Constrained: FM's monologue failed to cheer Dalal Street

If the Indian cricket team could be a metaphor for Jaswant Singh, and Union Budget 2003 a metaphor for the ICC World Cup, the stockmarket's reaction to the Finance Minister's two-and-a-quarter hour monologue could be akin to India's performance against upstarts Holland. Just as India won that match in an unspectacular fashion, the BSE Sensex on Budget Day did end in the black, but the upward movement wasn't too different from the way the Indian captain moved his feet-tentatively and scarcely.

Apologies for that rather torturous cricket allegory, but if February 28 was expected to provide some relief from the flannelled fools in South Africa (and Mandira Bedi's tri-colour bangles, amongst her other ample accessories), it wasn't coming-not at least on Dalal Street. For the thin audience that gathered at the expansive BSE Convention Hall on the first floor of the stock exchange, there weren't too many reasons to burst into applause. A few claps did echo when Singh proposed the abolition of dividend and long-term capital gains tax, but then those sops were all factored in when the Sensex opened Budget Day with a 30-point jump. By the time Singh had completed his speech-whoever let on that it was going to be a 45-minute affair should be flogged-the index had lost most of those gains. That could only mean some of the expectations built into stock prices pre-Budget had been belied. For instance, most of the corporate sector was counting on Singh getting rid of the surcharge on corporate tax, but he only halved it to 2.5 per cent.

Meantime, even the good news that Mr. Hussain from Iraq had grudgingly agreed to destroy missiles could do little to prop up the Sensex. One reason could be that the news filtered in around the time the markets were closing on Budget Day. Hours before that, rising oil prices and the March 1 deadline set by Mr. Bush for Iraq to disarm had spooked marketmen. And that meant only an effort of miraculous proportions by the fm could send the stock indices soaring northward.

But let's not read too much into the market's lethargy. Previous Budgets have proved that Dalal Street isn't the most accurate of barometers of budgetary proposals. Two years ago, Yashwant Sinha's Budget was greeted by an over-the-top spurt in the Sensex, of 177 points. Last year, too, Sinha's do was crashed by a 143-point drop on Dalal Street which, to put it mildly, was an overreaction. Against that backdrop, the market's behaviour this time round actually appears rational-something you usually don't associate with The Street.

You could accuse Singh of being boring, but given that this could be the last Budget before the elections, he hasn't done a bad job. Along with making the proper noises on poverty alleviation, rural development, unemployment, and agriculture reforms, he also did touch upon promoting investment in industry and getting back the small investor into the markets. Meanwhile, the ballooning fiscal deficit and unachieved disinvestment targets notwithstanding, there's a much more burning question looming over the short term: Will India win the World Cup? And what will Mandira wear tomorrow? After all, Budgets will come and go...

-Brian Carvalho

Equity Gets a Fillip
Equity is back, thanks to the removal of dividend tax, lowering of taxes and more.

Bombay Stock Exchange: Reprieve for investors

The finance minister presented a pragmatic budget that should make equity investors happy. Doing away with the long-term capital gains tax with effect from March 1, 2003, will provide some push to the stockmarket. Though the review caveat remains, assuming that this advantage would continue, equities will definitely benefit. Removal of dividend tax would also attract investments in large-cap and mid-cap companies with high dividend yields.

The lowering of taxes-customs and excise-should provide a fillip to industry as such, and spur retail investment. After all, a lower tax regime means more money in the hands of investors, which is an indirect way of helping the equity markets. The reduction in corporate tax will help the bottomlines of heavy tax paying companies. Avers Milind Barve, Managing Director, HDFC Mutual Fund: "Initiatives like the rationalisation of Custom and Excise duties, as well as the introduction of Value Added Tax, will spur economic activity."

The 100 basis point cut in small savings is seen as a way to divert investments to equity markets as high returns and assurance on small savings (RBI relief bonds for example) have been the main reasons for high interest rates in the economy so far. Lowering of the small savings rate should give that much needed boost for the economy to grow.

-Shilpa Nayak

5 STOCKS THAT WENT UP

INFOSYS: Restoration of Section 10A/10B benefits for software companies resulted in a 2.13 per cent rise in Infosys, at Rs 4,284.

APOLLO HOSPITALS: Went up Rs 13 to Rs 113 on back of tax breaks for private hospitals and import duty sops on equipment.

ING VYSYA: Went up by Rs 27 to Rs 280 following the relaxation of foreign direct investment limit in private banks from 49% to 74%.

BRITANNIA: Climbed Rs 14 to Rs 516 on hopes of growth, following the excise duty cut on beverages, soft drinks and biscuits.

INDIAN HOTELS: Rose to Rs 217, gaining Rs 16, as a result of sops to tourism and the restoration of goverment employees' LTA.

5 STOCKS THAT PLUNGED AND WHY

BHEL: Went down to Rs 210 from Rs 219 as the power reforms, on which speculative positions were built, failed to materialise.

RELIANCE: RIL dropped over a rupee to Rs 294 (after a high of Rs 302) in the wake of import duty cuts on polymer products.

CROMPTON GREAVES: Crompton went down by Rs 8 to touch Rs 57 following import duty cuts on transmission equipment.

CENTURY TEXTILES: Expectations were much higher than the sops dished out, resulting in heavy offloading.

Looking The Part
Just what is it that's so 'breakaway' about Jaswant Singh? Try his sartorial style, for a start.

If you missed the weighty numbers and the sonorous intonations, you couldn't have missed what he was wearing. A neatly ironed dark grey (nay, near-black)... er... shirt, complete with large collars and chest pocket flaps. Cut just close enough to emphasise his frame, but roomy enough to grant him space to manoeuvre-with the distinctive shoulder epaulettes doing a prefect job of projecting the army-man in him. "Very military and very African safari at the same time," in fashionista J.J. Valaya's words. Part East, part West. No overt elitism. Nor any mass identification of the dhoti-kurta sort, with all those folds over folds, a tradition honoured since India's first fm, R.K. Shanmukham Chetty's budget of November 26, 1947. Of course, V.P. Singh's Sherwani-with-fur-cap was a notable exception. Manmohan Singh wore a kurta-pyjama with a Nehru jacket. P. Chidambram, a classic Tamil veshti. And Yashwant Sinha? Kurta-pyjama.

A study in contrast: (L to R) Manmohan Singh, P. Chidambaram, Yashwant Sinha and Jaswant Singh

Singh, in contrast, is a man of rare sartorial predilections. A man who's conscious of what he's wearing, and stays in control of every aspect of his demeanour, be it his gentle jokes (Einstein couldn't figure out taxes, he remarked) or dignified patience with rude interruptions (there were quite a few of those). What, after all, would one expect of a man who'd go horse-riding only in propah breeches?

Ask Raghuvendra Rathore, fashion designer to the fm, and he tells you that all he does is translate his client's character. What makes the job all the more satisfying is the man's "intense values". So when you see him, you know him-in a manner of speaking. "Singh's style personifies not only his appreciation for the classic personal style," explains Rathore, "but also marks the inherent chic that cannot be bought or hired. Rather, it is inborn, and grows with character and life."

-Moinak Mitra

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