Sensex gains 233 points; private banks lead

(updated at 3.30 PM)

Benchmark indices have turned choppy as the Government’s pragmatic Budget fails to impress everyone.  Shares of ITC contribute the most to the decline on the 30-share Sensex after finance minister proposed to some changes in excise duty on cigarettes coupled with weakness in HDFC. However, gains in private bank majors Axis Bank and ICICI Bank limit further losses.
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At 2:58 PM, the 30-share Sensex is up 7 points at 29,227 and the 50-share Nifty is up 20 points at 8,864.

In the broader market, both the BSE Midcap index, and Smallcap index, down 0.5% and 0.7% each are moving largely in-line with the front-liners. Market breadth in BSE is negative with 1,566 declines against 1,040 advances.     
The finance minister proposed to cut corporate tax from 30% to 25% over four years and deferred the implementation of general anti-avoidance rules (GAAR) by two years.
The government has estimated GDP growth for 2014-15 at 7.4% and expects 8-8.5% for 2015-16. The finance minister said that goods and service tax and cash transfers will be key focus areas.
The levy on corporate taxation, rationalisation of wealth tax, incentives by more expenditure towards infrastructure have been positive for positive.
Asserting that India’s infrastructure is a mismatch with its growth ambitions, Finance Minister Arun Jaitley today proposed a sizeable Rs 70,000 crore increase in investment in the sector besides a slew of steps to spur its growth.
In line with the government’s thrust on ‘Make in India,’ the Union Budget made some key changes to address the duty anomalies that made importing of goods cheaper than manufacturing them locally. The proposal announced will give 11.5 per cent duty advantage to mobile phone, if manufactured in India and 10.5 per cent to tablets.
Reacting to the proposals, Nandkumar Surti, MD & CEO, JPMorgan AMC said that the emphasis has been on tax simplification, tax compliance and infrastructure spend which is the need of the hour.
“The government has rightly delayed the Fiscal Deficit target by a year given the private sector challenge to spend money on infrastructure. The priorities are very clear. The direct association of increased excise duty to be spend on road infrastructure shows good use of the increased revenue. The emphasis to financial inclusion through micro refinance augurs well  for the rural educated. The various social schemes on medical, accident insurance and push to pension schemes is very well balanced. Budget with a good heart – tax the rich which still doesn’t pinch, spend on infrastructure,  ease of doing business and social spend – all very well intended,” he said in a post Budget note.
Meanwhile, foreign institutional investors were net buyers in equities to the tune of Rs 1,957 crore on Friday, as per provisional stock exchange data.
6 out of the 12 sectoral indices of BSE are in red. BSE FMCG index down 4.5% is the top loser followed by BSE Power and Consumer Durables indices down nearly 2% each. BSE Bankex, up 1.8% is the top gainer followed by BSE Healthcare index, up 1%.
Select bank stocks have posted significant gains. Axis Bank is up over 6% and ICICI Bank is up 1.6%.  Finance Minister Arun Jaitley’s proposal to simplify the procedures for local companies to attract foreign investments is likely to favour select private sector lenders who will now be able to raise additional money from foreign institutional investors (FIIs).
Pharma stocks have gained. Cipla is up nearly 1%, Dr Reddys Lab is up 1.5% and Sun Pharma has gained over 2%.  
A US federal judge has denied Indian generic drugmaker Ranbaxy Laboratories’s bid to reinstate approvals granted to it to launch the first copies of the heartburn drug Nexium and the antiviral Valcyte, a court document showed.
Judge Beryl Howell of the United States District Court for the District of Colombia on Friday also blocked Ranbaxy’s plea for a preliminary injunction to halt Teva Pharmaceutical Industries Ltd, Endo International Plc and Dr Reddy’s Laboratories Ltd from launching copies of the two drugs.
ITC is trading lower by nearly 9%. The Finance Minister has proposed a 25% increase in 65 mm cigarettes and 15% in other categories, which is more than what the market had anticipated.
Finance Minister Arun Jaitley today proposed a sizeable Rs 70,000 crore increase in investment in infrastructure sector besides a slew of steps to spur its growth. Related stocks like L&T is down 0.3% and BHEL has lost more than 3%.
The government has allocated Rs 22,407 crore for taking measures in housing and urban development across the country in 2015-16. Housing finance major, HDFC is down 1.4%.

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