The Indian equity markets witnessed a volatile day of trade today. While the markets opened on a flat note, as the budget speech begun, the key indices witnessed sharp correction, and slipped into the red. Having said that, in no time, buying activity picked up during the post noon trading session. But the markets could not hold onto their gains. Indeed, selling activity once again intensified during the final hour of trade and the markets closed in the red. The BSE-Sensex closed the day lower by 72 points while the NSE-Nifty closed lower by 18 points. Small and mid cap indices were in favour today. The BSE Mid Cap and BSE Small Cap indices closed up by 0.60% and 0.76 % respectively. Majority of the sectoral indices underperformed with realty and consumer durable stocks being among the leading losers.
As regards to global markets, Asian indices closed on a mixed note, while European indices opened weak. The rupee was trading at Rs 59.87 to the dollar at the time of writing.
As per the budget announcement, the Finance Minister has announced proposals to broaden the tax base in service tax. This will trim various exemptions in a variety of sectors. Accordingly now, service tax will be leviable on advertisements in broadcast media. Similarly, tax is being proposed on the service provided by radio-taxis to place them on par with rent-a-cab service. Certain exemptions are also withdrawn on air-conditioned contract carriages and technical testing of newly developed drugs on human participants. While some sectors will come under the indirect tax purview, others will continue to remain under the exemption list. FM expects the indirect taxes to yield around Rs 75 bn for the current fiscal.
Over and above this, on the customs front, the Finance Minister proposes to introduce faster clearance of import and export cargo. This will reduce transaction costs and improve business competitiveness. He has also proposed implementing an 'Indian Customs Single Window Project' to facilitate trade. Under this, importers and exporters would lodge their clearance documents at a single point only. This would reduce interface with Governmental agencies, and reduce the cost of doing business.
Overall, given that the government's hands were tied on the fiscal front, was this a good Budget? To read our take on the same, we urge you to take a look at today's edition of the 5 Minute Wrapup.