Even the decision to put a surcharge on corporate and individual income taxes was clearly taken in its stride.

The decision to reduce long-term capital gains tax from 20 to 10 per cent, besides putting an end to the controversy over the treatment of tax for buyback of shares and exempting dividend from mutual funds from tax have been viewed as positive steps for the market. However, some opinions have been put forward that there could be some tax-related selling pressure in April.

Benefits to the pharmaceutical sector, sparing the software sector from the imposition of any taxes or withdrawal of existing benefits, huge benefits to the housing finance sector and indirectly the cement and steel industries(benefits will be of a long-term nature and little will change for these companies in the short run) and attempts to try and curb the rising fiscal deficit were seen as positive highlights of the 1999-2000 budget for the market. However, certain sections of the market termed the assumptions underlying control of government finances as rather unrealistic.

These developments along with the thrust to UTI has come as a shot in the arm for speculators. It was clear that cigarettes were spared from a hike in excise in part to provide some support to UTI, which is a major shareholder controlling 16 per cent of ITC's equity. ITC closed the day at Rs 835, up from its previous close of Rs 775. Another obvious benefit targeted at UTI is exempting from tax income received as dividend from mutual funds in the hands of the unitholders.

The consumer non-durables sector, comprising of FMCG stocks has also benefited by the rationalisation of excise duties. The dual impact on Hindustan Lever and ITC along with leadingsoftware stocks and pharma stocks was good enough for the Sensex. Despite there being nothing in the form of direct benefits to the software sector almost all the software stocks closed at the circuit breaker.

The benefit extended to the pharmaceutical sector was unexpected. Allowing foreign direct investment of up to 74 per cent to multinational pharma companies in their Indian subsidiaries will mean increased stakes for a number of pharma companies. Companies such as Rhone-Poulenc, E Merck and Parke Davis will benefit the maximum as MNC stakes in these companies are around 40 per cent. These stocks hit the circuit breaker on the news.

Glaxo will also benefit from the 74 per cent direct FIPB clearance. It has now been made mandatory for the FIPB to clear all applications for FDI within 30 days. Further, all pharma companies will benefit from the 125 per cent deduction for income tax purposes on account of R&D expenditure. The other benefits for the company are reduction in excise duty on bulk drugsfrom 18 per cent to 16 per cent. This will, to some extent, be offset by an increase in excise on formulation from 15 per cent to 16 per cent.

A potential benefit for the pharma giant and the others will be the government's intention of diluting the Drug Price Control Order (DPCO), which should lift margins for most of these stocks.

Apart from the pharma sector, a large number of benefits have been handed out to the housing finance sector. One, the maximum deduction for income tax purposes on account of interest paid on housing loans has been increased to Rs 75,000 from Rs 30,000.

Second, HFCs will be taxed on a cash basis, which basically means that they pay tax on income actually received and not on accruals. And third, companies building housing complexes for their employees are now entitled to a higher depreciation rate of 40 per cent from 20 per cent which should benefit mainly the PSUs as well as companies such as Reliance Industries, Tisco etc. There will be an indirect benefit to the HFCs whichwould certainly extend funds for that purpose. But most important in a far reaching measure to the housing finance industry will be the introduction of foreclosure laws and development of a market for mortgage-backed securities.

For a change the budget even talked of encouraging investments in the agricultural sector. Setting up cold storage chains will have the dual benefit of increasing the quality of produce as well as keeping down ex-farm prices. Benefits could come to companies such as Carrier Aircon, Blue Star and Voltas that have the capacity to set up these units while companies like Thermax can benefit from the supply of components such as chillers etc.