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vendredi 11 juillet 2014

D-Street gives thumbs-up to Budget; give it 7 on 10; top stock bets

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NEW DELHI: Analysts on Dalal Street gave a thumbs-up to Arun Jaitley's maiden Budget 2014 as it was able to strike a fine balance between offering just the right incentives to various sectors to revive growth & job creation and his math on fiscal deficit.

On a scale of 1-10 most analysts on the Street gave a rating on 7 or 8 the Budget 2014 as it is expected to revive investment cycle and spur growth in Asia's third largest economy.

Even though markets corrected on the Budget Day, experts' view that the long term trend remain intact and investors use every decline to enter markets.

"We rate the Budget at 8 on a scale of 10. It is expected to spur the next wave of growth getting the Indian economy out of its worst growth in over a decade," said Sudhakar Ramasubramanian, MD- Aditya Birla Money Ltd.

"Modi government has lived up to the voter's optimism. While the implementation remains the key, Indian markets are set for a good time in the foreseeable future," he added.

Ramasubramanian is positive on sectors like Banking, Infrastructure, Capital Goods, Real Estate, Power and Auto. L&T, Maruti, ICICI Bank, Oberoi Reality and ITNL.

D-Street gives thumbs-up to Budget; give it 7 on 10; top stock bets According to analysts, the current market set up has all the ingredients of structural bull-run in place, and advice investors to remain invested in India Growth Story and increase exposure in fundamentally well researched stocks to achieve their financial goals.

Dharmesh Mehta of Axis Capital rate Budget 3.5-4 on a scale of 5 (or 7-8 on a scale of 10). "Clearly, markets have liked the Budget and there is nothing which is negative, except that we all expected the retrospective tax, which is not gone types, but it is not even there. So it is like a little bit of grey area," he added.

Mehta is of the view that the worst is over for the market and upcoming earning season is likely to give further direction to markets. The maiden budget of NDA government is well balanced and growth oriented with a number of measures across sectors to kick start investments in the economy.

The minister said that the government is committed to achieve fiscal deficit of 4.1 per cent for 2014-15 and set a target of fiscal deficit of 3.6 per cent for 2015-16 and 3 per cent for 2016-17 which is very positive.

The government has come up with a series of measures for individuals as well including rebate on interest on home loans, hike in limit under Section 80C and increase in personal income tax limit.

"The budget has also ironed out several operational issues that have been plaguing the capital market with introduction of single KYC and one demat account for all transactions across financial sector space," said Jayant Manglik, President-retail distribution, Religare Securities Ltd.

Top stocks in focus post Budget:

All the stocks indicated below have a positive impact as economic growth traction improves. Hike in Life insurance helps ICICI Bank capitalise itself. Passage on Insurance Amendment Bill could be a positive trigger for the bank.

Budget 2014-15: Sops galore for realty sector

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NEW DELHI: Much to the relief of slowdown- hit realty sector, the government today relaxed FDI rules, gave incentives on home loans, offered tax sops on investment trusts and provided Rs 7,060 crore for the development of 100 smart cities.

Finance Minister Arun Jaitley in his Budget 2014-15 also increased the allocation of Rural Housing Fund, run by National Housing Bank (NHB), to Rs 8,000 crore in this fiscal. Another Rs 4,000 has been earmarked for NHB to increase the flow of cheaper credit for affordable housing for urban poor.

"Our government is committed to endeavour to have housing for all by 2022. For this purpose, I intend to extend additional tax incentive on home loans to encourage people, especially the young, to own houses," Jaitley said.

Stating that housing continues to be an area of concern for middle-lower middle class due to high financing cost, he said: "To reduce this burden, I propose to increase the deduction limit on account of interest on loan in respect of self-occupied house property from Rs 1.5 lakh to Rs 2 lakh".

To deal with the problem of migration of people from rural to urban cities, Jaitley proposed development of 100 'Smart Cities' as satellite towns of larger cities and by modernising the existing mid-sized cities. A sum of Rs 7,060 crore has been provided in this fiscal for this purpose.

For encouraging development of Smart Cities, the finance minister has relaxed the FDI norms.

The requirement of the built up area and capital conditions for FDI is being reduced from 50,000 sq metres to 20,000 sq metres and from USD 10 million to USD 5 million respectively with a three year post completion lock in.

To further encourage this, projects which commit at least 30 per cent of the total project cost for low cost affordable housing will be exempted from minimum built up area and capitalisation requirements, with condition of 3 year lock-in.

When asked whether relaxation in FDI in real estate is applicable for all projects or Smart Cities only, Finance Secretary Arvind Mayaram said: "No it is not restricted to Smart Cities. It is anywhere in the country."

"But we believe that as Smart Cities have to come up, lot of construction activities will be in those cities and therefore a large part of it will go in funding in construction activities in Smart Cities. It can come into the (existing) projects which fall in the definition of FDI in construction," Mayaram added.

In 2005, the Centre had allowed 100 per cent FDI under automatic route in real estate and construction subject to conditions that included a minimum area of 50,000 sq meters, minimum capitalisation of USD 10 million and 3 year lock-in period from completion of minimum capitalisation.

To give a major fillip to the commercial realty, Jaitley announced tax sops for Real Estate Investment Trusts (REITs).

"REITS have been successfully used as instruments for pooling of investment in several countries. I intend to provide necessary incentives for REITS which will have pass through for the purpose of taxation," he said.

Budget 2014: Path breaking Budget for real estate sector, says Shishir Baijal of Knight Frank India

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Modi Vision 2014InteractivesExperts SpeakIndustryMarket View

Women have been in the tech industry for some time now and some rose up to lucrative leadership positions. We give you 11 wealthiest women in tech.

The big bang in Arun Jaitley's budget is that things will be done bottom up and it is more on execution rather than giving some grand proposals.

Chinese handset maker Xiaomi today unveiled its first handset, Mi 3, for the fiercely competitive Indian smartphone market, priced at Rs 14,999.

Jaitley announced a Rs 500 crore fund for farm price stabilization. He said the govt wanted agriculture to grow although weak rainfall was a concern.

Modi has more or less, achieved such a unity of command and control by getting his loyalist and confidant Amit Shah appointed as the BJP president.

As for his party, Jaitley is one of the principal trouble shooters, dispatched to various corners of the country to settle one dispute or the other.

In a marginal relief, Finance Minister Arun Jaitley increased the income tax exemption limit from Rs 2 lakh to Rs 2.5 lakh for citizens up to 60 yrs.

It is now the turn of Rajasthan’s camels to receive the benevolent concern of the state administration, alarmed by their fast declining population.

A new round of funding could see Flipkart being valued at $5 billion (Rs 30K crore) at least, almost a near-doubling of the company's valuation.

"The will be developed to accommodate the burgeoning number of people, otherwise, the existing cities would soon become unlivable," Jaitley said.

The govt said it will allocate Rs 500 crore for its 'Digital India' initiative to set up broadband network in villages and promote local softwares.

Congress wants to make the people aware of each failure of BJP government and how it has failed to fulfil its promises with a media offensive.

Budget 2014: Commex trades not speculative if commodity transaction tax's paid

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MUMBAI: Traders and business houses which traded commodities exempt from commodity transaction tax (CTT) on recognised commexes and adjusted losses or gains arising from such transactions against business income or losses will not be allowed to offset such transactions any longer.

This is because the Budget spells out that such offsetting of transactions can be done only in respect of commodities traded on recognised associations (by CBDT) and on which CTT has been paid. This will be applied retrospectively from April 2014. Such transactions have been declared as non-speculative or eligible ones for offsetting.

Earlier, if CBDT recognised a commex that collected CTT, all transactions done on it were deemed non-speculative. But the government has now modified the previous rule, in line with a notification in January this year, that only transactions done on a CBDTrecognised exchange and on which CTT has been paid are not speculative, explained Anil Mishra, MD & CEO, Ahmedabad-based commex NMCE.

However, another commex official on condition of anonymity, said a trader will also continue to be able to adjust business loss/profit against that from non-CTT commodity futures contract so long as these transactions result in delivery.

Section 43(5) of the income tax deems transactions in commodity, including stocks and shares, but excluding derivatives on recognised stock bourses, as speculative if they do not result in delivery.

Speculative loss/gain can be offset only against speculative loss/gain and carried forward for 4 years, while non-speculative gain/loss can be offset against speculative loss/gain and business loss/gain and carried forward for 8 years.

CTT was announced by the UPA government in the Budget for FY14 and began to be imposed from July last year.

Budget 2014: Infrastructure will be one of the biggest focus of the Modi government, says Shishir Baijal

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Budget 2014: Infrastructure will be one of the biggest focus of the Modi government, says Shishir Baijal - Economic Times You are here: Home>Collections>Affordable HousingBudget 2014: Infrastructure will be one of the biggest focus of the Modi government, says Shishir BaijalChandralekha Mukerji Jul 9, 2014, 10.50AM ISTTags:tax incentives|Shishir Baijal|settlement option|real estate|net worth|knight frank|interest rate|Insurability|Frank|chairman & managing director|affordable housing

(Tax incentives with a focus…)

Infrastructure will be one of the biggest focus of the Modi government's five-year plan, so will be affordable housing. We talked to Shishir Baijal, Chairman & Managing Director, Knight Frank India, on how real estate will benefit if it comes under the infra-umbrella and other budget expectations.

1. What are the things on the industry's budget wish list? What are the main pain points that need to be addressed?

body{margin:0px;}google_ad_client=\"ca-pub-8415620659137418\";google_ad_slot=\"3278470286\";google_ad_width=\"640\";google_ad_height=\"160\";google_ad_channel=\"9126527482,1000001865,1000000195\";google_adtest=\"off\";google_safe=\"high\";google_hints=\"housing loan interest affordable housing transaction cost\";google_max_num_ads=\"4\";google_override_format=true;google_page_url=\"http://articles.economictimes.indiatimes.com/2014-07-09/news/51248164_1_estate-regulation-bill-affordable-housing-real-estate-sector\";");document.close();})();' frameborder="0" scrolling="no" width="640" height="160">

One of the major challenges we are currently facing is there is no availability of funds and what is available is expensive. Also, realty hasn't received its due focus because of lack of industry status. So, the first thing on the wish list is infrastructure status to the sector. With this, the financial institutions and funds will have the required confidence for investment. This is likely to increase availability and bring down the cost of funds for the sector and widen the sources of funds.

We also face a lot of delays in approvals. This budget should highlight the importance of single window clearance across the country with an objective of substantially reducing the transaction cost which is incurred due to delays in approvals. FM should also allocate higher budget for urban infrastructure. Moreover, the demand is sluggish from the past few months. Tax incentives with a focus on middle income housing by enhancing deduction on housing loan interest and principal payment would support the house buying decision and propel demand.

2. What are the issues faced by home buyers that the government can help with?

At present, the biggest need is greater transparency and enforcement of fair agreement between buyer and seller. In this upcoming budget, we expect the government to lay down a strategic path for bringing in a regulator in the real estate sector which would implement transparency across all the states in the country.

Apart from this, higher subsidy for affordable housing projects will definitely make homes within the reach of common man. Also, city specific definition of 'affordable housing' for availing the benefits of interest rate subvention scheme is a more practical approach. Various indirect taxes on housing need rationalization as well. The FM could re-look and increase the current tax deduction available for repayment of principal amount and interest payment of housing loan.

3. Any pending schemes/proposals that needs further work from the new government?

There are three—Real estate regulation bill, Land Titling bill and Definitive measures on implementation of REIT structure and real estate regulator. It will be great if we get clarity on these as soon as possible.

body{margin:0px;}google_ad_client=\"ca-pub-8415620659137418\";google_ad_slot=\"3278470286\";google_ad_width=\"640\";google_ad_height=\"110\";google_ad_channel=\"9126527482,1000001865,1000000195\";google_adtest=\"off\";google_safe=\"high\";google_hints=\"housing loan interest affordable housing transaction cost\";google_max_num_ads=\"2\";google_override_format=true;google_page_url=\"http://articles.economictimes.indiatimes.com/2014-07-09/news/51248164_1_estate-regulation-bill-affordable-housing-real-estate-sector\";");document.close();})();' frameborder="0" scrolling="no" width="640" height="110">FEATURED ARTICLES

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Budget 2014: Sops in abundance for realty sector

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NEW DELHI: In a slew of measures to boost slowdown hit real estate sector, the government today relaxed FDI rules, gave incentive on home loans, offered tax sops on investment trusts and provided Rs 7,060 crore for the development of 100 smart cities.

Stating that housing continues to be an area of concern for middle-lower middle class due to high cost of financing, Jaitley said: "To reduce this burden, I propose to increase the deduction limit on account of interest on loan in respect of self occupied house property from Rs 1.5 lakh to Rs 2 lakh".

For encouraging development of Smart Cities, the finance minister has relaxed the FDI norms.

In a major fillip to the commercial realty, Jaitley announced tax sops for Real Estate Investment Trusts (REITs).

Industry players hailed the Budget saying these measures will help boost affordable housing as well as improve investment flows.

Market regulator Sebi had proposed draft regulations relating to REITs that has been placed in public domain for comments. Final norms are yet to be notified.

REITs would reduce the pressure on the banking system while also making available fresh equity, Jaitley said, adding that the instrument would attract long term finance from foreign and domestic sources including the NRIs.

Noting that Rural Housing Scheme has benefited a large percentage of rural population who have availed credit through Rural Housing Fund (RHF), Jaitley proposed increasing the allocations to Rs 8,000 crore for NHB.

He proposed setting up a mission on low-cost affordable housing which will be anchored by NHB. The schemes will incentivise the development of low cost affordable housing.

Finance Minister allocated Rs 4,000 crores for NHB in this fiscal with a view to increase the flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.

Jaitley proposed to add inclusion of slum development in the list of Corporate Social Responsibility (CSR) activities to encourage the private sector to contribute more towards this activity. He said the government is willing to examine other suggestions that would spur growth in the housing sector.

Union Budget 2014 could very well be a game changer for markets

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By Amit Rathi

While the Union Budget 2014 was low on big-bang announcements, but it was highly focused on smoothening out the operational irritants that impede business decision making.

The Budget aimed at creating a business-friendly environment and sending a strong signal that the government is focused on fiscal discipline.

Given the very short period within which the new government has prepared the budget, this budget will help build credibility with its pragmatic approach.

While FDI cap increase in defence and insurance was expected, the significant move in this budget was to create a funding source for infrastructure projects by exempting banks from reserve requirements on such lending.

This could be a game changer. While markets have traditionally been focused on seeking announcements on incentives for big ticket infrastructure or manufacturing investments, I believe the interesting approach in giving investment allowance for small and medium businesses on capital spending is refreshing as it recognizes that these smaller entrepreneurs are really the building blocks of our economy.

Of course, the key consistent theme across the budget was the big focus on creating an easier interface with the government and taking away the adversarial approach that had crept in.

Take for example, the advance ruling mechanism for resident tax payers or the clarification on tax treatment of gains of FPI investors with a base in India.

One area, where we believe the government could have been more aggressive, is the disinvestment target. While the idea of selling shares in PSU banks to retail investors is interesting, we would have to wait and watch the pricing on such share sales.

In several economies, such share sales have happened at significant discounts to encourage wider participation and are also seen as a transfer of tax payers' wealth back into their hands.

Overall, a good effort in a short period of time and demonstrating an extremely business and citizen-friendly approach. Hopefully, a sign of more good things to come over the coming months and years!

(The author is MD at Anand Rathi Financial Services Ltd. Views and recommendations expressed in this section are his own and do not represent those of EconomicTimes.com.)

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