Sunday, March 6, 2011

Infosys, TCS, ONGC, NTPC, Tata Power, BHEL, Sesa Goa, BEL stocks top picks post budget

The equity market has rallied since the presentation of the Union budget , with the Sensex closing at 18,486 on 4 March, compared with 17,850 at 11 a.m. on 28 February. Does it mean that the budget has settled all market worries? Not really. The rise can be attributed more to the lack of expectations from the budget than to fundamental changes. “There was a lot of negativity in the market before the budget was presented,” says Vivek Mahajan, head of research, Aditya Birla Money. The bear operators who had built up huge short positions based on the negativities were forced to cover these because the budget was not ‘as bad as expected’.

As far as the budget is concerned, positives outweighed the negatives and investors breathed a sigh of relief as there was no rollback of the stimulus package announced earlier. If it had, the standard rates for central excise, customs and service tax would have gone up from 10% to 12%, pushing up inflation. The other cosmetic changes, such as the increase in income tax slabs and reduction of corporate surcharge from 7.5% to 5%, will not add much to corporate profitability but have helped boost the market sentiment. The increase in the minimum alternate tax (MAT) rate from 18% to 18.5% and its extension to the units in special economic zones (SEZs) comprised the bad news.