The countdown has begun and all eyes are on Finance Minister Pranab Mukherjee who will present the Union Budget 2012 today at 11 am in Parliament.
Even though, no major reforms are expected this year, capital markets may elicit an immediate reaction depending on what Pranab-da has in his kitty. The key points that everyone is watching include fiscal consolidation, GDP figure and tax reform packages.
Yesterday's market mood was anything but forgiving after the Reserve Bank of India left key rates unchanged. High inflationary risks, surging oil prices, a burgeoning fiscal deficit and a depreciating rupee, were cited as reasons for keeping interest rates the same. It was the rate sensitive sectors and stocks which went into a tizzy yesterday when the apex bank left a rate cut out of the picture.
Which are the stocks to keep an eye on?
The market base case is a 10 percent increase in excise, However, up to 15 percent hike is already factored in the stock. Therefore, anything below 10 percent or above 15 percent will surprise that will see the stock move in the index.
BHEL , Alstom
An import duty levy of 19 percent is being widely anticipated by the domestic power equipment manufacturers. The street believes the likelihood is very high, and if implemented, will give a major boost to the stocks. Chinese manufacturers have however been nervous.
This company has lobbied hard against excise duty on diesel vehicles. It will be the biggest loser if the government goes ahead with the proposal. Conversely, it will see a relief rally if the proposal is not implemented.
Budgetary provision for oil is not material, say experts. Government is likely to provide residual amount for FY12 in the Budget. Any clarity on subsidies benefits the upstream companies the most.
This company will be the biggest beneficiary of any positive move in the infrastructure space. Expectations are mainly on improved capital availability and also benefits from power equipment duty.
The cash-crunched company is hoping for a move on FDI. It is said to have interested foreign suitors willing to buy stake. For an executive decision, the Budget may be a platform.
National Fertilizers , RCF
The Fertiliser Ministry's proposal to reduce subsidy on P and K fertilisers under the Nutrient Based Subsidy (NBS) policy has already been approved by the cabinet. The rates are set to be implemented from April 1. The stocks had reacted, but still, any reference to the fertilizer subsidy is expected to elicit further reaction from this bouquet of stocks.
Going into the Budget, it is a buy on dips call from Amisha Vora, the joint managing director at Prabhudas Lilladher.
For Ambareesh Baliga of Way2Wealth, the best is already priced into the market price and especially for the Bank Nifty. He sees a possible correction in banks of about 5-6 percent more from here. He sees a further downside and would go short on names like SBI, ICICI Bank and Axis Bank.
News-based stock cues
OMCs are not too enthused with the Economic Survey of India's fix for fuel prices. Watch out for moves on HPCL , BPCL and Oil India in opening trade.
The advance tax numbers are in. Watch out for moves on the companies that paid maximum and minimum tax this quarter.
DB hospitality is in advanced talks to sell Sahar Hotel. The deal is valued at Rs 450 crore.
KPIT Cummins allots bonus shares in the ratio of 1:1
Shasun Pharma concludes the sale of Velachery property for Rs 29 crore, declares interim dividend of Rs 2/share.
National Building Cons Corp IPO opens of March 22, and closes on March 27
PSUs to up ATF prices by average Rs 1,402/kl.