Budget day: Sensex down for 8th time in 10 years

With a fall of over 150 points in benchmark Sensex on the Budget Day today, this is the eighth time in last 10 years that the markets have suffered losses on the most important listed economic event of the year.

In a sharp knee-jerk reaction to various tax proposals made by Finance Minister Arun Jaitley in his Budget 2016-17, the stock market benchmark Sensex crashed sharply intra-day.

The BSE benchmark Sensex witnessed wild swings and finally ended at 23,002, down 152.30 points after falling 659.69 points to 22,494.61 — its 52-week low — during the day.

The NSE Nifty also sank by 42.70 points to end at 6,987.05.

In 2015, the Sensex had gained 0.48 per cent — recording its first rise on a Budget day in 4 years.

In the previous three sessions on Budget 2014, 2013 and 2012, the index had ended lower.

Prior to that in 2011 and 2010, markets had gained 0.69 per cent and 1 per cent, respectively.

Sensex had witnessed a sharp fall of 5.83 per cent in 2009 when Budget was presented.

Markets saw a similar fate in the previous two years, with a fall of 1.37 per cent and 4 per cent in 2008 and 2007, respectively.

In 2006, the blue-chip index had gained 0.85 per cent.

Sentiment turned weak by the proposal for higher dividend distribution tax on those earning more, and a proposal to increase Securities Transaction Tax in some categories.

“From a capital market perspective there is a huge sense of relief that long term capital gains tax is status quo.

However, increase STT on options and dividend tax on above 10 lacs dividend receipts is disappointing,” said Krishna Kumar Karwa, Managing Director, Emkay Global Financial Services Ltd.

Keywords: BSE, NSE, Bombay Stock Exchange, National Stock Exchange, Union Budget 2016-17

Arun Jaitley hikes tax on small cars, SUVs in Union Budget 2016

In the Union Budget 2016-17, Finance Minister Arun Jaitley proposed an increase of cess tax on passenger vehicles segment by 4 per cent on Monday.

ALSO READ: This is what happened with the auto industry in Union Budget 2015

The move is aimed at keeping a check on the rise in the pollution caused due to vehicles. However, this could hit the automobile market in return as it would hit the sales of passenger vehicles.

The FM proposed an increase of 1 per cent on petrol, CNG and LPG cars, while a 2.5 per cent increase on small diesel cars and a 4 per cent increase on high end cars.

Moreover, Jaitley also proposed a 1 per cent hike on luxury cars which cost more than Rs 10 lakh and above.

Follow: LIVE Union Budget 2016

With the sales of automobile already on a low since last year, this move by the FM will certainly hit the automobile industry in a hard way.

According to Society of Indian Automobile Manufacturers (SIAM), the auto industry sold around 168K cars in 2015 with a drop of 0.7 per cent since 2014. 

Biggest takeaway from the Budget is that there are no new ideas: P Chidambaram

Former finance minister P Chidambaram addressed the media on the Union Budget 2016-17 that was presented today.

Here are the highlights:

• There is no major initiative to increasing productivity of crucial crops 
• I am happy that UPA's schemes are being continued
• In the last 2 years the govt had turned its back on the the rural, social programmes. Three areas crying for attention are rural economy, private investments and exports
• The government is unaware of problems of the core sectors- power, steel mining, cement, oil and gas. Many projects are stranded and there is little new investment
• There is no mention of exports. I think after 14 consecutive months of negative growth, the government seems to have given up on the exports front
• Lukewarm reference GST. No promise to accommodate legitimate criticism of Opposition. Government continues to be stubborn
• In many cases there was very poor increase in Minimum Support Price (MSP); in some cases there was zero increase in MSP
• The third budget of a government which presented two forgettable budgets is expected to be political
• Government has wisely refrained from projecting the growth rate for 2016-17
• Government is boasting that they collected more tax than ever. It was only due to excise on Crude and not from corporate tax

Also read:

Union Budget 2016: Focus on rural India, tax regime same, but you pay cess

Budget 2016: Why agriculture topped Arun Jaitley's 9-point plan to change India

Arun Jaitley hikes tax on small cars, SUVs in Union Budget 2016

Finance Minister Arun Jaitley To Present Union Budget In Parliament At 11

Finance Minister Arun Jaitley To Present Union Budget In Parliament At 11

New Delhi: The Cabinet has approved Finance Minister Arun Jaitley's third Union Budget, which he carried into Parliament this morning in a briefcase, brown tending to red.

The Finance Minister met President Pranab Mukherjee before heading to Parliament, where he will present Budget 2016 at 11 am.

Prime Minister Narendra Modi, dressed in all white this morning, wants the Budget to appeal to India's rural poor, officials familiar with his thinking said, in a strategy shift designed to boost his party, the BJP's prospects in crucial state elections to be held soon.

But that is likely to disappoint investors. Stock markets opened lower and were trading choppily ahead of Budget announcements on Monday morning.

The government is expected to increase spending on agriculture, health and social sectors, a change from its focus on infrastructure spending and market reforms, officials told Reuters.

In its first two years in power, the Modi government splurged on roads and railways at the expense of welfare programmes in the hope of creating economic stimulus. The PM's gamble was that infrastructure investment would eventually generate dividends for the poor and the rural community.

But rising rural distress after back-to-back droughts and the recent election defeat in Bihar, a largely agricultural state, have upset that calculus. The BJP calculates that the opposition successfully attacked the government as a "suit boot ki sarkar (government for the rich)." Today's Budget is expected to counter that criticism ahead of key elections in heartland farming states such as West Bengal this year and Uttar Pradesh next year.

But the increased social spending may hike the closely watched fiscal deficit to 3.8 percent of GDP next financial year from a target of 3.5 percent, one official said. Last week, the rupee slumped on fears of a higher deficit level.

Investors are looking for concrete initiatives from PM Modi's government to make it easier to do business, with hopes it will move to simplify a complex tax regime seen as deterring investors.

While Mr Jaitley has previously outlined his intention to reduce corporate tax from 30 to 25 percent before the next election, Monday is expected to be the first time he lays out a detailed roadmap to reach that target.

"I have an exam too. 125 crore Indians are going to test me, tomorrow is the Budget," PM Modi said in his radio address Mann Ki Baat on Sunday as he wished school students for the board examinations that begin tomorrow.

The finance ministry has promised that the 2016-17 budget will be "growth-oriented" in the face of a global climate that appears significantly more challenging than last year.