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Markets to rebound on Monday

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The week gone by saw markets under pressure and lose ground on four of the five trading sessions. Post announcement of budget they simply crashed on Saturday when a special trading session was held, and ended the week with big losses.

BSE SENSEX lost 1,877.66 points or 4.51 percent to close at 39,735.53 points while NIFTY was down 586.40 points or 4.79 percent to close at 11,661.85 points. The broader markets saw BSE100, BSE200 and BSE500 lose 4.96 percent, 4.88 percent and 4.78 per cent, respectively. BSEMIDCAP was down 4.44 percent while BSE SMALLCAP was down 3.38 percent.

The Indian Rupee was down 2 paise or 0.03 percent to close at Rs 71.34 to the US Dollar. Dow Jones had a very poor showing on Friday when it lost 600 points to end the week with losses of 733.70 points or 2.53 percent at 28,256.03 points. January futures expired at 12,035.80 points losing 90.75 points or 0.75 percent.

Coronavirus has assumed serious proportions in the sense that global supply chain is being disrupted with serious time implications. This is becoming a matter of concern as globally people are worried about importing from China.

Further travel is being affected between countries and no one knows for sure who could the next carrier of the virus be. This has also caused crude prices to soften significantly as world demand is expected to slow down. The nagging doubt is how long could this affect the world before it could be presumed that coronavirus is behind us and whether there is an antidote for the same.

The budget was presented on Saturday and saw mayhem in the markets post that. The one thing that could be responsible to a large extent is no change in LTCG (long term capital gains tax). There were expectations of a roll back on the same with or without modifications in timeline or holding period and streamlining capital gains holding period uniformly across asset classes.

Markets have been pounded out of shape and the last hour sell-off could have got exacerbated by margin calls. Going forward one is bound to see a sharp rebound on Monday when markets resume trading and also as the ethos of the budget is better understood.

The key takeaway from this budget is the emphasis on infrastructure and here the personal rapport of the Prime Minister would come in play where he gets the sovereign funds of various countries to invest in building our infrastructure.

One must also remember that infrastructure spending kickstarts the economy, provides job and has a multiplier effect of anything between 5 and 8 times.

It is for this reason that the budget has extended 100 percent tax exemption to the interest, dividend and capital gains income on investment made in infrastructure and priority sectors before 31st March 2024 with a minimum lock-in period of 3 years.

Further the Finance Minister through the period September to November 2019 made a number of announcements including the cut to corporate income tax rates and as a coincidence, many of these announcements and press conferences happened on a Friday. One needs to add these announcements and benefits to the budget announced yesterday and then look at the same in totality.

The focus besides infrastructure concerns the farmer whose income is to be doubled in the next 4 years. Accordingly initiating measures to reach the produce from farm to table are being introduced which include adding refrigerated coaches to goods and express trains and also airlifting produce.

Thirdly to boost consumption, thrust has been given to increase disposable income in the hands of the middle class by reducing income tax rates minus the tax breaks.

It is expected that the younger generation who was saving money under the compulsion of tax-saving will opt for doing away with the saving and splurge. It is with this idea that the same is mooted and further the elimination of tax breaks would simplify tax returns.

The idea of bringing LIC to the markets would open up the sector further and help the government garner precious funds through divestment. It is expected that the minimum divestment of LIC could yield as much as 1 lac crs.

The government has received subscription of over Rs 22,500 against the base offer of Rs 10,000 crs and greenshoe of Rs 8,000 crs for the CPSE ETF. In the process of this issue, the price of the ETF has been hammered to Rs 20.28, a loss of Rs 1.67 or 7.61% for the week.

At this price, many of the shares in future are trading at a discount to the cash market. A bounce when markets resume is on the cards and one needs to take note of the fact that all of these companies are Nav Ratnas and dividend-paying companies.

In conclusion expect a bounce on Monday and then wait for the FM to complete the customary visits to various chambers of commerce and clarity on some of the finer points of the budget.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

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Fuel dearer again: Petrol prices up by 22-25 p/l, diesel by 24-26

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 Petrol and diesel prices rose sharply again on Saturday reaching new all-time highs as oil marketing companies (OMCs) decided to break the pause in revision of auto fuel prices to bridge the widening under recovery.

Accordingly, the pump price of petrol increased between 22-25 paisa per litre across all major metros on the day while diesel prices increased in the range of 24-26 paisa per litre.

With this, petrol is now priced at Rs 85.70/litre in Delhi as against Rs 85.45 a litre previously. Similarly, in Mumbai petrol prices increased to Rs 92.28 a litre, a 24 paisa increase from Friday’s price of Rs 92.04 a litre. In Chennai and Kolkata, petrol is now priced at Rs 88.29 and 87.11 a litre respectively, an increase of 22 and 24 paisa per litre from the previous day’s.

Diesel on the other hand faced sharper increase, rising by 26 paisa a litre in Mumbai from Friday’s level of Rs 82.40 a litre to Saturday’s retail price of Rs 82.66 a litre. In Delhi, diesel rose 25 paisa per litre to Rs 75.88 a litre; in Chennai by 24 paisa per litre to Rs 81.14 a litre and in Kolkata by 25 paisa per litre to Rs 79.48 a litre.

The increase in retail price of auto fuel came on a day when global crude prices showed some signs of softening declining by less than 1 per cent to close to $55 a barrel. Crude price have remained firm for last couple of weeks in the wake of unilateral production cuts announced by Saudi Arabia and a pick up in consumption in all major economies globally.

The increase petrol and diesel prices is fourth such revision this week. The auto fuels had risen sharply by 25 paisa per litre each on Monday and Tuesday before OMCs decided to give relief to consumers from frequent price rise for last two days.

With Saturday’s revision, the pump price of petrol and diesel has now increased by Rs 1.99 and Rs 2.01 per litre, respectively in January so far with OMCs deciding to break an earlier longer period of pause increasing the retail prices first time this year on January 6. The price had been raised on six different days since then.

The last few increases in pump prices in petrol and diesel has taken its price to record levels across the country in all major metro cities and other towns. The last time the retail price of auto fuels were closer to current levels was on October 4, 2018 when crude prices had shot up to $80 a barrel.

The current price rise is largely on account of steep increase in central taxes of petrol and diesel and firm crude prices.

Petrol price was very close to breaching the all-time high level of Rs 84 a litre (reached on October 4, 2018) when it touched Rs 83.71 a litre on December 7, 2020. But the march had been halted ever since then with no price revision by the OMCs in the month. The price rise started again only on January 6.

Oil companies executives said that petrol and diesel prices may increase further in coming days as retail prices may have to be balanced in line with global developments to prevent OMCs from making loss on sale of auto fuels.

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IndiGo to start Agra-Bengaluru flight from March

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As part of its strategy to bolster its regional connectivity, IndiGo has announced Agra as its 64th domestic destination. The airline will connect Agra to Bengaluru and Bhopal through direct flights under the RCS scheme from March 28.

A weekly flight to Goa is also likely to start early February, sources said.The bookings are open with one-way fares starting at Rs 2,523 for Bhopal and Rs 3,789 for Bengaluru.

Sanjay Kumar, Chief Strategy and Revenue Officer, IndiGo said, “We are pleased to have the Golden Triangle cities mapped on the 6E network, with the addition of Agra as our 64th domestic destination.

This will not only enhance connectivity for domestic travellers, but also aid in expanding international air traffic once restrictions are lifted and travel opens up.

Additionally, these connections will help promote tourism, trade and commerce, with Agra being home to multiple UNESCO world heritage sites, one of the hubs for leather goods production and known for its food and delicacies.”

The Agra tourism industry is upbeat as it expects a big inflow of tourists, both domestic and foreign, in the coming days. The industry had long been demanding air connectivity from Agra to major destinations in India. A lone flight to Jaipur was also halted some months ago.

The last 10 months saw a major setback to tourism, with the footfall of foreign tourists falling to just one per cent. The Taj Mahal and other monuments remained closed due to Covid-19 for over six months.

With restrictions now removed, the flow of visitors has increased and the hospitality industry is hoping to make good in the coming months. The daily evening cultural show at the Kalakriti Auditorium – Mohabbat the Taj – has resumed, as weekend crowds have begun thronging Agra again.

The inter-state buses have also begun operations, particularly to Delhi, from Monday, bringing relief to thousands of commuters heading for Palwal, Faridabad, Gurugram and other neighbouring areas.

Welcoming the announcement by IndiGo to start daily flights from Agra to Bangalore, Bhopal and Lucknow, Sunil Gupta, chairman IATO, northern region said “Tourists were hesitant to visit Agra as there are no flights which are usually considered very safe during the pandemic. We are hoping the number of visitors will now increase. We have demanded international flights also from Agra.”

Vice president of the Tourism Guild, Rajiv Saxena said “the flights will be very helpful and boost tourism in Agra. For the tourists, it will be such a big help as travel time would be reduced.”

Before the pandemic, Agra was annually visited by more than seven million tourists. “With three World Heritage monuments, and a number of other tourist attractions, plus Mathura and Vrindavan close by, Agra badly needed air connectivity.

But due to pressure from the Delhi lobby of hoteliers and travel agents, all kinds of hurdles were being created, but now the Modi government has taken a huge initiative which should see a turnaround in the fortunes of the hospitality industry in Agra,” said founder president of the Agra Hotels and Restaurants Association, Surendra Sharma.

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Equity indices fall, Sensex down 100 points

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The key Indian equity indices traded on a negative note on Friday with the BSE Sensex falling over 100 points.

Around 10.10 p.m., Sensex was trading at 49,518.63, lower by 106.13 points or 0.21 per cent from its previous close of 49,624.76.

It opened at 49,594.95 and has so far touched an intra-day high of 49,663.74 and a low of 49,361.22 points.

The Nifty50 on the National Stock Exchange was trading at 14,574.60, lower by 15.75 points or 0.11 per cent from its previous close.

Manish Hathiramani, technical analyst with Deen Dayal Investments said: “The Nifty has become slightly nervous after facing resistance at 14,750. While the trend still remains positive, we need to approach the index strategically.”

“On the upside we can go up to 14,800-14,900. On the downside, we have a good support at 14,300. Hence traders can initiate long positions with a target of 14,800 and a stop below 14,300,” he said.

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