Rail stocks drop on profit booking ahead of Rail Budget-2015

मुंबई Mumbai: Shares of nine companies whose fortunes are linked to orders from Indian railways fell by 0.78% to 16.01% at 10:45 IST on BSE on profit booking ahead of Railway Budget 2015-16 on Thursday, 26 February 2015.  The Railway Budget 2015-16 will be tabled in the parliament by the rail minister Suresh Prabhu on Thursday, 26 February 2015. This will be the first full railway budget of the Narendra Modi government and hopes are already running high that the document will contain innovative and out-of-the-box plans to turnaround railways and modernise the network and its supporting infrastructure.

Meanwhile, the S&P BSE Sensex was up 25.34 points or 0.09% at 29,000.45.

Among railway stocks, Hind Rectifiers (down 8.45%), NELCO (down 1.01%), Kalindee Rail Nirman (down 16.01%), Titagarh Wagons (down 9.99%), Stone India (down 9.74%), Texmaco Rail & Engineering (down 15.45%), Kernex Microsystems (down 4.95%), and BEML (down 0.78%) declined. Zicom Electronic Security Systems rose 0.17%.

Container Corporation of India dropped 4.36% as the stock turned ex-dividend today, 24 February 2015, for an interim dividend of Rs 8 per share for the year ending March 2015.

Most of these rail stocks had rallied in past one week. The Railway Budget 2015-16 will be tabled in the parliament by the rail minister Suresh Prabhu on Thursday, 26 February 2015. This will be the first full railway budget of the Narendra Modi government and hopes are already running high that the document will contain innovative and out-of-the-box plans to turnaround railways and modernise the network and its supporting infrastructure.

The Rail Budget will mainly look at issues such as dynamic revenue earning model, freight and fare rationalisation, and capacity augmentation, report said. Although, the Rail Ministry has several plans for the fiscal year 2015-2016 to improvise the condition of Railways, there seem to be no relief for the passengers this year. Prabhu had some time back said that reduction in passenger fares is unlikely to happen although diesel prices have come down. The budget is expected to be inspired by Narendra Modi’s Swachh Bharat Mission, Make in India initiative and hi-end technology.

With ‘Swachh Bharat’ expected to be the keyword in the Railway Budget, Prabhu may announce major steps to improve cleaning efforts comprising installation of bio-toilets in trains and stations, provisioning dustbins across all types of coaches. Introduction of Wi-Fi services on station premises might be introduced as another major highlight of the budget this year. The Railway Budget might explore the possibilities of Information Technology (IT) to enhance the security of railway passengers and to curb growing incidents of crimes against women commuters. The North-East is also expected to get priority in the upcoming budget as an announcement for introduction of local services to improve connectivity in the region is on the anvil. Proposals for innovative funding for infrastructure projects are also on the anvil. The cash-strapped Railways has a challenge of completing more than 300 pending projects requiring an investment of around 1.7 lakh crore. Prime Minister Narendra Modi’s ambitious plan of Diamond Quadrilateral – connecting metros with high speed trains – would also be tabled at the Rail Budget session. To run semi-high speed trains on several corridors, the budget is likely to propose indigenously built coaches or trains that can run upto 200 km per hour speed. All the proposals are expected to be in tune with government’s ‘Make in India’ initiative, report added.

The government had last year, notified the liberalised foreign direct investment (FDI) norms for rail infrastructure, allowing 100% FDI through automatic route in the sector. FDI beyond 49% in sensitive areas will require Cabinet approval on a case-to-case basis.

A rangebound movement was witnessed as key benchmark indices hovered near the flat line in early afternoon trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty were currently trading slightly higher for the day. The market breadth indicating the overall health of the market was weak. The Sensex was currently trading above the psychological 29,000 mark, having alternately moved above and below that level in intraday trade so far. The Sensex had fallen below the psychological 29,000 mark after yesterday’s slide. The Sensex was currently up 30.84 points or 0.11% at 29,005.95. The BSE Small-Cap and Mid-Cap indices, both, hovered in red.

Meanwhile, the government reportedly tabled the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015. Opposition parties remained adamant on their stance over the land acquisition bill and created a ruckus in Parliament even as the government said it is well within its right to issue ordinances.

Telecom stocks declined. Shares of companies whose fortunes are linked to orders from Indian railways edged lower.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 601.91 crore yesterday, 23 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 163.79 crore yesterday, 23 February 2015, as per provisional data.

The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month February 2015 series to March 2015 series. The near month February 2015 derivatives contracts expire on Thursday, 26 February 2015.

In the foreign exchange market, the rupee edged higher against the dollar.

Brent crude oil futures edged lower in choppy trade.

In overseas markets, Asian stocks edged higher before US Federal Reserve Chair Janet Yellen’s semi-annual monetary policy testimony to the Congress later in the global day. Most US stocks edged lower in choppy trading session yesterday, 23 February 2015.

At 12:19 IST, the S&P BSE Sensex was up 30.84 points or 0.11% at 29,005.95. The index fell 57.48 points at the day’s low of 28,917.63 in mid-morning trade. The index gained 79.71 points at the day’s high of 29,054.82 in early trade.

The CNX Nifty was up 9.90 points or 0.11% at 8,764.85. The index hit a low of 8,736.90 in intraday trade. The index hit a high of 8,777.40 in intraday trade.

The market breadth indicating the overall health of the market was weak. On BSE, shares 1,533 declined and 985 shares gained. A total of 93 shares were unchanged.

The BSE Mid-Cap index was off 20.20 points or 0.19% at 10,725.22. The BSE Small-Cap index was off 65.79 points or 0.58% at 11,323.69. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 1665 crore by 12:25 IST compared to turnover of Rs 1360 crore by 11:15 IST.

Telecom stocks declined. Reliance Communications (down 1.49%), Idea Cellular (down 1.81%), Mahanagar Telephone Nigam (down 1.86%), Bharti Airtel (down 0.69%) and Tata Teleservices (Maharashtra) (down 1.01%) edged lower.

Telecom Regulatory Authority of India (TRAI) in a notification yesterday, 23 February 2015, slashed domestic and international termination call charges. Mobile termination charge (MTC) for all calls originating from wireless network has been reduced from 20 paise per minute to 14 paise per minute. Further, to promote investment and adoption of wireline network (so that they become an effective vehicle for delivery of high speed internet in the country), TRAI has decided to prescribe fixed termination charges (FTC) as well as MTC for wireline to wireless calls as zero. Termination charge for international incoming calls has been increased to 53 paisa per minute from existing 40 paisa per minute.

Container Corporation of India dropped 5.16% to Rs 1,514.50. The stock turned ex-dividend today, 24 February 2015, for an interim dividend of Rs 8 per share for the year ending March 2015.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.2825, compared with its close of 62.3125 during the previous trading session.

Brent crude oil futures edged lower in choppy trade. Brent for April settlement was off 40 cents at $58.50 a barrel. The contract had dropped $1.32 a barrel to settle at $58.90 a barrel during the previous trading session.

Meanwhile, the government reportedly tabled the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015. Opposition parties remained adamant on their stance over the land acquisition bill and created a ruckus in Parliament even as the government said it is well within its right to issue ordinances. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015 will replace the ordinance promulgated by the government in December last year, which had brought changes in the earlier bill passed in 2013 by the UPA government.

Meanwhile, the stock exchanges have decided to keep the stock market open on Saturday, 28 February 2015, just like any other normal trading session when the Finance Minister Arun Jaitley presents the first full-fledged Budget of the Narendra Modi government. Trading will start at 9:15 IST and conclude at 15:30 IST. Jaitley will begin his speech at 11:00 IST in Lok Sabha on 28 February 2015 as he tables the Union Budget 2015-16 in the parliament.

The Railway Budget 2015-16 will be tabled in the parliament by rail minister Suresh Prabhu on Thursday, 26 February 2015. The Economic Survey will be tabled on Friday, 27 February 2015.

The next major event for the financial markets is Union Budget for 2015-16. Finance Minister Arun Jaitley will present Union Budget 2015-16 in Parliament on Saturday, 28 February 2015. Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government’s own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.

Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.

Analysts are awaiting further progress on the Goods and Services Tax (GST) during the ongoing Budget session of Parliament after the Constitution Amendment Bill for the introduction of GST was tabled in the Lok Sabha during the winter session of parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.

Asian stocks edged higher today, 24 February 2015 before the US Federal Reserve Chair Janet Yellen speaks to lawmakers. Key benchmark indices in Singapore, Taiwan, Japan, Indonesia and South Korea rose by 0.24% to 1.05%. In Hong Kong, the Hang Seng index fell by 0.45%. China’s mainland markets remain closed today, 24 February 2015 for the Lunar New Year holiday.

Markit Economics will tomorrow, 25 February 2015, announce preliminary reading of China’s HSBC PMI index for February 2015, indicating health of China’s manufacturing activity for that month.

Trading in US index futures indicated that the Dow could rise 11 points at the opening bell today, 24 February 2015. US stocks ended mixed yesterday, 23 February 2015 as lower oil prices dragged down energy shares. In economic data, sales of previously owned US homes fell in January as a tight supply forced up prices, showing the residential real-estate market faces an uneven recovery. Purchases slowed 4.9% to a 4.82 million annualized rate, the least since April, according to figures from the National Association of Realtors yesterday, 23 February 2015.

Investors will receive further clues on the central bank’s assessment of the economy and the timing of a rate increase when Federal Reserve Chair Janet Yellen gives two days of testimony to Congressional finance committees starting today, 24 February 2015.

Meanwhile, Greece yesterday, 23 February 2015, finalised measures which include plans to combat tax evasion and tackling fuel and tobacco smuggling in order to secure a bailout extension. Greece had previously delayed presenting the reforms by 24 hours. Euro zone finance ministers would today, 24 February 2015, discuss Greece’s plans as scheduled earlier.

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