Union Budget FY 2010 -11 - Highlights

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Weekly outlook 27/02/2010
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The event risk is now out of the way and what a pleasant surprise for the market. The key indices rose sharply on Friday after being range bound for most part of the week following positive feelers from the budget. Investors cheered the governments move to rein in the
fiscal deficit as it announced a partial rollback of some of the stimulus measures. Finally, the benchmark Sensex added 1.5% and NSE Nifty added 1.6% over the week.

The coming holiday-shortened week will see investors trying taking a closer look at the budget announcements and assessing whether the targets mentioned are achievable. Auto companies like Maruti have already announced a hike in prices of cars. The monthly numbers of auto and cement companies will be closely watched. The impact of fuel price hike will see some loud protests from many.

-- Wish you a nice long weekend and a Happy Holi-day! --

Union Budget FY 2010 -11 - Highlights 26/02/10

— Net revenue gain from tax proposals at Rs 20,500 crore
— Certain accredited news agencies exempted from service tax
— Service tax to remain 10 per cent
— Increase in duty on gold and silver import
— Clean energy cess of Rs 50 per tonne to be levied on coal produced in India
— 10 per cent central excise duty on all non-petroleum products
— Structural changes in excise duties on cigarettes, cigars and cigarillos.
— Revenue loss of Rs 26,000 crore on direct tax proposals.
— 7.5 per cent duty on petrol, diesel, crude restored.
— Exempt duty raised for all non-smoking tobacco producs
— Investment linked tax deductions to be allowed to two—star hotels anywhere in the country.
Fiscal deficit seen at 4.8 per cent and 4.1 per cent in 2011—12 and 2012—13 respectively.
Income Tax department ready with two—page Saral—2 return forms for individual salaried assesses
— Surcharge on companies reduced to 7.5 per cent
— Additional exemption of Rs 20,000 for long term investment in infra bonds
— Ten per cent tax slab for income above 1.6 lakhs up to Rs. 5 lakhs.
— 20 per cent tax for income above Rs 5 lakh and up to Rs 8 lakh
— 30 per cent tax for income above Rs 8 lakh.
— National Social Security Fund created for workers in unorganized sector with allocation of Rs.1,000 crore
— Government to give Rs.1,000 for each National Pension Scheme account opened by workers in the unorganised sector
— Exclusive skill development programme for the textile sector
— Fifty percent hike in allocation for schemes for women and child development
— Rs.4,500 crore allocated for ministry of social justice and empowerment, a hike of 80 percent
— Rs.2,600 crore allocated for ministry of minorities affairs
— Rs.1,900 crore for Unique Identification Authority of India
— Rs.147,344 crore allocated for defence
— 2,000 youth to be recruited in central paramilitary forces
— Draft Food Security Bill prepared and will be put in the public domain
— Allocation on primary education raised from Rs.26,800 crore to Rs.31,300 crore
— Banking facilities to be provided to all habitations with a population of 2,000 and more
— Rs.66,100 crore allocated for rural development in 2010—11; Rs.40,100 crore for National Rural Employment Scheme; RS.48,000 crore for Bharat Nirman
— Rs.1,270 crore allocated for Rajiv Awas Yojna for slum dwellers, up from Rs.150 crore, an increase of 700 percent with the aim of creating a slum free India.
— Forty—six percent of plan allocations in 2010—11 will be for infrastructure development
— Coal Regulatory Authority to be set up to benchmark standards of performance
— Allocation for new and renewable energy sector increased 61 % from Rs.620 crore to Rs.1,000 crore in 2010—11
— National Clean Energy Fund to be established
— Rs.200 crore allocated as special package for Goa to prevent erosion and increase green cover.
— Government committed to growth of SEZs.
— Four—pronged strategy for growth of agricultural sector.
— Rs.200 crore to be provided in 2010—11 for climate—resilient agricultural initiative.
— Involvement of private sector in grain storage to continue for another two years.
— In view of drought and floods, debt repayment period extended to June 2010.
— Five more mega food processing projects in addition to 10 existing ones.
— FDI flows in April—December 2009 $20.9 billion.
— FDI policy to be made more user—friendly with one comprehensive document.
— Apex level financial stability council to be set up for banking sector.
— Indian Banking Association to give additional licences to private players.
— Provision for further capital for regional rural banks.
— Roadmap for reducing public debt in six months.
— Implementation of direct tax code from April 2011.
— Government actively engaged in finalising structure of general sales tax regime; hopes to implement it from April 2011.
— Rs.35,000 crore raised from divestment in 2009—10; will be higher in 2010—11.
— New fertiliser policy from April 2010; will lead to improved productively and more income for farmers.
— Economy stabilised in first quarter of 2009—10; strong rebound in second quarter; overall growth at 7.2 and could be higher when Q3 and Q4 are taken into account.
— Export figures for January encouraging.
— Hope to breach 10 percent growth mark in not too distant future.
— Government set in motion steps to bring down food inflation.
— Need to review stimulus package; need to make growth more broad—based.
— India has weathered global economic crisis well; Indian economy in far better position than it was a year ago. In 2009 Indian economy faced grave uncertainty; delay in southwest monsoon had undermined agricultural production.
— First challenge now is to quickly revert to 9 percent growth and then aim for double digit growth; need to make recovery more broadbased.
— Second challenge is to make growth more inclusive; have to strengthen food security.
— Third challenge is to overcome weakness in government's public delivery mechanism; a long way to go in this.

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NIFTY MOVEMENT ON UNION BUDGET DAY SINCE 1999
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FEB 27, 1999 +5.13%
FEB 29, 2000 -5.12%
FEB 28, 2001 +4.38%
FEB 28, 2002 -3.87%
FEB28, 2003 +0.19%
JAN 8, 2004 +2.54%
JULY 8, 2004 -2.25%
FEB 28, 2005 +2.18%
FEB 28, 2006 +0.86%
FEB 28, 2007 -4.01%
FEB 29, 2008 -1.38%
JULY 6, 2009 -5.83%

FEB 26, 2010 +1.29

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Weekly outlook 21/02/2010

Weekly outlook 21/02/2010

Without doubt, next week will be action-packed for the Indian markets.Apart from Railway Budget, Economic Survey and Union Budget, we will also have to grapple with the F&O expiry and of course Q3 GDP figures.To add to the anxiety would be newsflow from the external front, which of late has been exerting quite an influence on the overall market sentiment. Talking of global markets, China will resume trading after a long holiday. The surprise hike in reserve ratio just before the holiday started and the Fed move to raise the discount rate could weigh on that market. Not much data is expected from China next week.On the other hand, a lot of economic reports are due from the US next week, including a spate of data on housing and revision in third
quarter GDP.

Coming back to India, the main focus will be on Budget and what the two Bengali ministers have in store for all concerned. One thing is sure they can't afford to be too populist this time around. They better not, as the economy is at a crucial juncture and any further slippage in policy making could hurt its prospects going forward. A broad consensus that is emerging on the Budget is that there will definitely be a partial rollback of fiscal stimulus, besides articulation of a roadmap to return to the path of fiscal prudence.One should also watch out for announcements on disinvestment, GST rollout, 3G auction and the Centre's estimate of market borrowings.
Given the spiraling inflation, we expect the Government to try and address growing concerns on this front as well.

Speaking of sectors that might gain from the Budget, the usual suspects are Infrastructure, Education, Fertilizers, Textiles,Agriculture, etc.

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United Bank of India - IPO
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United Bank of India is a public sector banking institution with branches in 28 States and in 4 Union Territories in India. The Bank is currently wholly-owned by the Government of India. As of December 18,2009, they had 1,484 branches, 265 ATMs, 28 regional offices and 11 extension counters. United Bank is in the process of opening a representative office in Dhaka, Bangladesh. As of December 18, 2009,company had a workforce of 15,813 employees (including part-time
employees). United Bank of India is one of the 14 banks which were nationalised on July 19, 1969.

United's business is principally divided into retail banking,corporate / wholesale banking, priority sector banking, treasury operations and other banking services such as agency functions for insurance and mutual fund distribution, pension and tax collection services. Their retail banking business provides financial products and services to retail customers. United Bank provide loans and advances for housing, trade, automobiles, consumer durables,education, personal loans and other retail products. Also they provide commercial banking products and services to corporate customers, including mid-sized and small businesses and government entities. They offer direct financing to farmers for production and investment, as well as indirect financing for infrastructure development and credit to suppliers of agricultural inputs.

In Fiscal 2009, company made a net profit of Rs. 358.55 crore and had net assets of Rs. 61,500.78 crore and net worth of Rs. 2,537.83 crore.As of September 30, 2009, they made a net profit of Rs. 231.10 crore and had net assets of Rs. 71,952.25 crore and net worth of Rs.2,769.87 crore. They have experienced growth in deposits and advances,with deposits growing at a compounded annual rate of 21.1% during the last five fiscal years and net advances growing at a compounded annual rate of 32.8% during the same period.

The objects of the Issue are:

1. To augment capital base to meet the future capital requirements arising out of the growth in their assets due to the growth of the Indian economy; and 2. For meeting the expenses of the Issue.

Issue Detail:

»» Issue Open: Feb 23, 2010 - Feb 25, 2010
»» Issue Type: 100% Book Built Issue IPO
»» Issue Size: 50,000,000 Equity Shares of Rs. 10
»» Issue Size: Rs. 300.00 - 330.00 Crore
»» Face Value: Rs. 10 Per Equity Share
»» Issue Price: Rs. 60 - Rs. 66 Per Equity Share
»» Market Lot:
»» Minimum Order Quantity:
»» Listing At: BSE, NSE

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IPO Listing - Aqua Logistics Ltd
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Aqua Logistics Ltd IPO will list on Tuesday, February 23, 2010. Issue
price of this IPO has been fixed at Rs 220/- per share. Aqua Logistics
IPO subscribed 1.94 times(3.0002 times in retail).

IPO Listing Detail

Listing Date: Tuesday, February 23, 2010
BSE Script Code: 533159
NSE Symbol: AQUA
Listing In: B Group
ISIN: INE544K01018
Issue Price: Rs. 220.00 Per Equity Share
Face Value: Rs. 10.00 Per Equity Share

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IPO Listing - DB Reality Ltd
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DB Realty Ltd IPO will list on Wednesday, February 24, 2010. Issue
price of this IPO has been fixed at Rs 468/- per share. IPO was
oversubscribed by 2.95 times (0.3658 times in retail).

IPO Listing Detail


Listing Date: Tuesday, February 24, 2010
BSE Script Code: 533160
NSE Symbol: DBREALTY
Listing In: B Group
ISIN: INE879I01012
Issue Price: Rs. 468.00 Per Equity Share
Face Value: Rs. 10.00 Per Equity Share


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New ipo listing

IPO Listing - Thangamayil Jewellery Ltd
-----------
Thangamayil Jewellery Ltd IPO will list on Friday, February 19, 2010.
Issue price of this IPO has been fixed at Rs 75/- per share.
Thangamayil Jewellery IPO subscribed 1.12 times(2.2633 times in
retail).

IPO Listing Detail

Listing Date: Friday, February 19, 2010
BSE Script Code: 533158
NSE Symbol: THANGAMAYL
Listing In: 'B' Group of Securities
ISIN: INE085J01014
Issue Price: Rs. 75.00 Per Equity Share
Face Value: Rs. 10.00 Per Equity Share

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IPO Listing - Aqua Logistics Ltd
-----------
Aqua Logistics Ltd IPO will list on Tuesday, February 23, 2010. Issue
price of this IPO has been fixed at Rs 220/- per share. Aqua Logistics
IPO subscribed 1.94 times(3.0002 times in retail).

IPO Listing Detail

Listing Date: Tuesday, February 23, 2010
BSE Script Code: 533159
NSE Symbol: AQUA
Listing In: B Group
ISIN: INE544K01018
Issue Price: Rs. 220.00 Per Equity Share
Face Value: Rs. 10.00 Per Equity Share

Market Beeps 17/02/10


-Ranbaxy Laboratories
leads gainers in 'A' group
-Jain Irrigation vaults as Govt may focus on farm sector in Budget
-Empower Industries jumps 40% in four days on liberal bonus issue
-IVRCL Infrastructures recovers as it denies reports of IT raids
-FCS Software hardens after fixing record date for bonus issue
-Metal shares in demand as copper rises on LME
-Oil exploration stocks move in tandem with rising crude oil prices
-Bonus plan keeps Castrol counter buzzing with activity
-Profit booking pulls down MBL Infrastructures
-New order powers recovery in Suzlon Energy
-PVR drops after calling off deal to buy DLF group's theatre biz
-Deccan Chronicle slips on concern it may exit IPL 3
-Airline stocks take off on reduction in ATF price
-Ballarpur Industries gains on Malaysian bid
-Bears rule Bharti Airtel counter after large overseas acquisition bid
-Fund raising plan drives interest in Jyoti Structures
-United Breweries gains on robust sales outlook
-Tata Motors speeds up on strong global sales
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Gold price may rise to $1,124- $1,127 this week : 17/02/10
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By Dan Norcini
The reflation trade was back on in a big way today as both the commodity world and the equity world witnessed sizeable money flows coming their way. The Dollar's weak display was enough to send the algorithms wildly to the buy side once again as the war between the inflationists and the deflationists saw the deflation camp in all out retreat during this particular skirmish. Copper, crude oil, soybeans and even lumber were all stronger today.

Bellwether copper had a huge day as it surged into a band of strong resistance near the 40 and 50 day moving averages before sellers showed up. A push through these levels that can be maintained for one full session should see copper having a shot at making a run back to near $3.40 again. That is hardly the substance that deflation is built of. Again, as always, we will be monitoring this market to gauge how sentiment is shaping up in the above-stated war.

Gold responded accordingly as it knifed through resistance centered near the $1,105 region before gathering momentum which carried it just shy of horizontal resistance near $1,124- $1,127. It managed to poke its head through the downsloping trendline drawn off its all time high but just barely. Additional upside strength tomorrow will go a long way in buttressing the bullish technical case.

The Dollar continues to be of concern, lob-sidedly loaded with as many stale long positions as it is, plus the fact that momentum oscillators are now showing serious bearish divergences. In my view, it is a technical train wreck just waiting to occur but so far the Dollar bulls have not yet been able to be dislodged from behind their parapets. That will take a smashing break through the 79 level to do so and is where the bears are hoping to push the greenback. So far they have not succeeded but the chart tells the ferocity of the battle to do so. Stay tuned on this one.

While the HUI is stronger today, the mining shares continue to underperform bullion as the hedge funds employ their ratio spread trades once again. In order for the HUI to accelerate higher and attempt to catch back up to gold bullion, it will have to push through 427 and maintain those gains for a session or preferably two. One cannot underestimate the size of the spread trades that the hedge funds are employing among the miners. Keep in mind however that gold companies still make money by digging gold out of the ground and selling it, notwithstanding the tactics of the hedge funds. The higher the price of bullion and the more valuable the product that they produce becomes the more their revenues will increase. Even hedge funds cannot long ignore such simple facts.

I do wish to point out that the 10 day moving average of the HUI has now decidedly turned up and is quite close to generating a bullish upside crossover of the 20 day. With short term technical indicators in a bullish posture, the tendency should be for dips to be bought. Initial chart support is last Thursday low near 388 – 390 with very strong support having been formed near the 365- 370 region.

Strangely enough, bonds are higher today. Go figure – I suspect is has something to do with the Treasury International Capital Flows data. Even though that is dated, it confirms the suspicions of many of us that the supply problems associated with the gargantuan US fiscal deficits are first and foremost on the minds of bond traders, at least for today, and that safe haven associations or lack thereof, are taking a back seat to those concerns.

Courtesy: www.jsmineset.com




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Recommendation after Q3 Results 04/02/10


Aban Offshore Ltd
Aban trading
at 5xFY'11E earnings and 4xFY'12E earnings can witness upside triggers in price for any new contracts for its idle assets or upwards revision of day rates for any of its assets. We value the company on an EV/ EBIDTA basis and rate it a Buy with a targetmultiple of 6.1x and target price of Rs.1566. Bajaj Auto Ltd Q3-FY'10 were above expectations and we continue to remain upbeat on the prospects for Bajaj Auto trading at 13xFY'11E earnings and re- iterate Buy with a target of Rs2116. Dhampur Sugar Mills Ltd After a bumper Q1 performance we upgrade earnings for DSM and recommend a Buy on the stock trading at 4.3xFY'10E earnings with a one- year price target of Rs236. JSW Steel Ltd Given its strong Q3 performance we continue to maintain Buy on JSW Steel trading at 10.8xFY'11E earnings of Rs91.3 with a target of Rs1208. Mahindra & Mahindra Ltd Q3-FY'10 witnessed margin pressures on a sequential basis but we believe that volume growth and new launches coupled with the synergistic benefits of PTL merger from next fiscal would help M&M and rate the stock trading at 14xFY'11E a Buy with a one-year price target of Rs1296. Maruti Suzuki Ltd Q3-FY'10 witnessed a robust 50% y-o-y volume growth on a low base and we expect ramp up in capacities to boost revenues going forward. We re- iterate a Buy on Maruti trading at 13.5xFY'11E earnings with a one- year price target of Rs1750. Steel Authority of India Ltd Robust Q3-FY'10 performance and with plans to double production
capacity
by 2012 makes SAIL trading at 11.5xFY'11E earnings of Rs18.4 a good investment bet and we recommend a Buy with a price target of Rs240.

Market Beeps 04/02/10

-JSW Steel leads gainers in 'A' group -JSW Steel on a roll after surge in production in January 2010 -Market gives thumbs down to Balaji Amines' diversification plan -Chembond Chemicals hits the roof on overseas tie-up -Power shares rally as institutions lap up NTPC FPO -Associated Stone Industries jumps 31% in five days -Supreme Infrastructure in demand after new order win -Kabra Extrusion hits all-time high on expansion plan -Sterlite Industries spurts after brokerage upgrade -Titan Industries glitters on expansion buzz -L&T builds on new order win -Rasandik Engineering jumps after turnaround Q3 numbers -Rally in crude oil price fuels oil stocks -Inox Leisure hogs limelight after buying stake in rival multiplex -Larger order electrifies Bharat Electronics -Haldyn Glass sparkles after fixing record date for stock-split -Sail shines after price hike -Hindustan Dorr-Oliver moves up on nuclear power plant foray -New drug launch strengthens Venus Remedies -Metal shares track recovery in metal prices on LME -Decent gains for Infinite Computer Solutions on debut.

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