Mumbai: The Reserve Bank of India (RBI) will not be in a hurry to cut rates, particularly after finance minister Arun Jaitley pushed the target of limiting the fiscal deficit to 3% of gross domestic product (GDP) by a year to fiscal year 2018. The pace of cutting the deficit would be slower as the minister seeks to boost investment revising the target for the next fiscal year to 3.9% from 3.6%.

Asian markets were trading higher after the People’s Bank of China cut both its benchmark interest rate and its deposit rate by a quarter point each. Hong Kong’s Hang Seng and China’s Shanghai Composite were trading flat, while Japan’s Nikkei Stock Average was up 0.2%. The twin rate cuts could signal trouble for the Chinese economy but policymakers’ proactive response to the slowdown should be positive for the stock market, reports Financial Times.

US markets ended in the red on Friday as investors’ concerns shifted from Greece to the divergent outlooks for monetary policy in the US and the eurozone. Investors unwound their positions as Federal Reserve’s first rate rise looms later this year. Dow Jones Industrial Average fell 0.5%, Nasdaq Composite was off 0.5% and S&P 500 declined 0.3%.

In India, Indian Railways is in talks with Life Insurance Corp. of India to devise a mechanism to deploy 1 trillion of its surplus funds into railway infrastructure over a period of five years, reports Mint. This is a part of the government’s plan to secure funds for improving and expanding railways.

Jewellery maker shares such Titan Co. Ltd, PC Jewellers Ltd and Tribhovandas Bhimji Zaveri Ltd will be in focus after the budget kept import duty on gold unchanged. Gold premiums in India could jump to as much as $5 an ounce over world prices next week, from being almost at par after Arun Jaitley kept import duty at a record level in the budget.

State owned oil marketing companies will be in focus after they announced a hike in diesel and petrol prices by 3.18 per litre and 3.09 per litre on account of steep rise in international price of crude. Even truck rentals may rise by as much as 4.5-6% on various trunk routes in a few days and consumer sentiment towards new purchases of cars and two-wheelers may be dampened following the diesel price hike.

Airline shares will be under pressure after state owned oil marketing companies hiked the price of jet fuel by 8.2%, the first such increase since last July. The rates of non-subsidised LPG also increased by 5 per cylinder on firming international oil rates, reports Business Standard. Fuel costs account for about 40% of an airline’s operating expenses.

State run banks’ shares will be in the limelight as the Narendra Modi government has decided to initiate changes, aimed at revitalizing ailing lenders, including encouraging mergers, empowering their boards and offering higher cash incentives to banks for meeting targets, reports Mint.

Companies bidding for telecom spectrum and coal blocks might be in for a shock, as the budget has proposed an enabling provision to allow service tax at 14% on all services provided by the government to business entities, reports Business Standard. Allocation of spectrum or mines will attract service tax on the fee or royalty to be paid by companies.

Realty companies will benefit after the budget clarified the confusion on tax treatment at the time of initial listing, the pass-through status and the trading of REIT (Real Estate Investment Trust) units by the private equity investors. The budget has done away with capital gains tax issue for the sponsors and allows pass-through on rental income

Lastly, The Modi government’s budget offered some sops for middle-class tax payers and a series of steps aimed at boosting social security for the country’s poor, read more.

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