Sensex surges 132 points in opening trade

MUMBAI: The Bombay Stock Exchange benchmark Sensex gained over 132 points in opening trade on Monday on continued capital inflows by foreign funds, driven by strong corporate earnings.

The 30-share index, which rallied by over 293 points in the previous four sessions, gathered another 132.28 points, or 0.74 per cent to 17,826.48 points in opening trade.

Banking, realty, metal and auto sector stocks lead the rally.

Marketmen said better-than-estimated quarter earnings by some corporates buoyed trading sentiments.

The wide-based National Stock Exchange index Nifty went up by 38.25 points, or 0.72 per cent to 5,342.35.

Among major gainers ICICI Bank was up 0.94 per cent to Rs 984.95, HDFC Bank by 1.98 per cent to Rs 1,982.90, State Bank of India by 0.02 per cent to Rs 2,256.05, Maruti Suzuki 1.63 per cent to Rs 1,384, Hero Honda 0.87 per cent to Rs 1,900, Sterlite Industries by 1.36 per cent to Rs 806 and Tata Steel by 1.36 per cent to Rs 657.30.

Shares of Reliance Industries, however, fell by 2.3 per cent to Rs 1,064, following disappointing quarterly earnings.

Meanwhile, Hong Kong's Hang Seng index gained 1.64 per cent and Japan's Nikkei was up 2.08 per cent in the morning trade today.

Maruti, Hyundai post highest-ever monthly sales in February

NEW DELHI: India's largest car maker Maruti Suzuki India on Tuesday reported its highest-ever monthly sales of 96,650 units for February, a jump of 22.05 per cent over the same month last year. Sales of Hyundai Motor India Ltd, the country’s second largest car manufacturer touched a new high with record sales of 31,001 units in the domestic market registering 46.1% growth over the same month last year.

In the domestic market, Maruti sold 84,765 units from 70,625 units in February 2009, an increase of 20.02 per cent. Exports surged by 38.76 per cent to 11,885 units from 8,565 units in the year-ago period, it added. Maruti had sold 79,190 units during the same month last year. "This is the highest-ever total monthly sales in the company's history," Maruti Suzuki India (MSI) said in a statement. The previous monthly sales record stood at 95,649 units in January 2010, it added.

HMIL's total sales for February, 2010 stood at 54,617 units as against 38,235 units in February, 2009 registering 42.8% cumulative growth. The domestic sales growth accounted for 31,001 units (which is the highest since 1998 when HMIL launched the Santro in September) as against 21,215 units in February, 2009 while the exports grew from 17,020 units in February, 2009 to 23,616 units in February, 2010 reflecting 38.8% growth YOY.

However, sales of Maruti's once bread-and-butter model M800 fell by 22.01 per cent at 3,178 units compared to 4,075 units in February 2009, the statement said. The A2 segment (comprising Alto, WagonR, Estilo, Swift, A-Star and Ritz) witnessed 19.97 per cent growth at 60,380 units compared to 50,331 units in the same month a year ago.

A3 segment sales (consisting of SX4 and DZiRE) increased by 27.49 per cent to 10,254 units compared to 8,043 units in the corresponding period a year ago, the company said.

MSI's passenger car sales rose 20.53 per cent at 84,480 units in February against 70,090 units in the same month in 2009, it added.

The segment-wise cumulative sales of Hyundai for the month of February, 2010 are as follows: A2 Segment (Santro, i10, Getz & i20) 50,515 units; A3 Segment (Accent & Verna) 4,051 units; A5 Segment (Sonata Transform) 50 units; and SUV Segment (Tucson) 1 unit.

Budget 2010: FM delivers a masterful performance on all fronts

First Sachin Tendulkar, and now, the finance minister; this seems to be a week for veterans to dazzle us with their deft footwork.

The FM must have had an unenviable task in front of him, at the time of drafting the budget proposals. He had to consolidate the growth momentum, rein in the fiscal deficit, improve the climate for investment and spending, and to do all this while keeping a keen eye on inflationary pressures. It’s been a virtuoso performance on all these fronts.

The broad numbers look very positive on the macro-economic front — a fiscal deficit of about 5.5% and targeted deficits of 4.8% in 2011-12 and 4.1% in 2012-13 are extremely positive signs. That he has managed to limit government borrowings to Rs 3.45-lakh crore is also positive.

The market was expecting this to be somewhere around Rs 4-lakh crore. The reduced number leaves enough headroom for private sector borrowing. An increase in 15% of plan expenditure while non-plan expenditure has grown by only 6% is another positive.

FM’s decision to include hidden deficit-spending like oil bonds and fertiliser bonds in the fiscal deficit accounting is the right move and will bring in greater transparency. Another move towards greater transparency is his promise to release a status paper on public debt in six months.

Some of his policy moves are long overdue and most welcome. These include the promise of a comprehensive FDI regulation, an apex level Financial Stability Council, Financial Sector Legislative Reforms Commission, especially the latter. I also hope that he is able to implement his promises to adopt the Kirit Parikh Committee report on decontrol of oil sector pricing and allowing of FDI in the retail sector, especially in the retailing of food and farm items.

FM’s announcement of additional banking licences, including for those NBFCs complying with various norms and his promise of extending banking services to clusters habitation of 2,000 people using the banking correspondent route, will go a long way towards financial inclusion and expanding the reach of banking services. His provision of Rs 16,500 crore towards recapitilisation of PSU banks is also welcome, especially for some of the weaker PSU banks.

The finance minister has targeted Rs 25,000 crore through disinvestment and has promised to raise more through the same route next year. This will add further depth to the market, though I hope that these are spread out and priced correctly to attract retail investors.

The FM has increased the allocation to the infrastructure sector by a whopping 46%. He has allowed an investment of Rs 20,000 in designated infrastructure bonds to be deducted from taxable income. This will also help divert household savings in the infrastructure sector. Given the state of India’s infrastructure and the enormous investments required, both these are positive moves.

Another positive move, which will remove several procedural anomalies, is the establishment of a Coal Regulatory Authority and the decision to allocate captive coal blocks for power plants by a system of competitive bidding. This will raise additional resources as well for the government.

By broadbasing the direct tax slabs and by removing the surcharge from corporate income tax, the FM has left more money in the hands of both the household as well as the corporate sector. This will lead to enhanced spending and investment and can only add to the growth story.

The rollback of excise duties was expected and while it might will raise fuel prices as well as hit some sectors like auto, cement etc, given the fact that food prices have been falling for the past couple of months and crude prices are also softer in the international market, this is unlikely to have too much of an impact on inflation.

Overall, I believe this is an extremely positive and balanced budget that will help propel India into the next growth orbit. I expect, with this budget, GDP will grow by about 7.7% to 8%.

Brokerages turn positive on Tata Motors

MUMBAI: Shares of automobile manufacturer Tata Motors zoomed Tuesday after after Jaguar Land Rover boosted its December quarter profit and the top vehicle maker reported robust sales for February. Brokerage firms lauded the automaker’s stellar performance, thus maintaining a ‘Buy’ rating on the stock.

“We believe that stock is currently undervalued given the recovery of JLR’s profitability. Key growth triggers for Tata Motors going ahead are 1) domestic CV volumes growth (higher allocation to road development in budget), 2) stabilization of JLR profitability (OPM) at 7.5 per cent and 8 per cent for FY11E and FY12E respectively, 3) margin expansion in domestic business and 4) decrease in leverage to strengthen balance sheet position.

Future concerns for Tata Motors include competition and impact on demand due to rise in excise duty. We upgrade the stock to buy from market price with a revised target of Rs 836,” said India Infoline.

Nirmal Bang Securities has recommended investors to buy shares of Tata Motors with a stop loss of Rs 701. “The structure looks positive and this stock has given a fresh breakout with good volumes. If this stock manages above 735, then next level could be 800-810,” said the brokerage firm.

Anand Rathi Securities has retain its Buy rating on the stock and also raised its estimates and target price to Rs 923 to factor in a faster than expected turnaround at JLR.

“The outlook for the CV sector is buoyant due to the recovery in economic growth, emission-norm change, good bus demand, and infrastructure development activity. JLR had an EBITDA margin of 9.8% (vs 2.9% in 2Q). Margin improvement is attributable to an improved product mix, lower qoq marketing costs, and cost control measures (which could yield benefits in future as well),” said the brokerage firm.

“Our target price of Rs923 is based on standalone value of Rs572 (6.3x FY11e EV/E, 15% discount to its 5-year average), investments in key subsidiaries at Rs165, and JLR at Rs186. Buy,” it added.

Meanwhile, IFCI Financial Services has maintained a neutral rating on the stock. “At CMP of Rs 711 the stock trades at 19.5x FY10E and 15.7x FY11 EPS. We maintain our Neutral rating on the stock with an upward revised standalone target price of Rs 634 based on 14x FY11E standalone EPS,” it said.

Shares of the company were trading at Rs 777.65, higher by 9.34 per cent or Rs 66.45 on the NSE. The stock touched a high of Rs 781 in trade so far.

Tata Motors reported a 58-per cent jump in February sales at 69,427 units, against 43,811 units sold in the same month last year. The company's passenger vehicle sales in the domestic market grew 43.7 per cent at 29,241 units in the reporting month against 20,348 units in the same period last year, its highest ever sale, Tata Motors said in statement. Its total exports jumped over twofold at 3,237 units compared to 1,318 units in the same month last year, it added.

The company also reported a consolidated net profit of Rs 650 crore for the December quarter of 2009, after suffering a loss of Rs 2600 crore last year. The profit was boosted by rise in sales and margins at its Jaguar Land Rover unit in London as buyers returned after the global crisis.

Budget 2010: Cheers to middle class, jitters for 'aam admi'

The elephant has been synonymous with India from time immemorial, through history, mythology and belief. For decades, the Indian economy, too, came to be likened to an elephant, but in a pejorative, lumbering sense. Today, as the balance of global power shifts to the East, and India is regarded with awe for weathering the financial storm better than most, the elephant analogy is back – but with the positive attributes of size, stability, solidity and strength. With our economy projected to become the second largest in the world, after China and ahead of even the US, there’s a growing sense that we’re riding a quiet but powerful giant, one that needs to be taken care of if we want it to travel far and carry over a billion people on its back. Just as the elephant-god is worshipped by millions as remover of obstacles and bearer of good fortune, our Budgets are awaited with a prayer that they will lead us to a better tomorrow. Will this Budget make a difference to our lives, will it help the elephant dance?

NEW DELHI: When finance minister Pranab Mukherjee presented the interim budget last year on the eve of elections, the phrase 'aam admi' figured five times in his speech starting with the opening paragraph. In his latest Budget speech on Friday, the aam admi figured only twice and had to wait till well into the speech to be invoked.

Is this more than just trivia? It might well be. The salaried middle class can celebrate an entirely unexpected windfall of up to Rs 56,000 per annum from the reworked personal income tax slabs and a new tax exemption option. Most Indian corporates have reason to be happy with the surcharge on corporate tax coming down from 10% to 7.5%, even if some among them will be unhappy about the minimum alternate tax (MAT) being hiked from 15% to 18%.

Reformers will welcome the declaration of intent implied in a disinvestment target of Rs 40,000 crore for the coming year — and another Rs 14,000 crore in the one month left in this year — and the assertion that the return to fiscal rectitude has begun with the deficit being pruned to 5.5% of GDP. The proposal to issue new banking licences to the private sector after a gap of over 10 years should also please business groups that have been hankering for entry into the sector.

In contrast, the aam admi might wonder why the 'flagship' rural employment scheme (NREGS) has been given just 2.5% more than in last year's budget and the ambitious Bharat Nirman has got just 6% over the budgetary allocation last year. In real terms, adjusting for inflation, both would amount to a cut in outlays.

The aam admi is also hardly likely to be pleased with the hike in fuel prices by way of excise and customs duty increases on crude oil and petroleum products — which alone are estimated to yield the government an additional Rs 26,100 crore in the coming year. This is bound to stoke fears of further inflation. The fact that excise duty hikes are more or less across the board — in a partial exit from the stimulus package rolled out through late 2008 and early 2009 — does not help.

Mukherjee's announcement that excise duty on petrol and diesel will go up by one rupee per litre prompted what might well be the first-ever boycott of a budget speech, or a part of it, by the Opposition. That's a sign that these parties believe they can gain some political traction on the issue.

True, the middle class too will not be spared the impact of these duty hikes, which the FM later insisted would directly raise the inflation rate by just 0.4%. It can also point to the fact that the extended coverage of service tax to things like domestic air travel and under-construction houses will do it no favours. But it would be difficult to dispute that on balance the Budget has saved more money for this section than it has taken away.

As for corporates, the 175-point rise in the Sensex on the day was a fair indicator of how the markets perceive the overall impact of the Budget on India Inc. While excise duty hikes are never good news for industry, the much lower-than-expected borrowings of the government — projected at Rs 3.45 lakh crore — means business need not fear being either crowded out of the credit market, or being hit by the kind of rise in interest rates that a larger borrowing programme would have meant by increasing the demand for credit.

The FM is clearly betting on growth to help him raise revenues on the scale he expects, while the fact that the pay commission arrears and farm loan waiver are no longer a millstone around his neck has helped enormously in keeping expenditure from rising too much.

The direct tax changes for individuals and corporates, he said, would cost him Rs 26,000 crore over the year, while the excise, customs and service tax changes would get him an additional Rs 46,500 crore, thus yielding a net Rs 20,500 crore. On the corporate tax front, a higher MAT will fetch him Rs 6,000 crore, while lower surcharge will lose him Rs 5,000 crore — a modest additional burden of Rs 1,000 crore on India Inc.

Mukherjee said in his speech that the proposed move to a goods and service tax (GST) would have to wait till April next year and that he would also introduce the proposed new direct tax code, which is premised on lower rates with fewer exemptions, from April 2011.

Later in the day, he told a TV channel that while he was sure about the introduction of the direct tax code next year, since that was within his purview, GST coming into force would require the concurrence of the states and hence was something he couldn't guarantee.

Economic Survey positive on economy, worried about price rise

NEW DELHI: Enthused by reforms and the strong fundamentals, the Economic Survey on Thursday predicted that India would bounce back to a high nine per cent growth in 2011-12 on the way to becoming world's fastest growing economy in four years.

The document, which assesses the state of the economy, warned that high food prices would rise further over next few months and criticized the food management policies that have led to "unacceptably" high prices of items like sugar.

Food inflation is at present hovering close to 18 per cent.

The pre-budget Economic Survey (2009-10), presented by finance minister Pranab Mukherjee in Parliament, also recommended a "gradual rollback" of stimulus measures after assessing the impact on each sector.

Projecting the economic growth to touch up to 8.75 per cent in 2010-11 and nine per cent in the next year, the survey said: "It is entirely possible for India to move into the rarefied domain of double digit growth and even attempt to don the mantle" of the fastest growing economy in the world within the next four years.

It, however, expressed concern over rising prices, saying that a major concern during 2009-10 was the emergence of high double digit food inflation.

In a direct criticism of the government, particularly over the very high consumer price inflation, the survey said that the "hype" over kharif crop failure without taking into account the comfortable food stocks and rabi prospects "may have exacerbated inflationary expectations encouraging hoarding and resulting in a higher inflation in food items.

"... in the case of sugar, delay in the market release of imported raw sugar may have contributed to the overall uncertainty, thereby allowing prices to rise to unacceptably high levels in recent months," it added.

The survey said that "since December 2009, there have been signs of these high food prices, together with the gradual hardening of non-administered fuel product prices, getting transmitted to other non-food items, thus creating some concerns about higher than anticipated generalised inflation over the next few months."

Referring to projection of 7.2 per cent growth of the economy in 2009-10, the survey said, "The fast-paced recovery of the economy underscores the effectiveness of the policy response of the government in the wake of the financial crisis."

The board-based recovery, it added, "Creates scope for a gradual rollback, in due course of some of the measures undertaken over the last 15 to 18 months, as part of the policy response to the global slowdown."

These initiatives, it added, were also necessary for pushing the economy back on the growth path of 9 per cent, the rate at which the economy was expanding before the global crisis hit the world.

Two-third of India's forex kitty due to rupee rally: Survey

NEW DELHI: The country's foreign exchange reserves grew by USD 31.5 billion in the first nine months of this fiscal, but credit for two out of every three of these dollars go to the rupee appreciation.

The Indian currency's sharp appreciation against dollar -- an eyesore for the export sector that has been the main contributor to forex reserves traditionally -- contributed USD 20.3 billion or 64.4 per cent to the total accretion in forex reserves till December 2009 in the current fiscal.

The total foreign exchange reserves increased by USD 31.5 billion in 2009-10 fiscal, from USD 252 billion at the end of March 2009 to USD 283.5 billion in December 2009, according to the Economic Survey presented in Parliament today.

The pre-budget document on the country's economic health added that the actual accretion in forex reserves was, however, only USD 11.2 billion (35.6 per cent of the total increase of USD 31.5 billion), which was mainly due to rise in FDI inflows and investments from foreign institutional investors.

"... accretion of USD 20.3 billion (64.4 per cent) was on account of valuation gain due to weakness of the US dollar against major currencies," the Survey said.

Rupee has been appreciating against the US dollar in the current fiscal, largely due to signs of economic recovery and revival in FII inflows after March 2009.