Money on the markets
A maturing market amid the mayhem
from India Insight:
The countdown has begun for the biggest business and economic event of the year, the release of India's annual budget at the end of February, and Finance Minister P. Chidambaram has a tough job on his hands. With general elections a year away, he must please voters, boost growth and control deficits.
In the last five years, the finance minister has always relaxed income tax slabs -- by either increasing the basic exemption limit or widening the tax slabs. As far as markets go, the 2009 budget day was the worst for stocks as the index fell around 950 points during trade. However, the focus has always been on the government's fiscal deficit targets, which have hovered around the 5 percent mark in recent years.
As India's economy battles slowing growth, investors will take cues from Chidambaram's plans to rein in spending and boost growth. Here's a look at budgets between 2008 and 2012 -- the hits, the misses and how they affected the common man.
from India Insight:
Slowing growth, a falling rupee, sliding stock markets, a rising current account deficit, drying foreign inflows and policy paralysis at the centre. Things certainly don’t look rosy for India.
With the rupee down 22 percent in the last 10 months and a 6 percent drop in stock markets so far in May (as of Friday’s close), is it time for the government to seriously rethink its strategy ahead of the 2014 general elections?
When the finance minister presents the budget, the stock market moves one way or the other.
And like every year this will dominate the news.
Over there and everywhere.
Is that fair? Or convincing?
Some of the analysis will follow a pattern.
If the stock market goes up, the budget may be described as successful because it didn’t “rock the boat”.
The Sensex plunged 5.8 percent on Monday as the higher-than-expected fiscal deficit announced by the government in the Union budget disappointed investors.
The 30-share sensitive index swung from an intra-day high of 15,097 to an intra-day low of 13,959 and closed 870 points lower at 14,043. The fifty-share Nifty ended 5.84 percent down at 4,165.
The benchmark index started off on a shaky note and ended Tuesday’s session with losses of 0.24 percent after briefly hitting positive territory on the finance minister’s comments to reduce factory gate duties and service tax.
The sectoral picture looked weak with all sectors closing in the negative. The BSE Metal Index lead the pack with losses of 2.3 percent and was closely followed by the Banking Index which ended down 1.3 percent.
The budget failed to deliver on investor expectations of a stimulus plan for sectors such as autos and construction, while announcing that spending was likely to increase later in the year. For complete coverage of Interim Budget 2009/10, click here.