Third Stimulus Plan in India, Port Modernization

123jump.com Staff
25 Feb, 2009
New York City

Indian government is preparing to release third economic stimulus plan that includes reduction in service tax and other excise taxes on manufactured goods. The latest package is focused on businesses and lowers tax burden to manufacturers. India also unveiled port modernization plan.

[R]10:00AM New York, 7:30 PM Mumbai – Indian government is preparing to release third economic stimulus plan. The latest package includes reduction in service tax and other excise taxes on manufactured goods. The latest package is focused on businesses and lowers tax burden to manufacturers. India also unveiled port modernization plan to increase cargo handling capacity.[/R]

Indian stocks rose after the government unveiled a third stimulus package and favlorable trading sentiment after the U.S. Fed Chairman suggested that he is not in favor of nationalizing troubled banks at the expense of shareholders.

In Mumbai, the BSE 30-share Sensex Index rose 0.9% or 80.50 to 8,902.56, and the CNX Nifty edged up 1.1% or 28.60 to 2,762.50.

Of the stocks traded on the BSE, 1,230 rose, 1,215 declined, and 66 were unchanged.

Market Statistics

Daily turnover on the BSE fell to 2,210 crore rupees from 2,457.09 crore rupees yesterday.

Government to Invest 55,804 crore rupees in the Ports

Economic Times of India reported today that the government will invest 55,804 crore rupees in the port sector of the country and will actively encourage investment from the private sector.

Road transport and highways minister TR Baalu said the government has launched the National Maritime Development Program involving a total investment of 1,00,339 crore rupees.

Investment will be targeted on construction, upgrading of berths, deepening of channels, road connectivity projects and equipment modernization.

All ports in India collectively have a handling capacity of 532.07 million tons.

India in 30,000 crore rupees Package to Boost Economy

The Indian government announced yesterday that the government intends to unveil a third stimulus package in the form of cuts worth 30,000 crore rupees in service tax, excise duty and countervailing duty on imports.

Excise duty on products will be lowered from 10% to 8% and service tax has been slashed 2% to 10%, while customs duty exemption on naphtha imports for power generation has been extended beyond March 31.

Economists expect the prices of manufactured goods such as color television sets, washing machines, refrigerators, soap, detergents, cola, hybrid cars and commercial vehicles to drop.

Gainers & Losers

Energy stocks rose after the government unveiled a stimulus package that will see lower service tax. Reliance Industries rose 1% to 1,266 rupees and ONGC advanced 2.4% to 696.75 rupees.

Larsen & Toubro dropped 2.1% to 612.45 rupees.

Financial stocks rose. HDFC Bank increased 0.9% to 864.15 rupees, ICICI Bank advanced 1.5% to 340.50 rupees after Life Insurance Corporation of India increased its stake in ICICI Bank by 2.04% to 9.38%.

State Bank of India advanced 0.9% to 1,037.75 rupees after the government prepared to introduce legislation to increase the capital base of State Bank of India’s subsidiaries and issue preference and bonus shares.

Oriental Bank of Commerce rose 2.5% after a 7.25 lakh shares block trade was executed on the NSE at 109.50 rupees per share.

Steel stocks increased on expectations that steel prices will drop by up to 600 rupees per ton.

IT stocks rose on speculation the U.S. economy will recover in 2010 and rupee fell to 49.95 against the dollar from 49.87 yesterday. Wipro advanced 2.5%, Infosys Technologies climbed 2.7%, and TCS gained 2.9%.

Auto stocks increased. Tata Motors increased 5.9% and Ashok Leyland rose 3.3%.

Cement stocks were mixed on speculation that cement prices will drop by 4 rupees to 5 rupees per 50-kilogram bag. UltraTech Cement increased 4% and Grasim Industries advanced 1.6%, respectively.

Telecommunications stocks also rose. Reliance Communications fell 1.8%.