After the union budget Indian stock market gained momentum. The 750 plus points rally post budget was the clear indication of a bull rally. Disinvestment programmes in the pipeline more and more traders attracted towards Indian stocks. From the current levels the Indian indices will go upwards in the recent future.
Governmet policies regarding fiscal consolidation and foreign investment would allow more capital inflow into Indian stock market. The budget proposals regarding the banking sector reforms and pumping of huge amount of money for infrastructure development are the major plus points prevailing in Indian stock market. In the long term infrastructure companies will be hot picks and also good performing financial services companies.
Government likely to collect more money from the 3G auction. This in turn beneficial for telecom companies. Airtel, now at buyable price range will be the main beneficiary. Tax slab adjustment is another major development and also serve positive inputs to the market. Indian industrial growth is slowing taking up momentum, industrial growth means economic growth!. Credit growth was hovering around 11-12% in December 2009 would accelerate to above 15% in 2010. The Eurozone crisis slowly settles down, sigh of relief for the markets all over the world. EPS for the sensex scrips is expected at Rs.840 in FY10, Rs. 1096 for FY11 and Rs.1264 for FY12. Where as it is estimated that fiscal deficit will come down to 4.1% with in four years. Happy days for FIIs estimated. Considering major factors property companies will not be at this moment. Auto sector will be outstanding now. Especially good movement expected in Mahindra and Mahindra, Ashok Leyland.
After the third quarter results announcement there will be some profit booking in Indian market. That will be an opportunity. Going ahead there will be positive sentiment in the market through out the first quarter of the next financial year. Invest in index stocks, buy them at lows whenever an opportunity arises.

The most awaited union budget has come. In a line Budget targets more growth without much risk. In order to sustain the momentum of growth finance minister took the way of income increase. There are positives as well as negatives in the budget. The remarkable negative point is that fuel price is going to increase. Which will increase inflation. Although minister said that steps will be taken to contain inflation this proposal is against his statement. Government primarily going to collect money from disinvestment and 3G auction. Tax rate becomes lower. MAT increase by 3% negative for the business. Indian market reacted well to the budget. Nifty up by 100 points and sensex by above 300 points post budget.
Inflation will go up further. Cost for household articles going to increase extra burden for aam admi. Government partially withdraw stimulus package. And set up a bright fiscal deficit target for FY13. These are positives. Apart from that there are proposals to increase the foreign investment inflow to indian market which will be beneficial for India Incorporated. RBI mulling to give banking licence for private players and NBFCs. Details of this proposals are not available. This is a move which will evoke long term consequences (even bad ones-if not implemented properly).

Government wants to decrease fiscal deficit in the coming financial years. FY10 fiscal deficit revised to 6.9 percent of GDP. According to the finance minister FY11 fiscal deficit target pegged at 5.5 percent of GDP. It will further come down in FY12 to 4.8 percent of GDP and will reach 4.1 percent by FY13. He intends to decrease the fiscal deficit to 4.1 percent of GDP with in 3 years. Finance minister also said 10 percent growth rate is attainable.

In a way budget is investor friendly. It intends to increase capital inflow to the economy. Rs. 15,000 Cr. more money will be collected through disinvestment in FY11. Service charge remains the same which is also a good move. Finance minister eased the tax burden so more money will flow into the economy.

Union Finance minister  praised UPA government. He termed Indian economy is now at a “better situation”. He was in favor of PSU disinvestment and disclosed that the target of Rs.25,ooo Cr from disinvestment. Double digit inflation is a major concern and will take steps to reduce it in 2 months. Manufacturing sector led the recovery, termed Finance Minister.

Tax proposals

Nil tax for income upto 1.6lakh
10 percent tax for income between 1.6-5lak
20 percent tax for income between 5-8lakh
30 percent tax for income above 8 lakh

Key Points

Rs. 50 per tonne cess on Indian coal

LED and CFL lights to cost less

More sops for tourism sector

Business with 60 lakh turnover have to audit A/cs

Partially withdraws stimulus package

Agriculture seeds exempt from service tax

Service tax retained at 10 percent

Tax for construction materials increased, red signal for construction industry

Refrigerator, Television,Mobile phones to cost more

3G auction to fetch Rs.36,000 Cr

Propose to extent interest subvention for export by one year

2 percent loan subsidy for farmers

Smart card alloted to NREGA

Defence allocation 1.47 lakh Cr

extended subsidy subvention for affordable housing

Surcharge for companies cut from 10 percent to 7.5 percent

Excise duty hiked from 8 percent to 10 percent
Central Excise Duty on petroleum products increased by Re 1 per litre
cigeratte to cost more
Partial rollback of excise duty on large cars

Foreign investment increased to a great extent. This was because of the loose FDI policy. More steps will be taken to increase foreign inflow

Challenges outlined during the last budget still remains

Food security and Health care system will be given more preference

10 percent growth rate is attainable

Will discuss kirit parikh report in due course (will lead to free pricing of Petroleum products)

GST and DTC (direct tax code) will implement in April 1, 2011

Will reduce fertilizer subsidy (red signal for agriculture, which is already recording a even more negative growth rate)

Banking licence for private banks and NBFCs

India market up following these announcements.

13 percent higher road allocation. Asked to fund infrastructure development more.Rs 1.73 lakh Cr. For infrastructure development.

Government to setup coal regulatory authority

Doubles allocation for power sector. Hiked fund allocation for renewable energy by 61 percent

Will extent farm loan payment by 6 months

Fund allocation for increased for school education to Rs.31036, and more grant for states.

Draft food security bill in public domain soon

More allotment for rural development, Bharat Nirman gets more money