Public sector banks are also looking for the finer details of the government's capital infusion plans, which will boost capital adequacy and raise the government's stake to 58 percent in many. Currently only Industrial Finance Corp, Life Insurance Corp, Infrastructure Development Finance and some other non-banking infrastructure finance firms are allowed to issue tax-free bonds.

IT firms hope for STPI extension
Indian information technology firms are looking for increased spending on education, e-governance and defence sectors, and an extension by at least one year of tax benefits under the Software Technology Parks of India (STPI) scheme, but many think it is unlikely. STPI was a society set up by the Ministry of Information Technology in 1991 to boost software exports. Among other benefits, the STPI scheme provides a 10-year income tax exemption for units situated in software technology parks.

Government may tweak fuel taxes
India, struggling to balance between cutting its costly fuel subsidies and curbing inflation, may tweak fuel taxes in the Feb. 28 budget to cushion the blow of rising global crude prices on state-run oil retailers. Tackling the current informal structure of fuel subsidies would help investors put a better valuation on proposed share sales for Indian Oil Corp (IOC) and Oil and Natural Gas Corp, aimed at bringing in more revenues for New Delhi. Any decision on cutting subsidies would be a highly charged politically in a country where half a billion people live on little more than the cost of a litre of diesel a day.

FMCG firms want inflation tackled
India's fast moving consumer goods industry is hoping the upcoming budget will bring in concrete measures to tame spiraling inflation and viable tax structure to ensure continued growth. The 130-billion-rupee industry, which is the fourth largest sector in the Indian economy, has been reeling under the pressure of surging input costs and subsequent impact on profit margins. Prices of agri-commodities are on the rise. Prices have risen by 30-35 percent in the past two year and there is also simultaneous rise in freight rates and packaging costs which is squeezing the operating margins of the FMCG companies.

Power firms want extension of tax sops
Indian power sector expects the government to continue its thrust on infrastructure and pins its hopes on incentives for the renewable energy sector and extension of sunset clause under Income Tax Act in the budget for 2011-12 to be tabled in parliament on Feb 28. Under section 80-I(A) of the Income Tax Act mega power generation projects, with over 1,000 megawatts (MW) in case of thermal and over 500 MW in hydro, are exempted from income tax for 10 years, if they are commissioned before March 2011.

Pharma firms want tax cuts, R&D sops boost
Drugmakers want tax exemption deadline for export oriented unit (EOUs) to be extended and want infrastructure or priority sector status in the budget on Feb 28. The deadline for full exemption of tax on net profit for exports oriented units, or EOUs, ends in March, though drug-making facilities in special economic zones would not be affected. The exemption beyond March 2011 will provide relief to companies like Dishman Pharmaceuticals and Chemicals, Divi's Laboratoriess, Cipla and Torrent Pharmaceuticals, which run EOUs.

Media firms seek higher FDI, lower taxes to aid growth
Media firms are expecting the government, in its budget for 2011-12 on Feb. 28, to provide them with some tax relief and are hopeful of getting a growth boost by way of an increase in foreign direct investment limit. In June 2010, Telecom Regulatory Authority of India, which also regulates broadcasters, had recommended higher foreign direct investment in the broadcasting sector, particularly in direct-to-home (DTH) and cable network operators and FM radio.

TELECOM
    Inclusion of 3G investments under section 80IA tax benefits
    Import duty on mobile handsets

CHEMICALS and FERTILISERS
    Increase in fertilizer subsidy
    Inclusion of urea in nutrient-based subsidy (NBS) scheme and price decontrol
    Increase in excise duty on chemicals to 12 pct from 10 pct

METALS
    Remove import duty on steel
    Levy duty on hot rolled or HR coil exports
    Increase import duty on HR coils to 10 pct from 5 pct
    Increase in export duty on iron ore and fines
    Reforms on iron ore and coal blocks allocation and speedier approval process for land acquisitions

CONSTRUCTION AND INFRASTRUCTURE
    MAT break for infra projects for the initial period of income tax holiday
    Single window clearance system for road and power projects
    Easing ECB norms for infrastructure projects
     Infrastructure status to integrated townships and group housing development
    Increase in allocation for Jawaharlal Nehru National Urban Renewal Mission    

Read more about Budget 2011-12

Sluggish Revitalization Ups Risk For Obama By Mansukh

The economy is bouncing back two years into Obama's presidency. But the president is confronting unemployment of more than 9%, record home foreclosures and in all likelihood, the third straight federal budget shortfall of over $1 trillion. About 1.1 million nonfarm jobs were created last year, and economists are forecasting growth of 3.5% in the final three months of 2010. That said, many Americans remain out of work, even as markets have improved. There are 2.8 million fewer jobs now than in January 2009. With planning for his second White House run already underway and with Republicans gunning for his signature health-care plan and seeking aggressive federal spending cuts, Obama must convince voters he can deliver the scaled-back version of Washington they're demanding as well as targeted investments.

The latest Wall Street Journal/NBC News poll, taken Jan. 13-17, showed 53% approved of the job Obama is doing as president, up eight percentage points from December. The poll was conducted after Obama signed a package of tax-cut and jobless-benefits extensions he agreed on with congressional Republicans during the December lame-duck session of Congress. Obama has been road-testing the themes for his sophomore State of the Union in recent days, including in remarks last week at a General Electric Co. plant in New York that will soon be making advanced batteries. He used the occasion to name GE CEO Jeffrey Immelt to head a new White House council on jobs and competitiveness, and underscored how investment will help the U.S. stay competitive.
Obama's address comes as the government is operating on a short-term budget that expires March 4, and a fight over raising the U.S. debt ceiling looms. Treasury Secretary Timothy Geithner has warned Congress that the country could hit its $14.3 trillion debt limit by the end of March if Congress doesn't act, but Republicans are demanding spending cuts in return for their votes. Industries are also eager to hear from the president, who has pivoted in recent weeks to a decidedly more business-friendly posture.

The recently passed tax-cut deal between President Barack Obama and Congressional Republicans has removed some of the pressure on the Fed from being alone on the front line battling the economic crisis. The eighteen members of the Open Market Committee are widely expected at their two-day meeting that kicks off Tuesday to keep interest rates steady at record low levels and make no changes to the controversial $600 billion bond-buying program. The Fed has kept since December 2008, and is expected to keep, its key interest rate in a range of 0% to 0.25% as it seeks to bolster the economy.

The market responce to state of uniom speeches

FUNDAMENTAL PICKS BY MANSUKH JANUARY 2011

Jammu & Kashmir Bank (J&K Bank) is a sole banker to the Government of Jammu & Kashmir. With the majority holding of 53% by J&K Govt it is only a private sector bank designated as RBI's agent for banking business. It also carries out the banking business of the Central Government, besides collecting central taxes for CBDT. The bank operates through its network of 556 branches, out of which 344 branches are located in semi-urban and rural areas. The bank has a network 212 ATMs which is largest ATM network in J&K.

FINANCIALS: The Interest Income of J&K Bank has posted CAGR growth of more than 14% during FY05-FY10, Net Interest Income (NII) and Net Profit of the company has also grown by 13% and 35% respectively in the same period. In FY10 the Interest Earned Income of Bank rose by 2.3% to Rs 3056.88 crore over FY09, NII also surged by 11.9% to Rs 1119.34 crore, J&K Bank has also reported more than 25% jump in Profit after Tax to Rs 512.38 crore over FY09. In Q2FY11 the Interest Earned Income of the bank surged by 22%, NII and PAT also grew by 53% & 21.60% respectively. The NIM & PATM of J&K Bank for the same period were 3.66% & 18.16% respectively.

INVESTMENT GROUNDS
Industry Outlook
Banking Sector is always being playing the key role in the growth of the Indian economy and an ample liquidity in the banking system is always being the exigent task for the RBI. RBI has taken steps many times to squeeze the unusual liquidity condition in the Indian financial system since November. In its latest mid term monetary policy review RBI has left the repo and reverse repo rates unchanged to 6.25% and 5.25% respectively, CRR also retained at 6%. The policy review was lined with the expectations but in forthcoming meetings RBI is planning to raise the rates and may be around 25-50bps in upcoming quarters. RBI has maintained key policy rates unchanged but to encourage banks to increase their lending it cut SLR by 1% to 24%. Reducing SLR is more of a comfort given to banks when loan demand is rising, it is a signal to banks to lend more instead of holding huge SLR. Tight liquidity and slowing deposit growth may have deterred banks from the aggressive lending needed to boost economic growth.

Advantage of Regional Spread
J&K Bank is enjoying the advantage of regional spread across the state of Jammu & Kashmir provenance. Currently it is dominating the region with the total number of 380 branches & 220 ATMs. Bank has largest number of account holders and branches spread almost in every block of Jammu & Kashmir region. It caters around 3.7 million customers through it branches and having a kind of Monopolises Business in the region. It holds market share of 87% in total advances and 70% in the total deposits held by the all banks in this region.

Balanced Loan Distribution to minimize the evasion risk
J&K Bank has maintained a balanced distribution of advances to different section of the society. In Jammu & Kashmir area it has lend 25% of its total loan to Government and 22% to corporate sector, and remaining 53% is almost equally distributed in Agriculture, Personal, Trade and to Small Medium Enterprises. On the national level J&K Bank has distributed major portion of its advances to corporate sector which accounts 60% of the total advances. This well balanced loan distribution loom is also maintaining a good quality of source income.

Healthy Business Growth
J&K Bank has managed to record a healthy growth in all its business mix. The bank has achieved the CASA ratio of more than 41% in Q2FY11 from 37.84% in Q1FY11. Bank has also maintained its most sensitive margin (NIIM) above 3% since last three years to 3.66% in Q2FY11. The bad assets (NPA) of the J&K Bank are at encouraging level of 0.13% in Q2FY11 from 1.38% in Q2FY10. J&K Bank has also given impressive rate of return on Equity and Assets It has given return on equity of more than 18% in last two years and more than 16.5% in previous two years The Return of Assets also consistently grown to 1.34% in Q1FY11 which was always being above 1% in last four years.

Tips for those who intend to invest in NSE and BSE market

Today, everyone wants to make some extra money. And, when there are a lot of opportunities, right at your doorstep, it becomes even more alluring. The best thing is that you don’t need to invest huge amounts of money; you just need to be well informed. Out of all the money making opportunities available, the stock market is the best. And while it is pretty unpredictable, it has, in recent times, given its investors various reasons to celebrate. Therefore, prudence suggests that now is the perfect time to invest in the NSE and BSE market. 

However, there are some tips that one needs to follow before investing in the stock market. The first and the most important tip, is to follow affairs of NSE and BSE market and monitor the updates regularly. Not only will this provide you with a better understanding of the market and its changing trends, it will also help you understand the crucial aspects such as which sector is delivering positive results, which companies are basking in gains etc. All this becomes easy, as you can have a quick view of the live stock market, at the click of a mouse.

The smartest move is to gather as much information as you can about the stock that you are planning to buy. The most crucial information that one must extract is the changes in the movement of stock prices, according to the market trends, over a certain period of time. One should also conduct intensive research about the past and present performance of the company. Further, one should track the growth record of the company based on the pictures presented by BSE live, share market live and various other factors.

Now, the most crucial tip is not to panic over small losses, as profit-loss is the part and parcel of the stock market game. The wise thing to do is to understand the very core of the market and its functioning by observing the performance of NSE and BSE market regularly. Slowly and steadily, experience will teach you maintain balance between profit and losses and also make profitable deals out of them, more often than not.
So, the crux of this game is that if you are a smart and well-informed investor, you can mint a great deal of money from stock market trading.

Author Bio:
The author is an expert in financial markets and offers valuable tips on the stock market. For more information on investing in NSE & BSE visit http://www.nsebse.com

Read More: http://www.articlesbook.com/tips-for-those-who-intend-to-invest-in-nse-and-bse-market/ 

MARKET OUTLOOK- CAUTIOUSLY OPTIMISTIC

MARKET INSIGHTS: On Wednesday Dec 01, 2010,
The domestic markets extended their gains for the third consecutive day supported by the good set of economic data. The joy of better than expected GDP numbers got doubled with the report that the output of six infrastructure industries, which had showed significant moderation in last few months, surged by a robust 7% in October 2010, against a 3.9% growth recorded in the same month last year, not only that Export for the month of October too showed a good growth coupled with decline in imports that led the trade deficit coming down significantly on the same time The seasonally adjusted HSBC PMI recorded a value of 58.4 in November, rising from October's reading of 57.2. The global cues too remained supportive and helped the markets gain strength, all the Asian markets closed in green while the European markets too traded with good gains. Earlier the start of the markets was flat tracking the sluggishness in the global markets, as the US markets closed lower while the Asian pack was not looking confident. But the markets started inching higher rejoiced with the good GDP numbers and the Finance Minister Pranab Mukherjee's statement that India can achieve GDP growth between 8.5 percent and 8.75 percent in the current fiscal that ends in March 2011 acted as a catalyst for the markets.  March 2011 acted as a catalyst for the markets.















TheBSE Sensex touched a high and a low of 19,870.19 and 19,525.15 respectively. (Provisional)
whilethe S&P CNX Nifty soared 100.85 points or 1.72% to end at 5,963.55 (Provisionally)There were 25 advances against 5 declines on the index. The S&P CNX Nifty touched a high and a low of 5,971.00 and 5,865.55, respectively (Provisional). There were 40 advances against 10 declines on the index. (Provisional).

In the BSE sectoral space, Metal up 3.24%, Realty up 3.13%, PSU: up 3.12%, Bankex up 2.98% and CD up 2.01%, while there were no laggards. The broader indices ended in the positive region; the BSE Mid-cap index zoomed 2.62% while the Small-cap index rocketed 3.06%. There were 2384 advances against 554 declines on the index. (Provisional).

All Asian equity markets finished in the green terrain on Wednesday on the back of good economic data, sharp increases was reported in purchasing managers indexes (PMI) in China, which was mainly driven by output and export orders, revealing strength both domestically front and overseas. Shanghai Composite advanced 3.27 points or 0.12% to 2,823.45, Hang Seng rose 241.81 points or 1.05% to 23,249.80, Jakarta Composite surged 87.88 points or 2.49% to 3,619.09, KLSE Composite was up 0.19 points or 0.01% to 1,485.42, Nikkei 225 jumped 51.01 points or 0.51% to 9,988.05, Straits Times soared 37.24 points or 1.18% to 3,181.94, Seoul Composite increased 24.69 points or 1.30% to 1,929.32 and Taiwan Weighted added 147.63 points or 1.76% to 8,520.11.

                                 MARKET OUTLOOK- CAUTIOUSLY OPTIMISTIC