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Rail Budget dampner, Nifty ends at 8684 on FO expiry


The News International Team
Live Market Commentary

03:30 pm Market closing: The Rail Budget failed to enthuse investors dragging the market after Minister Suresh Prabhu hiked freight rates. February F&O expiry also added pressure in the market. The Nifty ended F&O expiry at 8683.85, down 83.40 points or 0.9 percent. The Sensex lost 261.34 points or 0.9 percent at 28746.65.

NTPC was up 4 percent while ONGC, GAIL, Reliance and Hero Motocorp are top gainers in the Sensex. Among the losers are Infosys, sun Pharma, Bajaj Auto, Cipla and Hindalco.

03:20pm Europe Update: European equities traded flat as the markets weighed concerns over Greece’s ability to meet its debt repayments commitment to the IMF and the European Central Bank. Crude oil saw a decline after yesterday’s sharp rally, as US crude stockpiles hit another record high for the seventh straight week.

03:15pm Railway Minister Suresh Prabhu says he has rationalised freight rates in terms of classification. “Railway will look for various options to raise money. A large government organisation has committed Rs 20,000 crore investment in railways and Railway is in talks with World Bank for funding of railways,” he adds.

Railway cannot depend on sole source of gross budgetary support, Prabhu says.

03:07pm While addressing press conference post Railway Budget speech, Railway Minister, Suresh Prabhu says Rs 6,581 crore has been approved to remove around 3,500 level-crossings.

“We focussed on safety in the Rail Budget and have increased the quota for senior citizens,” he adds.

03:03pm Market Expert: Deven Choksey of  K R Choksey believes the Railway Budget was fundamentally a directional one with focus on working to root out corruption.

According to him, the profound measures announced in the Budget with regards to safety, technology development, revenue creation, investments was unlike any other previous Budget.

He also believes it was transformational and has a systematic plan in place.

Meanwhile, he is not overly worried about freight hikes in cement and don’t see a very material impact of that on cement companies as such.

02:55pm Standard Chartered in News: Asia-focused bank Standard Chartered said former JPMorgan investment bank boss Bill Winters will take over as chief executive in June to replace embattled boss Peter Sands.

Standard Chartered said today Chairman John Peace will also leave next year, and named other changes to its board in a massive overhaul in management following a run of problems for the UK bank prompted top shareholders to call for change.

Winters, 53, is one of the most respected bankers in the industry and has wide experience of investment banking and regulatory issues. Standard Chartered shares jumped 3 percent on the news of the appointment.

He will join the Standard Chartered board in May and take over from Sands the following month, and be based in London.

“Bill is a globally respected banker and has the right experience and skills to drive the Group’s new phase of growth,” said Peace, who said he will remain in his role until next year to help Winters’ transition.

Standard Chartered said Jaspal Bindra, CEO of its Asia business, will leave this year after 16 years with the bank.

It said a further three long standing directors will step down – Ruth Markland, Paul Skinner and Oliver Stocken – and said two new directors will join the board – Gay Huey Evans and Jasmine Whitbread.

02:50pm Railway Budget: The speed of trains connecting major metro cities would be increased up to 200 kilometres per hour (kmph) on nine select railway corridors in a bid to reduce travel time, Railway Minister Suresh Prabhu announced today.

“The speed of nine railway corridors will be increased from the existing 110 and 130 km per hour to 160 and 200 kmph respectively so that inter-metro journeys like Delhi-Kolkata and Delhi-Mumbai can be completed overnight,” Prabhu announced while presenting his maiden Railway Budget in Lok Sabha.

The increased speed will involve upgradation of track including turnarounds, improve rolling stock to higher standards and adopting improved methods of track recording, monitoring and maintenance.

Efforts would continue to “pursue with vigour” the special projects like high speed rail (Bullet Train) between Mumbai and Ahmedabad, Prabhu said. The feasibility study for this was in an advanced stage and was expected by the middle of this year.

“Quick and appropriate action will be taken once the report is available with us,” he said.

02:45pm Defence spending: Sources told CNBC-TV18 that two consortiums are required to develop prototype in 18-24 months. Cost of prototype will be under Rs 1,000 crore for each consortium; so the government will fund 80 percent of prototype cost and partners 20 percent, say sources.

CNBC-TV18 learnt that Tata Power SED-L&T Defence and Bharat Electronics-Rolta consortiums have been selected for developing prototype. Defence ministry has awarded BMS prototype development to 2 consortium and the production will take 4-6 years post prototype completion, say sources.

02:38pm Market Update: The market recouped half of its losses in last hour of trade. The Sensex declined 154.66 points to 28853.33 while the Nifty fell 44 points to 8723.25 ahead of expiry of February derivative contracts.

About 1010 shares have advanced, 1707 shares declined, and 202 shares are unchanged on the Bombay Stock Exchange.

HDFC, ICICI Bank, Reliance Industries and ONGC supported the market on expiry day, trading with marginal gains.

02:34pm Suresh Prabhu (in his speech) says, “Over the next five years, we envisage an investment of Rs. 8.5 lakh crore.”

To get the most out of the additional resources that Railway will be investing, Railway will need to ensure the highest standards of operational and business efficiency.

Prabhu proposed the operating ratio for 2015-16 at 88.5 percent as against a targeted operating ratio of 91.8 percent in 2014-15 and 93.6 percent in 2013-14. “I am pleased to state that not only will this be the best operating ratio in the last 9 years but the best after the VIth Pay Commission,” he adds.

The Railways will not be able to deliver sustained improvement in operating efficiency unless changes are made to speed up decision making, tighten accountability, and improve management information systems, he says.

02:30pm Railway Minister says Unfortunately, Railway facilities have not improved very substantially over the past few decades. A fundamental reason for this is the chronic underinvestment in Railways, which has led to congestion and over-utilization.

This cycle must be put to an end. Once it does, the gains to the economy will be immense: better services, improved connectivity for all citizens including the poorer segments of our society, lower costs and improved competitiveness. Investment in the Railways will have a large multiplier effect on the rest of the economy and will create more jobs in the economy for the poor.

In the next five years, our priority will be to significantly improve capacity on the existing high-density networks. Improving capacity on existing networks is cheaper. There are no major land acquisition issues and completion time is shorter. The emphasis will be on gauge conversion, doubling, tripling and electrification. Average speed will increase. Trains will become more punctual. Goods trains can be timetabled.

02:25pm Union Budget Expectations: With a decline in Gold imports, Commerce Ministry has sought reduction in import duty on gold, a step that could boost exports and manufacturing of gems and jewellery.

“We have been asking for a cut in gold import duty,” Commerce Secretary Rajeev Kher told reporters here on the sidelines of a CII function. In its Budget proposals, the Ministry has suggested the Finance Minister to consider reduction in import duty on the yellow metal.

The industry has sought reduction in customs duty on gold to two percent, from 10 percent now. The gems and jewellery sector, which employs about 35 lakh people, would get a boost from the move. Gold imports in December declined sharply to 39 tonnes, from 152 tonnes in November.

Exports of gems and jewellery too declined by 1.2 percent year-on-year to USD 2.66 billion in December. The sector is one of the 25 thrust areas identified under the ‘Make in India’ programme.

The campaign aims at attracting domestic and foreign investments to boost manufacturing and create jobs. The government had raised the import duty on gold to contain the widening current account deficit, reports Reuters.

02:20pm Bharti Infratel large trade: About 5.5 crore equity shares (2.9 percent equity) changed hands in 3 block deals on BSE, NSE at Rs 350-353.65 apiece.

“We wish to inform that Bharti Airtel Limited has decided to sell up to 55 million equity shares (with an upsize option of up to 17.5 million additional equity shares) of its subsidiary company Bharti Infratel Limited tomorrow i.e. February 26, 2015 through stock exchanges,” the company had said in a regulatory filing yesterday.

Bharti Airtel has 74.85 percent stake in Bharti Infratel as of December 2014. Bharti Infratel had reported a 23 percent jump in consolidated net profit at Rs 507 crore for the quarter ended December 31, 2014, riding on the back of operators’ focus on fast roll-out of data networks.

02:15pm Railway 5-year Plan: Railway Minister, Suresh Prabhu envisages Rs 8.5 lakh crore investment over 5 years. “We will invest Rs 1.99 lakh crore on network decongestion and Rs 1.93 lakh crore on network expansion.

Railway will also invest Rs 1.27 lakh crore on safety, Rs 1 lakh crore on station redevelopment and Rs 1.02 lakh crore on rolling stock.

02:12pm Standard Chartered gains 2% as its Asia CEO Jaspal Bindra will step down in April and Global CEO Peter Sands will step down in June.

02:08pm Modi speaks on Rail Budget: Prime Minister Narendra Modi says Railway Budget lays out roadmap to make it key growth driver. This Budget is a forward- looking and passenger centric one he adds.

02:00pm Market Check

The market remained under pressure post Railway freight rate hike. The Sensex plunged 244.59 points or 0.84 percent to 28763.40 and the Nifty slipped 74.40 points or 0.85 percent to 8692.85, dragged by capital goods, technology, auto, banks and pharma stocks.

About 919 shares have advanced, 1737 shares declined, and 188 shares are unchanged on the Bombay Stock Exchange.
Railway Minister Suresh Prabhu has raised freight rate for several sectors like cement, coal & iron & steel, oil etc. He raised freight rate by 3.1 percent for scrap & pig iron, 2.7 percent for slag, 0.8 percent for kerosene and 0.8 percent for LPG.

Freight rate is also hiked for cement by 2.7 percent, 0.8 percent for iron & steel, 10 percent for urea and 6.3 percent for coal. However, Freight rate is lowered by 1 percent for high-speed diesel (HSD).


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