IMPACT OF UNION BUDGET 2012-13 ON SHARE MARKET

Submitted to Ms. Richa Gupta Astt. Professor MBA Deptt

Submitted by Vikas Roll No. 11222 MBA Sem III

Impact of union budget 2012-13 on stock market

Union Budget 2012 was declared by Finance Minister Paranab Mukharji. Under the ruling party of UPA-II There is direct impact of Union Budget on the stock market, policy, schemes, condtions has a deep impact on it. KEY POINTS OF UNION BUDGET 2012 GDP growth to be 7.6 per cent (+ 0.25 percent) during 2012-13. Amendment to the FRBM Act proposed as part of Finance Bill. New concepts of "Effective Revenue Deficit" and "Medium Term Expenditure Framework" introduced. Efforts to reach broadbased consensus on FDI in multi-brand retail. Rajiv Gandhi Equity Saving Scheme: to allow income tax deduction to retail investors on investing in equities Rs. 15,888 crore to be provided for capitalization of public sector banks and financial institutions Tax Free Bonds of Rs. 60,000 crore to be allowed for financial infrastructure projects Rs. 5,000 crore India Opportunities Venture Fund to help small enterprises Investment in 12th Plan in infrastructure to go uptoRs. 50,00,000 crore; half of this is expected from private sector. Rs. 30,000 crore to be raised through disinvestment. SHARE MARKET TREND AFTER UNION BUDGET 2012

The Union Budget 2012 has tried to attract small investors into the stockmarket leaving mutual funds in a mess. It shows knee jerk reaction, no understanding of ground reality and policy confusion Finance Minister Pranab Mukherjee, in his budget presentation speech for the fiscal 2012-13, announced a slew of measures to encourage the small investor to participate in equity markets. If one takes the average of the impact analysis done by stock market analysts, it suggests that the budget is negative for majority of the sectors. Out of 22 major sectors, analysts say that the budget is negative on 10 and neutral on 4. It is positive for 8. The budget is negative for real

estate, oil and gas, Pharma, hotels, auto and fertilizer sectors among others. It is neutral on IT, telecom and FMCG. This means, a sizeable chunk of the market cap is not moving anywhere.
Fall in market due to increase in tax rates

Stock market reacted in flat manner due to flat budget Small investors are appreciated due to which investment in mutual fund and bonds also increased. Lack of reforms and FDI has resist the flow of funds.

Fixed Income market analysis- Bond market future is positive

The flows into the debt market could also be muted as we are currently in a stable interest environment with an outer possibility of a rate cut. The expected flow into equity markets may not keep pace as investment-worthy sectors such as healthcare and the consumer space already seem overbought with the valuation getting stretched. Any further up move will only increase the size of the bubble which is getting created. The other sectors may not evince much interest looking at the macro factors.

REVIEW OF VARIOUS TRADING AGENCY Budget 2012: Walking a thin ropeKarvy Research The latest budget is neither bold or reformist nor populistHDFC Securities India Budget FY13 - Neither here nor thereAnand Rathi Securities INDIA UNION BUDGET 2012-2013 - Politically CorrectPinc Securities Union Budget 2012-13: Right on intent, low on action---Sharekhan Budget special India Insight : Deficit reduction target a tall task-- Deutsche Bank Uncertainty Regarding Policy Implementation Will Keep India's Deficit High In Fiscal 20122013 Despite ReformsS&P