and IT stocks are the worst hit by the various budget
proposals. All the stocks in these sectors have lost
heavily as the policy changes were almost unexpected.
excise duty structure for cement has been altered with
a view to hold cement prices and control inflation.
The government is clearly concerned that, because of
massive infrastructure spending, cement prices may rise
further and push up inflation.
the government has decided to reward those cement manufacturers
who are willing to hold the price of a 50 kg bag of
cement below Rs190 by offering an excise duty cut. But
those who sell cement at higher prices would have to
pay a higher excise duty. As cement prices are now well
above Rs190 per bag and it is very unlikely that price
would be lowered to those levels, cement companies would
end up paying higher excise duties.
the large cap cement stocks tumbled around 10 per cent
each after the announcement, but have now come off their
lows. ACC, Gujarat Ambuja Cements and Grasim are all
trading with losses of more than 7 per cent each.
the smaller cement stocks, Kesoram is down 10 per cent
while Shree Cement and Madras Cements have lost over
9 per cent each.
stocks tumbled following the announcement that minimum
alternate tax (MAT) would be applicable to all companies.
Companies in the IT services sector who were enjoying
tax benefits under sections 10A and 10B would now have
to pay taxes at the rate of around 11 per cent of adjusted
book profits. However, this policy change may not be
applicable to companies which operate out of special
has lost well over 5 per cent while TCS and Wipro are
down around 3.5 per cent each. HCL Tech is down nearly
3.5 per cent and Infosys has lost nearly 2.5 per cent.
and Tata Elxsi are the major losers among mid-cap IT
major change, which is negative from the stock market
perspective, is the increase in dividend distribution
tax from 12.5 per cent to 15 per cent. This would lower
the dividend received by shareholders.