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Global Research Limited
CapitalVia - Special Report
BUDGETMANIA
2010
Edition : February10
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The Indian Markets have seen
a sharp rally from the
budget period of Feb.
2009 to the present Feb.
2010. The SENSEX in
the month of Feb.
2009 closed at 8891
and the NIFTY at
2 7 6 3 . 6 5 .C o m p a r i n g
the present value of Sensex
around 16200 and Nifty around 4900
both the indices have gained nearly 82.20% &
77.30% respectively. Where will the markets go
this budget no one knows? The Indian markets
have seen a big round of recovery on account of
the stimulus packages being announced by our
government and other measures being taken last
year to help the economy recover. The Indian
economy is in a better condition now and theIf you read the fiscal deficit numbers that haveGovernment may now plan out on how will itcome out for the year, we are running at fiscalrollback the stimulus package.deficit of close to 11%. This is not sustainable. So
The biggest concerns this Budget are the we need to get back to central deficit comingFiscal Deficit and the Rising Inflation. It is back below 5% in 2010-2011. Government willmost likely that the fiscal deficit is likely to get have no choice but to raise some taxes. Someprecedence in Budget considerations. The raise in taxations are expected mostly, as fiscalconsolidated Fiscal Deficit (including off-Budget deficit is close to 11%liabilities) is expected to be 10.30% in FY09-10.
Government's major focus will thus be on theOver the long term, this high level of deficit is not
steps it can take to reduce both the fiscal deficitonly unsustainable but could in fact derail theand the inflation. Apart from it the Governmentgrowth prospects themselves. The financing ofwill also take other steps which may impact ourthis fiscal deficit could fuel inflationary pressures,markets.as growth picks up and capacity utilization peaks.
In a scenario where inflation rates are alreadyWe are providing underneath the sectors and the
climbing steadily, this is not a satisfactory macro-stocks that can be in focus on any
economic environment to engender. Theannouncements made in that sector.
financing of the deficit could put pressure on
interest rates as well, thus handicapping any
monetary policy measures that may be
considered for containing the rising inflationary
expectations.
BUDGET MANIA 2010
y
(Rs.Crs.)
Year
Year
InflationRate
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Global Research Limited
Special Report - Budget Mania 2010Edition: February 2010
AUTO
Auto stocks will have direct impact on any announcements
being made in the sector on excise duties. If there is any hike in
excise duty the stocks will have negative impact whereas any
positive announcements or no hikes can have positive impact on
the stocks. Any rise in excise duty will be passed on to the
consumers which will be reflected in the higher prices they have
to pay for it and vice- versa.
Stocks to Watch:
TATAMOTOR, MARUTI, M&M, BAJAJ AUTO, HEROHONDA, ASHOK LEYLAND AND TVS MOTOR.
AGRICULTURE
Indian economy being an agricultural economy our
Government's focus will be on promoting agricultural activities.Rising inflation is also a worry thus increased allocation for this
sector will have a positive impact on the stocks in this sector and
vice-versa.
Stocks to Watch:
JAIN IRRIGATION, KRBL, RUCHI SOYA, KSOILS, CHAMBAL FERT.& NAGARJUNA FERTILIZER.
CEMENTS
The cements stocks will also be in focus as any hikes or reductions
in excise duties will have direct impact on this sector. A hike in
excise duty will have negative impact on the stocks as the end
consumer has to pay more prices for the product whereas any
decrease in the excise duty will positively impact the stocks.
Stocks to Watch:
ACC, AMBUJA CEMENTS, GRASIM AND ULTRATECH CEMENT.
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y
Global Research Limited
Special Report - Budget Mania 2010Edition: February 2010
F INANCIALS
The financial sector will be impacted by any announcements on
Loan Policies and increase or decrease in FDI Limit.
Stocks to Watch:
RELIANCE CAPITAL, KOTAK, INDIABULLS FINANCIAL, LICHOUSING FINANCE.
Better infrastructure facilities for India have been the priority of
Indian Government. Any increase in infrastructure spending by
the Government will help the construction sector to usher in
long term.
Stocks to Watch:
NAGARJUNA CONSTRUCTION, HINDUSTAN CONSTRUCTION,
UNITECH, PARSVNATH, GAMMON INDIA.
FMCG
The FMCG Stocks will be impacted by any hike/decline in excise
duty. A Hike in excise will lead to higher prices for the products
which ultimately will be passed on to the end consumer in terms
of increased price, thus any hike would have negative impact on
this sector and vice-versa.
Stocks to Watch:
ITC & HINDUNILEVER
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CONSTRUCTION
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Global Research Limited
Special Report - Budget Mania 2010Edition: February 2010
RE AL ES TATE
Any revisions on raising the limits of interest rate deductions
available on housing loan interest payments will help the real
estate companies as the customer will be in a position to have
higher loans which will ultimately lead to higher demand for the
Real Estate Players.
Stocks to Watch:
DLF, UNITECH
METALS
Any increase in export duty on iron ore will have negative impact
on the stocks related to iron ore sector. Also increase in excise
duty will have adverse impact on the metals stocks and vice-
versa.
Stocks to Watch:
Increase in export duty on iron ore:
Increase in excise duty:
Stocks that will have negative impact are SESAGOA &JSWSTEEL.
TATASTEEL, SESAGOA, JSWSTEEL, SAIL etc.
PHARMA
Pharma sector is a priority sector. Any rebates or deductions
related to R&D and promotional activities will give a boost to this
sector which will have positive impact on the stocks of this sector
and vice-versa.
Stocks to Watch:
DR. REDDY, SUNPHARMA, GLENMARK and LUPIN.
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Special Report - Budget Mania 2010Edition: February 2010
BUDGET MANIA 2010