Budget 2018 Market Impact: Most newly listed stocks escape unhurt

After Finance Minister Arun Jaitley's Budget 2018 announcements, while half the stocks in NSE's Nifty50 and Nifty Midcap50 indices ended in red, the newly listed stocks seemed relatively cushioned

Finance Minister Arun Jaitley on Thursday presented Union Budget 2018-19 in Parliament. This was his fifth and the Narendra Modi government’s last full Budget before heading into the 2019 general elections. Some of the market-related measured announced by Jaitley in his Budget impacted the Indian equity markets. While the stocks in the NSE’s Nifty50 and Nifty Midcap50 indices took more hit, the newly listed ones seemed relatively cushioned.
 
This EY analysis looks at the announcements in Finance Minister Arun Jaitley’s Union Budget 2018-19 that might have impacted each of the newly listed stocks:
 
HDFC Standard Life Insurance Company Limited

·                Increase in Education cess from 3% to 4%

·                Tax on Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10%, without allowing indexation
·                80JJAA provisions rationalized to give benefit to new employees subject to conditions
·                Transaction in respect of trading of agricultural commodity on recognized stock exchange to be treated as non – speculative transaction
·                Amendment in the Indian Stamp Act with respect to stamp duty regime on financial securities transaction.
·                Retrospective amendment proposed to exempt services by Naval Group Insurance Fund by way of life insurance to personnel of coast guard under Central Government scheme from 10 September 2004 to 30 June 2017

 
The New India Assurance Company Limited
·                Increase in Education cess from 3% to 4%
·                Tax on Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10%, without allowing indexation
·                Compensation on termination or modification of terms and conditions of contract to be taxable as business income or income from other sources
·                80JJAA provisions rationalized to give benefit to new employees subject to conditions
·                Transaction in respect of trading of agricultural commodity on recognized stock exchange to be treated as non – speculative transaction
·                Amendment in the Indian Stamp Act with respect to stamp duty regime on financial securities transaction.

·                Retrospective amendment proposed to exempt services by Naval Group Insurance Fund by way of life insurance to personnel of coast guard under Central Government scheme from 10 September 2004 to 30 June 2017
 
Reliance Nippon Life Asset Management Limited
·                Increase in Education cess from 3% to 4%
·                Tax on Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10%, without allowing indexation
·                Compensation on termination or modification of terms and conditions of contract to be taxable as business income or income from other sources
·                80JJAA provisions rationalized to give benefit to new employees subject to conditions

·                Transaction in respect of trading of agricultural commodity on recognized stock exchange to be treated as non – speculative transaction
·                Amendment in the Indian Stamp Act with respect to stamp duty regime on financial securities transaction.
 
General Insurance Corporation Of India
·                Increase in Education cess from 3% to 4%
·                Tax on Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10%, without allowing indexation
·                Compensation on termination or modification of terms and conditions of contract to be taxable as business income or income from other sources
·                80JJAA provisions rationalized to give benefit to new employees subject to condition

·                Transaction in respect of trading of agricultural commodity on recognized stock exchange to be treated as non – speculative transaction
·                Amendment in the Indian Stamp Act with respect to stamp duty regime on financial securities transaction.
·                Retrospective amendment proposed to exempt services by Naval Group Insurance Fund by way of life insurance to personnel of coast guard under Central Government scheme from 10 September 2004 to 30 June 2017
 
MAS Financial Services Limited
·                Increase in Education cess from 3% to 4%
·                Tax on Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10%, without allowing indexation

·                Compensation on termination or modification of terms and conditions of contract to be taxable as business income or income from other sources
·                80JJAA provisions rationalized to give benefit to new employees subject to conditions
·                Transaction in respect of trading of agricultural commodity on recognized stock exchange to be treated as non – speculative transaction
·                Amendment in the Indian Stamp Act with respect to stamp duty regime on financial securities transaction.
 
Godrej Agrovet Limited
·                Increase in Education cess from 3% to 4%
·                Tax on Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10%, without allowing indexation

·                Compensation on termination or modification of terms and conditions of contract to be taxable as business income or income from other sources
·                100% deduction proposed to companies registered as Farmer Producer Companies with an annual turnover upto INR 1000 crore
·                80JJAA provisions rationalized to give benefit to new employees subject to conditions
·                Transaction in respect of trading of agricultural commodity on recognized stock exchange to be treated as non – speculative transaction
·                Basic Custom duty reduced to 2.5% in case of Cashew nuts in shell (raw cashew)
·                ‘Operation Greens’ launched to address price fluctuations in potato, tomato and onion for benefit of farmers and consumers

·                Two New funds of INR 10,000 crore announced for Fisheries and Animal Husbandry Sectors
·                Agri-Market Infrastructure Fund of INR 2,000 cr will be setup
 
Khadim India Limited
 
·         Rationalization of additional deduction of 30% on new employees
·         Existing secondary and higher education cess of 3% increased to 4%
·         Deemed dividend under section 2(22)(e) to attract dividend distribution tax@ 30%
·         Long term capital gains tax @10% introduced on sale of listed shares
·         Any capital/ revenue compensation receivable towards termination/modification of business contract taxable as business income
·         No Chapter VI-A deduction unless the return of income is filed within due date

·         Renewed focus on rural wages and jobs growth  likely to spur growth for consumer packaged goods companies
·         BCD rate on Footwear increased from 10% to 20%
·         Increase in effective duty due to introduction of social welfare surcharge
 
Prataap Snacks Limited
·         Rationalization of additional deduction of 30% on new employees
·         Existing secondary and higher education cess of 3% increased to 4%
·         Deemed dividend under section 2(22)(e) to attract dividend distribution tax@ 30%
·         Long term capital gains tax @10% introduced on sale of listed shares
·         Any capital/ revenue compensation receivable towards termination/modification of business contract taxable as business income

·         No Chapter VI-A deduction unless the return of income is filed within due date
·         Renewed focus on rural wages and jobs growth  likely to spur growth for consumer packaged goods companies
·         BCD rate on miscellaneous food preparations increased from 30% to 50%
·         Increase in effective duty due to introduction of social welfare surcharge
 
Future Supply Chain Solutions Limited
·         Compensation received towards termination or modification of the terms of the contract now taxable
·         Rationalization of additional deduction of 30% on new employees
·         Legislative amendments to align the provisions of Income tax with Income computation and Disclosure Standards

·         The present secondary and higher education cess of 3% increased to 4%
·         Department of Commerce will be developing a National Logistics Portal as a single window online market place to link all stakeholders
 
Mahindra Logistics Limited
·         Compensation received towards termination or modification of the terms of the contract now taxable
·         Rationalization of additional deduction of 30% on new employees
·         Legislative amendments to align the provisions of Income tax with Income computation and Disclosure Standards
·         The present secondary and higher education cess of 3% increased to 4%
·         Department of Commerce will be developing a National Logistics Portal as a single window online market place to link all stakeholders

 
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