Month: February 2023

Budget 2023 Expectations: Industry bodies hopeful of Indirect Tax rationalisation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ahead of the presentation of the Union Budget 2023-24 by Finance Minister Nirmala Sitharaman on February 1, industry bodies and the corporate sector expect more tax reforms, especially rationalisation of indirect taxes. All eyes are on the Finance Minister as to whether she will announce a more friendly tax regime with respect to the Goods and Services Tax (GST).

Multiple wish lists have been making their way to the Finance Minister, calling for tweaks in GST norms and rationalising tax slabs for different sectors, among others.

Speaking of indirect taxes, ever since the introduction of the Goods and Services Tax (GST), indirect taxes, including excise duty, service tax, and sales tax, have fallen under its umbrella, and now indirect taxes mainly comprise excise duty on diesel, petrol, and alcohol, along with some customs duty on imports.

The Confederation of All India Traders (CAIT) in its 18-point budget charter has asked the Finance Minister for a fresh review of the GST system and to launch a one-nation-one-license policy along the lines of a one-nation-one tax.

Experts are of the view that the last full budget by the incumbent Finance Minister could see the inclusion of various newer products under the Production Linked Incentive (PLI), thereby widening the ambit of the scheme. The indirect tax collection in the ongoing financial year could exceed the Budget 2022-23 estimates of Rs 13 lakh crore.

Further, there is anticipation that the current indirect tax structure could be simplified even more. Not just experts, the World Trade Organization (WTO) Trade Policy Review has also highlighted the need for the Indian tariff structure to become more lucid for exporters and importers, as complexity leads to prolonged litigation.

An elaborate amnesty scheme for customs duties is also required, which could put to rest all the procedural disputes revolving around the GST law since its introduction.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2023: The five factors that may cheer the stock markets

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s financial markets will look to repeat their performance from the budget day of 2021 when they gained the most in a single budget session since 1997. The days preceding the Union Budget have been market with volatility and a sharp sell-off, with the FII selling figure crossing the Rs 40,000 crore mark in January. The sell figure on January 30 was the highest since June last year.

Amidst this backdrop, the markets have turned towards Finance Minister Nirmala Sitharaman for some much needed respite. Expectations are high with regards to this Budget providing a boost to rural consumption that continues to struggle and also simplify taxation norms for the middle class.

Here are five aspects of the Union Budget that can provide some cheer to the equity markets:

Consumption Boost

The economic survey presented yesterday pointed out that India’s economic growth in the current financial year has been principally led by private consumption and capital formation. Rural demand, however, has been on the backfoot, still struggling to find its footing since the pent-up demand from the post-pandemic era faded away.

Most FMCG, consumption-oriented companies barring HUL, have mentioned in their business updates or quarterly results that rural demand continues to remain lower compared to urban demand.

In such a scenario, some measures to boost rural and farm income through MGNREGA or other schemes can provide some cheer to the market. Stocks like two-wheeler companies, fertiliser or agri-based stocks can see some ripple effects if such measures do get announced.

Tax Benefits

The one aspect that the middle class always looks up to the budget every year is whether they will be provided any relief towards taxation. It has been eight years since the standard deduction limit has been raised and experts are of the view that this Budget is a great opportunity to bring some reforms in the personal income tax space.

Sudhir Kapadia of EY told CNBC-TV18 that the highest income tax rate should kick in from Rs 20 lakh instead of the current Rs 10 lakh. Kapadia further said that the government should prune the deductions and focus on investments, health and education.

Himanshu Parekh of KPMG was of a similar opinion and said that the new income tax regime needs a revamp as it has found few takers. He also said that the highest personal income tax rate should be brought down to 30 percent.

Any such move in rationalising taxation slabs can provide a cheer to the market.

Keeping LTCG and Short-Term Capital Gains Tax Unchanged

As the Union Budget approaches every year, speculations begin to do the rounds on whether the government will tinker with any of the capital gains taxes. In such a subject, no bad news is good news. Therefore, in case the rates are left unchanged, the market will breathe a sigh of relief.

Nilesh Shah of Kotak Mahindra AMC told CNBC-TV18 that the budget should plug tax loopholes. Dinesh Kanabar of Dhruva Advisors said that one-year cannot be considered long-term from any perspective.

However, EY’s Sudhir Kapadia said that while shortening the holding period for debt has merit, it is good to have attractive rates for long-term capital gains. He further said that short-term capital gains should be taxed at normal rates and it is unlikely that the government will tinker with the short-term capital gains tax.

Increased Roads and Rails Capex

The Budget this time is expected to focus on increase in capex for roads and railways.

There is an expectation of a 10-15 percent hike in spending for roads and railways to Rs 2.1 trillion. This could bring to the limelight stocks like Larsen & Toubro, IRB Infrastructure Developers, Ashoka Buildcon along with smaller names like KNR Constructions.

Railways is also a key focus area for the government. In the current financial year, the railways had a budgeted spend of Rs 1.37 lakh crore that is expected to rise to Rs 1.6 lakh crore for the next financial year. The stocks to watch would be names like RVNL, Jindal Steel and Power and Siemens.

Along with L&T, higher infrastructure spends could mean more orders for companies like ABB India and Thermax.

More PLI Schemes, Especially Clean Energy

The numerous PLI schemes announced have covered a wide gamut of sectors and have provided a boost to domestic manufacturing.

There would be expectations that the scope for these PLI schemes are widened and cover more areas like clean energy where there has been a lot of emphasis on in recent times.

Brian Jacobsen of Allsprings Global Investments told CNBC-TV18 that he is looking forward to structural reforms in the Budget, including investments in clean energy.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2023 Highlights: Rahul Gandhi counters govt’s ‘Amrit Kaal’ Budget with ‘Mitr Kaal’ jibe

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Budget 2023 Highlights: Finance Minister Nirmala Sitharaman had a lot in store for different sectors including technology, auto, research environment and agriculture. But her announcement on the personal Income Tax emerged as the star of the speech. She delivered a 1-hour-27-minute long speech — her shortest so far. Stay tuned to this blog for LIVE updates in on the Budget 2023:

Catch minute-to-minute updates on the Budget here:

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Trade Setup for Feb 1: Nifty 50 FII long positions on Budget day lowest since 2020

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The Nifty 50 index has witnessed a week of turmoil and volatility ahead of the Union Budget which will be presented today in a few hours from now.

Ahead of the budget presentation, FII long positions on the index stand only at 18 percent, which is the lowest since the Budget of 2020, when it stood at 15 percent.

Historically, barring the Budget of 2021, when the indices had their best budget-day move since 1997, the Nifty 50 has moved in a range of 2 percent gains to a 2.5 percent drop over the last six years.

The Nifty 50 index has corrected 1,225 points from its all-time high of 18,888 on December 1. FIIs have been persistent sellers since the start of the new year. Their sell flows in January have now crossed Rs 41,000 crore. Domestic investors have tried to contain the damage by pumping in Rs 33,400 crore in January.

Besides the Union Budget, the street will also await commentary from the US Federal Reserve, when it announces its interest rates decision later tonight. The street has already factored in a hike of 25 basis points, with the Nasdaq Composite rising 9 percent in the month of January.

What do the charts suggest for Dalal Street?

At the start of the new year, the Nifty 50 range was seen to be between 17,750 – 18,200. The recent correction has dragged that range lower to 17,400 – 17,850. Resistance on the upside is seen at 17,950 while a key level to track on the downside is the 200-Day Moving Average of 17,290.

Jai Bala of cashthechaos.com believes that the market is only seeing a temporary support from its Friday’s low of 17,493 and that it has great potential to break below the June low in the medium-term. In all probability, he believes that the index is unlikely to climb back above 18,200. “If there is a temporary bump up of sorts, it will probably get capped at those levels,” he said.

The Nifty Bank index added over 250 points on Tuesday to close above the 40,500 mark on Tuesday. Bala expects the banking index to take the leadership on the downside for the medium term. He sees resistance for the index at 41,560 and 41,720. A short-term support is seen at 39,170.

Kunal Shah of LKP Securities believes that in case the Nifty Bank index manages to sustain above the 41,000 mark, it may spark a sharp short covering on the upside towards levels of 41,500 and 41,800.

Here are key things to know about the market ahead of the trading session on Budget day:

SGX Nifty

On Wednesday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty 50 index — gained 130 points or 0.73 percent to 17,882, thereby pointing to a gap-up opening for the market.

The economic survey tabled in Parliament by the Finance Minister on Wednesday said that once the temporary challenges abate, an explosion in India’s economic growth rates is inevitable. “Once these global shocks of the pandemic and the spike in commodity prices in 2022 fade away, the Indian economy is well placed to grow faster in the coming decade,” the survey said.

What to expect on Dalal Street

Rupak De of LKP Securities sees support for the Nifty 50 at 17,400 and expects the index to trade in a broader range of 17,400 – 17,800. He expects the “sell-on-rallies” trend to persist as long as the index remains below 17,800.

HDFC Securities’ Nagaraj Shetti concurs with the assessment that the confirmation of the short-term trend on the Nifty 50 turning positive is possible only after it sustains above 17,800. He said that sustaining above those levels can confirm a near-term bottom reversal in the market.

Key levels to watch out for

For tomorrow’s weekly options expiry, both 18,500 and 18,600 strike call of the Nifty 50 saw addition of over 18 lakh shares in Open Interest. On the other hand, the 17,800 call saw shedding of 8 lakh shares.

On the downside, the 16,700 put added 13.7 lakh shares in Open Interest, while the 16,300 put added 12.6 lakh shares. Another 12.1 lakh shares were added by the 17,600 put.

Nifty 50’s put-call ratio has moved marginally higher to 0.80 from 0.77. Ambuja Cements continues to remain in the F&O ban.

FII/DII activity

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow