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Saturday, March 8, 2008

Budget and Sector outlook

Automobile

Budget Highlights

* Reduction in excise duties from 16% to 12% on manufacturing of 2&3 wheelers and small cars
- Excise duty reductions will help lower prices and stimulate demand for 2&3 wheelers and small cars

* Reduce in excise duty on buses and their chassis from 16 per cent to 12 per cent
- Excise duty reductions will help lower prices and stimulate demand for buses
- Increased demand for new buses from STUs (State Transport Undertakings) as well as private players

* Agricultural credit outlay increased to Rs 2,80,000 crore
- Higher agricultural credit outlay will help boost demand for tractors

* 10% increase in defence sector allocation to Rs 1,05,600 crore
- Higher defence allocation will spur investment in new vehicles

* Higher allocation towards road development programme such as the NHDP.
- Increased thrust on road infrastructure is a positive for all the automobile manufacturers especially passenger vehicles and CVs

Major stocks:
Ashok Leyland
Bajaj Auto Ltd.
Tata Motors
Maruti
Mahindra and Mahindra

Hospitality Sector

Budget Highlights

* An amount of Rs 624 crore to be allocated for the Commonwealth Games.
- This would help bring in additional supply of rooms in the North India region

* Five year holiday from income tax is granted to two, three or four star hotels established in specified districts having UNESCO-declared 'World Heritage Sites'. The hotel should be constructed and start functioning during the period April 1, 2008 to March 31, 2013.
- This will help promote tourism in the country.

Major stocks:
Indian Hotels Company Ltd
Hotel Leela Venture Ltd
EIH Associated Hotels Ltd
ITC Hotels Ltd

Among other sectors, healthcare did receive some mention. Allocation towards healthcare spending has been increased by 15% for FY09. Apart from increased outlay for the National Aids Control Programme and eradication of polio, customs duty was also reduced on specified life saving drugs and on bulk drugs used for their manufacture.

Posted by Srivatsan

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