Sensex cheers Union Budget 2010; auto, metals, banks lead

The benchmark Sensex salutes Union Budget 2010 unveiled by Finance Minister Pranab Mukherjee and rallied over 400 points during the day. Experts say it was a effect of short covering and positive reaction to budget. Technical Analyst, Ashwani Gujral said it’s just a short covering, so those who are long should exit. However, he feels impact of budget is over and the markets will react to the global cues.

The Nifty closed above the 4900 mark but the sell-off and profit booking in ITC on hike in excise, BHEL, Tata Power, TCS, Infosys and ABB erased more than 50% gains from day’s high. Even heavyweights came off their day’s high on profit booking at higher levels. It seemed that the markets discouted the budget.

Pranab Mukherjee in his second budget announced some positives like gradual reduction in fiscal deficit, cut in surcharge, more allocation for infrastructure development, increase in FY11 divestment target, increase in personal tax slab to Rs 8 lakh etc, which all these pushed the Nifty above 4950 level during the day. However, there were some negatives like hike in excise duties etc.

FM has increased tax slabs for Aam Adami, so that spending will increase. For income upto Rs 1.60 lakh, there will be no tax while there will be 10% tad for income between Rs 1.60 lakh to Rs 5 lakh; 20% tax for income between Rs 5 lakh to Rs 8 lakh and for income above Rs 8 lakh, there will be tax of 30%.

This will result into an increase in the disposable income of individuals and will boost the spending on necessary as well as luxury goods. Homi P Ranina, Tax Expert, says increase in the exemption limits is on expected lines. According to him, a person earning up to Rs 8 lakh will save Rs 54,000 a year by way of taxes.

The 30-share BSE Sensex closed at 16,429.55, up 175.35 points or 1.08% and the Nifty was at 4,922.30, up 62.55 points or 1.29%, after seeing day’s high of 16,669.25 and 4,992, respectively. The Nifty March Future ended with 13.65 points premium, as per provisional data.

Union Budget 2010-11: Highlights

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Tags: BSE, Budget 2010-11, NSE

Category: Stock-News