Consolidating gains
Rex Mathew
02 March 2005
Markets regained some of the post-budget optimism in opening trades, with the finance minister going on a media overdrive to assure industry that he meant no harm to anyone. Yesterday, he stated that divestment was not off the radar but has only been moved out of the budget. Divestment proceeds will now go to a National Investment Fund to fund infrastructure and the target for next year is around Rs7,000 crore.
Today, in his address to industry chamber FICCI, Chidambaram promised to look into industry complaints on taxation of fringe benefits and the transaction tax on cash withdrawals. He also assured the industry that VAT is well on track, that he would consider VAT on imports and the need to converge excise rates to the CENVAT rate, currently at 16 per cent.
Finance heads of IT companies, stocks of which took a beating yesterday, are of the opinion that fringe benefit tax may not affect them much if genuine business expenses like travel and telephone expenses were excluded.
Foreign brokerage JP Morgan struck a divergent note by giving the budget positive rating and setting a year-end sensex target at 8000, considerably higher than the 7000-7250 range touted by other brokerages. sensex closed at 6687, up 36 points and the Nifty at 2093, a gain of 9 points. Nifty futures continued to trade marginally lower than the spot index.
US markets bounced back yesterday, ahead of the Fed Reserve chairman's Congressional testimony, where he is widely expected to pronounce a positive outlook for the US economy. Oil prices continued to rule steady on expectations of higher demand. Indian ADR's ended weak with Satyam and Tata Motors among the major losers. Infosys, Wipro, HDFC Bank and ICICI Bank closed with marginal losses.
ICICI Bank was a major gainer among front liners with the stock shooting up more than 4 per cent. The Bank's ADR has seen a major rally over the last month after its third quarter results and is quoting at $22.5 currently. This translates to a per share equivalent of Rs.489, or a 25 per cent premium to the domestic price. This is significant in the light of the proposed sponsored ADR issue which has already been cleared by FIPB.
