It is no rocket science to understand a government can ill-afford to raise spend or cut taxes when revenue generation is low. In corporate tax cut, the Modi govt has already burnt a hole in its pocket. Yet, Budget expectations are running high. What gets missed in this feverish speculation are bare facts: Remember last Budget's tax buoyancy target? It was 2.0x; current rate 0.8x. Disinvestment target? Missed by Rs 50,000 crore. Last few years, govt finances have been at the mercy of telecom spectrum revenue, RBI doleouts or the occasional windfall like AGR dues and PSU dividends. Why then is all this excitement over Budget?
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded 23 points lower at 7 am (IST), signalling weakness ahead on Dalal Street. Stocks made a barely positive start in early Asian trade after the WHO called it a little too early to declare a coronavirus outbreak a global emergency.
HERE'S WHAT TO WATCH  | MSCI's broadest index of Asia-Pacific shares outside Japan rose a marginal 0.1%, while Japan's Nikkei stood flat and Australian stocks added 0.4%. Financial markets in China, Taiwan and South Korea closed on Friday for the Lunar New Year holiday. |
| Overnight, key Wall Street indices bounced from lows. The Nasdaq rose 0.2% to a record closing high, while S&P500 added 0.1%, while Dow eased 0.1%. |
| Coronavirus fears continued to weigh on crude oil prices. WTI crude futures rose marginally by 0.05% to $55.61 a barrel, after hitting $54.77 in the previous session. |
| The rupee depreciated by 7 paise to close at 71.26 against the US dollar on Thursday as the spread of a deadly new virus from China stoked fears of a global pandemic. However, softening crude prices and strong domestic equity market restricted the rupee's fall, forex dealers said |
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SBI Cards On a High… SBI Cards & Payments Services is trading at a Rs 200-250 premium in the grey market ahead of its proposed share sale in February, said three dealers involved in such trades. The company is likely to be valued at Rs 57,000-60,000 crore in the initial public offering. "There is lot of demand for unlisted shares as the theme is driven by the Indian consumption story," said Abhenav Khettry, the managing director of financial services advisory firm Vyana Wealth. SBI Cards is billed as a proxy to high-margin credit card business. It is the only standalone company focused entirely on cards business.
Read More Reliance Retail Rebounds… Shares of Reliance Retail, the unlisted arm of Mukesh Ambani's Reliance Industries, rebounded sharply in the unofficial grey market on Thursday from around Rs 450 to Rs 700, after the company tweaked the terms of a restructuring agreement. Reliance, in an extraordinary general meeting on Thursday, made the share-swap scheme for shareholders in the retail venture optional as against mandatory earlier. Now, shareholders of the Reliance Retail can retain their shares in the company.
Read More Jio Clears AGR Dues… Reliance Jio Infocomm became the only phone company to meet the Supreme Court's adjusted gross revenue dues deadline, paying Rs 195 crore on Thursday. Rival Bharti Airtel sought more time to pay since the top court will be hearing its modification plea next week. The telecom department directed circle offices not to take any "coercive action" against telcos that hadn't paid the dues by the deadline. Separately, oil minister Dharmendra Pradhan expressed the hope that non-telecom, state-run firms will remain unaffected by the October 2019 court ruling on AGR.
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Big LIC Exposure Slides into Default… LIC, India's biggest buyer of debt, has seen Rs 11,000 crore of bonds slide into defaults in the first half of FY20, with rating companies downgrading to junk the papers of DHFL, Reliance Capital, Reliance Home Finance, and Sintex Industries. LIC made provisions for its investments of Rs 6,500 crore in DHFL across life and pension funds, and these papers were downgraded to default in June. Its exposure of Rs 4,000 crore to Reliance Capital turned NPA for lenders in September 2019.
Read More 14% Jump in Off-Budget Borrowings?… The Modi government is likely to fund roughly $28 billion of its expenditure outlay in its Budget for fiscal 2020-21 via off-budget borrowings, three government sources said, as it seeks to revive a sagging economy while keeping its fiscal deficit in check. Off-Budget borrowings are a means by which the government keeps its fiscal deficit in check by making quasi-government entities borrow on its behalf, to partly fund its expenditure plan for the year. This would mark a roughly 13.8% increase in so-called off-Budget borrowings from an estimated Rs 1.75 lakh crore this financial year.
Read More Meanwhile... The Coffee Day Group has signed up with the Chennai-based Shriram Group to sell one of its financial services units, Way2Wealth Securities, for an undisclosed sum as part of its efforts to dispose of non-core assets to cut debt and shore up resources for working capital. Shriram Capital, the holding company for the group's large nonbanking finance and insurance businesses, is said to be conducting due diligence on the proposed deal.
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