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Indian Indices Open Strong
Tue, 1 Mar 09:30 am

Major Asian stock markets have opened the day on a positive note. The stock markets in Hong Kong and Taiwan are trading higher by 0.5% and 0.6% respectively. Major indices in Europe ended their previous session in green. However, the benchmark indices in US ended the day lower by 0.7%. The rupee is trading at 68.61 per US$.

Indian stock markets have opened the day on a firm note. The BSE Sensex is trading higher by 267 points (up 1.1%) and NSE Nifty is trading higher by 89 points (up 1.2%). Both, BSE Mid Cap and BSE Small Cap are trading higher by 0.7% each. Major sectoral indices have opened the day in green with stocks from banking and information technology sectors witnessing maximum buying interest.

The Union Budget announced yesterday strives to put more money in the hands of rural people. This is evident as a mammoth sum of Rs 877.7 billion was allocated to the rural sector. The consumption patterns in the rural areas have come down, owing to a deficit monsoon in the preceding two years. Accordingly, Finance Minister Arun Jaitley aims at doubling the farmer's income within a span of five years. The spending on agriculture is hiked to Rs 359.9 billion with a focus on bringing more areas under irrigation.

In order to boost the rural consumption, the budget allocated a sum of Rs 385 billion for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). This scheme ensures that the labourers get jobs on demand for 100 days in a year. Further, an allocation of Rs 190 billion was made for the Pradhan Mantri Gram Sadak Yojana (PMGSY). This scheme aims to provide good all-weather road connectivity to unconnected villages. This will add jobs as well as increase connectivity.

All these measures could possibly drive the rural consumption and could benefit the companies in the consumer packaged goods sector. The turnover of most of the consumer packaged goods companies have remained flat in the current fiscal year owing to poor rural demand. These measures could provide an impetus to the companies in this space.

In another news update, the government has set a target to raise Rs 565 billion through disinvestments in the fiscal year 2017. Of the total target, Rs 360 billion is estimated to come from minority stake sale in public sector undertakings (PSUs), while the balance Rs 205 billion will come from strategic sale in both profit and loss-making units.

Strategic sale seems to be a new method to raise money for the purpose of disinvestment. Strategic sales aims at monetizing assets such as land held by the state run companies. However, there is lack of clarity as to how the public sector enterprise will mobilize money through sale of assets and also the manner in which these proceeds will be transferred to the government. Divestment would play an important role in ensuring that the fiscal target is achieved.

Considering, the government has missed its divestment target 16 times in the last 25 years. So will the government be able to achieve the stated target this year? We would look for more developments on this front.

We have discussed our views on the budget in yesterday's edition of The 5 Minute WrapUp. Be sure you don't miss it! Click here to access it. In addition to this, we have also discussed the key takeaways from the Union Budget 2016-17. Click here to read this interesting piece.

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Nov 24, 2017 (Close)