Disconnect    |     Deficit     |     Debt    |    Disinvestment   |     Dividend   |    Dispute

deduce ~ reach a conclusion by thinking about the information or evidence that is available

deconstruct ~ reduce something to it’s basic elements in order to interpret it in a different way

Here’s the flow of how we have deconstructed and deduced the Union Budget 2020 for you with a focus on the ‘D’s as above offering you a perspective on each supported by government statistics on record .This a Three Part Scrip Standpoint , each of which is being send separately to reinforce the content


PART I    ~ DISCONNECT ~Declining Economic Growth vs Rising Record Sensex

PART II ~ DEFICIT AND DEBT ~ Dancing with Deficit and are Sovereign Bonds the Solution? PART III ~ DISINVESTMENT ~ (Dis)Comfort with Complacency of a High LIC Valuation

DIVIDEND DISTRIBUTION TAX ~ Reverting to taxing the Recipient

DISPUTE ~ Vivad se Vishwas Scheme ~ One Time Offer for resolving Direct Tax Disputes



Is the Union Budget a Non Event ?

The Sensex may react on the Budget Day as graphically shown below ,but going forward shrugs off this event sentiment and moves on, making the Budget more a Non Event

On Saturday, February 1,2020 we heard the longest ever Union Budget Speech by a Finance Minister when Mrs Nirmala Sitharaman addressed the Parliament from 11 am to pm and feeling exhausted wound up taking the last two pages as read .In her Interim Budget Speech on July 5,2019 there was mention of India becoming a US $ 5 Trillion Economy by 2024/25 and that in the ongoing year itself the GDP would be US $ 3 Trillion.Her Speech on February 1,2020 had no mention of this again .On Saturday, February 1,2020 we heard the longest ever Union Budget Speech by a Finance Minister when Mrs Nirmala Sitharaman addressed the Parliament from 11 am to

The Reason has to be the stark decline in the GDP Growth Rate in the past few quarters and it is concerning that the nominal rate (Real + Inflation) for this ongoing year is just 7.5% from the 12% assumed in the first Budget Estimates last year.

The FM had a tough job balancing the Budget against a Backdrop of declining GDP growth, rising Unemployment and declining Tax Revenues .There is an imperative need to stimulate both the Drivers of our Economy, Investment in Infrastructure and Consumption. Pre Budget, the Government had addressed the first Driver to stimulate Growth by

  • Sacrificing Annual Corporate Tax Revenues to an extent of Rs 1,45,000 crs by slashing the Corporate Tax Rate ~ more on this in PART II
  • Announcing the National Infrastructure Pipeline of Rs 103 lakh Crs or US $ 1.4 Trillion over five years

The First was a Promise made in 2014 ,but in our View ,given the worrying state of our Economy, it could have been deferred for at least another two years. The Second ,may look ambitious ,but is a much needed thrust though raising concerns of funding as the outlay of US $ 1.4 Trillion equals our current Total Government Debt .The Government focus is on raising Sovereign Debt which in turn, in our view raises even more concern which we have highlighted in PART II

Macroeconomic Backdrop

Declining Economic Growth  |   Growing Unemployment   |     Rising Sensex


Date of Budget

(Pre Budget Date Figures)













Interim 1 1/2/19 Interim 2 5/7/19  


Financial Year 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2019/20 2019/20
GDP Rs Crs 12488000 13567192 15075429 16784679 18840731 21100607 21007439 20442233
GDP Growth Rate % 7.2 8.6 11.1 11.3 13.3 12 10.5 7.5
Unemployment Rate % 4.9 5 8.7 4.7 5.5 6.9 7.5 7.3
Fiscal Deficit/ GDP % 4.1 3.9 3.5 3.5 3.4 3.3 3.4 3.8
Sensex Level 25445 29220 23154 28743 34184 35867 39908 40723
Sensex Growth yoy % 34.9 14.8 -20.8 24.1 18.9 4.9 11.3 13.5
Repo Rate % 8 7.75 6.75 6.25 6 6.5 5.75 5.15
Exchange Rate Rs/$ 59.9 61.8 68.6 67.6 63.6 71.1 68.7 71.5
Inflation Rate % 5.9 4.9 4.5 3.6 3.4 3.4 3 4.1/7.3
Forex Reserves $ Bn 316 334 350 362 418 398 428 467
Oil Price $/barrel 102.3 49.8 33.8 52.8 64.7 53.8 56.8 51.6
Gold Rs/10g 28490 26477 29495 28823 30451 33305 34592 41230

Source : RBI,BSE,NSE,CMIE,Budget Documents,Jeena Scriptech Research


The Current Unemployment Rate is 7.3% .The graph below reveals a concern of a much higher Unemployment Rate (UER) in the Youth despite higher labour participation (LPR)

Union Budget 2020 at a Glance

Budget Estimate of GDP for 2020-2021 has been projected at Rs 2,24,89,420 crs assuming

a 10 % growth over the revised estimated GDP of Rs 2,04,42,233 crs for 2019-2020



DISCONNECT ~ Declining Economic Growth vs Rising Record Sensex

Here’s the clear Disconnect between the declining economic growth, Corporate Earnings/GDP and the rising Sensex




Date of Budget



















Interim 1


Interim 2





Financial Year 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2019/20 2019/20
GDP Growth Rate % 7.2 8.6 11.1 11.3 13.3 12 10.5 7.5
Sensex Before Budget 25445 29220 23154 28743 34184 35867 39908 40723
Sensex Growth yoy % 34.9 14.8 -20.8 24.1 18.9 4.9 11.3 13.5

Jeena Scriptech Research


Why this Disconnect ?

Think of Equity as a Table with four Legs being Valuation, Liquidity, Momentum and Sentiment

Despite an alarming decline in the GDP Growth Rates and the Corporate Earnings/GDP Rate as above, the Sensex has risen significantly.

Stock Markets Legs of Momentum and Sentiment have been driven up by the Leg of High Liquidity Inflows from Foreign Portfolio Investment (FPI/FII) and Domestic Mutual Funds (MF) as Statistics below demonstrate.


The High Mutual Fund Inflows into Indian Equity in the years 2017 to 2019 can be attributed as an outcome of Demonetisation in November 2016


FPI Investments – Financial Year

Financial Year

In Rs Crs
Debt-VRR Hybrid Total
Equity Debt
2014-15 111333 0 0 277461
2015-16 -14172 -4004 0 0 -18176
2016-17 55703 -7292 0 0 48411
2017-18 25635 119036 0 11 144682
2018-19 -88 -42357 0 3515 -38930
2019-20 65234 7995 2677 5301 78530
Total 951735 379912 2677 8827 1340471


FPI Net Investments in 2019 and 2020 up to February 6,2020

Calendar Year

In Rs Crs
Equity Debt Debt-VRR Hybrid Total
2019 101122 25882 8995 135995
2020 11051 -13222 2677 -46 460

Source : NSDL

US $ 14 Billion have been pumped by FPIs into Indian Equity in 2019 and in just over a month in 2020 the FPI Inflow has crossed US $ 1.5 Billion

When have we had before, in a Financial Year in this Millenium ,where on a declining GDP Growth Rate,the Sensex has significantly risen ?







Change in GDP



Change in Sensex



FPI Equity Inflows US $ Billion

1999-2000 8.8
2000-2001 3.8 -5.0 -23.8 1.4
2001-2002 4.8 1 -18.3 1.1
2003-2003 3.8 -1.02 3.5 0.4
2003-2004 7.9 4.1 72.6 5.6
2004-2005 7.9 12.4 6.1
2005-2006 7.9 41.8 6.8
2006-2007 8.1 0.2 46.3 3.5
2007-2008 7.7 -0.4 46.7 7.4
2008-2009 3.1 -4.6 -52.5 -6.6
2009-2010 7.9 4.8 79.7 15.3
2010-2011 7.5 -0.4 17.4 15.3
2011-2012 5.2 -2.3 -25.1 6.1
2012-2013 5.5 0.3 25.1 19.5
2013-2014 6.4 0.9 8.5 11.1
2014-2015 7.4 1 29.6 15.5
2015-2016 8 0.6 -5 -2
2016-2017 8.2 0.2 2 7.7
2017-2018 7.2 -1 27.5 3.6
2018-2019 6.8 -0.4 5.9 negligible
2019-2020 4.8 -2 14.08 7.3

Jeena Scriptech Research


The Table highlights a clear disconnect in the past three financial years from 2017-18

In our view, at 4.8% GDP Real Growth in FY 20, we are at a low base and perhaps may see a marginal decline for the next two or three quarters before we once again rebound and resume a sustainable upward momentum in the coming years

Our GDP will surely reach US $ Five Trillion, albeit not by the targeted FY 25 , and with  a prayer that the Rupee remains stable .Any significant weakening of the Rupee will take this target even further away

One thing to keep in mind is that rising Inflation restricts RBI’s ability to further reduce the repo rate in an endeavour to stimulate the economy


Disclosure & Disclaimer



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Daily Bulletin (12th February, 2020)



1.Scrip code : 507944
Name : Bajaj Steel Industries Ltd.
Subject : Board approves Split / Sub-division of Equity Shares
Bajaj Steel Industries Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 12, 2020, inter alia, has recommended the Split/Sub-division of shares of the Company from face Value of Rs. 10 (Rupees Ten) each to Face Value of Rs. 5 (Rupees Five) each, subject to the approval of members of the Company.

2.Scrip code : 500820
Name : Asian Paints Ltd.
Subject : Announcement under Regulation 30 (LODR)-Scheme of Arrangement
We refer to our letter dated 22nd January, 2020, wherein the Company had informed the Stock Exchange(s) that the Board of Directors at their meeting held on 22nd January, 2020, had inter alia, approved the Scheme of amalgamation of Reno Chemicals Pharmaceuticals & Cosmetics Private Limited, wholly owned subsidiary of the Company (‘Transferor Company’) with the Company, subject to necessary statutory and regulatory approvals, including approval of the National Company Law Tribunal, Mumbai. Accordingly, we enclose the below mentioned documents for the purpose of disclosure: Certified True Copy of Scheme of amalgamation of Transferor Company with the Company. Certified True Copy of the Resolution passed by the Board of Directors of Asian Paints Limited at their meeting held on 22nd January, 2020, approving the aforesaid Scheme. This is for your information and record.

3.Scrip code : 526951
Name : Stylam Industries Limited
Subject : Intimation Under Regulation 30 Of Securities Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulation 2015 Regarding Approval Of Scheme Of Amalgamation Of Golden Chem-Tech Limited (The Transferor Company) With Stylam Industries Limited (The Transferee Company) And Their Respective Shareholders, Under Sections 230 To 232 Of The Companies Act, 2013 (‘The Scheme’), Vide Its Order Dated February 11, 2020 By The Hon’Ble National Company Law Tribunal Bench At Chandigarh
We are pleased to inform you that Hon’ble Chandigarh Bench of the National Company Law Tribunal has conveyed its approval for the Scheme of Amalgamation of Golden Chem-Tech Limited (The Transferor Company) with Stylam Industries Limited (The Transferee Company) and their respective shareholders, under sections 230 to 232 of the Companies Act, 2013, vide its Order dated February 11, 2020.

4.Scrip code : 526582
Name : TPL Plastech Limited
Subject : Outcome Of Board Meeting Held On February 11, 2020
Pursuant to Regulation 30 and 33 of SEBI (LODR) Reg., 2015, we wish to inform you that the Board of Directors of TPL Plastech Limited at its meeting held on February 11, 2020, inter-alia, reviewed, considered and approved: 1. The Un-audited Financial Results (Standalone & Consolidated) for the Quarter and 9 months ended Dec. 31, 2019 and Limited Review Report thereon Annexure-A 2. Scheme of Amalgamation between Ecotech Green Lifecycle Ltd (‘Transferor Company’- wholly owned subsidiary) and TPL Plastech Ltd (‘Transferee Company’ Holding Company) as Annexure-B. 3.The Board has not approved the proposal for sub-division of equity shares of the Company therefore alteration in Memorandum of Association of the Company is not required.

5.Scrip code : 540975
Name : Aster DM Healthcare Limited
Subject : Regulatory Approval On The Ownership Structure In Emirate Of Dubai.
With reference to the captioned subject, we wish to inform that the Company received approval of the UAE Government to hold 100% legal ownership in the subsidiaries in Emirate of Dubai, which contributes majority of the GCC business. Earlier, as per UAE law requirements, nationals of the UAE were required to, directly or indirectly, be the legal/registered owners of at least 51% of the share capital of UAE companies and the foreign investors could not acquire more than 49% legal ownership. The Government of UAE has now granted approval of 100% ownership to foreign companies in approved sectors. Subsequently, the Government of UAE released the list of sectors which could hold 100% foreign ownership, in which Healthcare sector was also included. It is further clarified that this activity shall not result in any major cash outflow towards investment since the Company is already holding majority beneficial ownership in those subsidiaries. Kindly take the above said information on record

6.Scrip code : 524804
Name : Aurobindo Pharma Ltd.
Subject : Announcement under Regulation 30 (LODR)-Updates on Acquisition
We refer to our earlier letter dated November 28, 2019 informing about entering into a definitive agreement to acquire certain business assets from Profectus BioSciences Inc., USA., a clinical-stage vaccine development company by Auro Vaccines LLC, 100% subsidiary of Aurobindo Pharma USA Inc., USA, which in turn is 100% subsidiary of the Company. In this regard, we would like to inform you that the aforesaid acquisition has been completed on February 11, 2020.

7.Scrip code : 524370
Name : Bodal Chemicals Ltd
Subject : Announcement under Regulation 30 (LODR)-Acquisition
Bodal Chemicals Limited has informed the Exchange about Acquisition of Shares of Trion Chemicals Ltd and make Trion Chemicals Ltd wholly Owned Subsidiary of Bodal Chemicals Ltd

8.Scrip code : 500114
Name : Titan Company Limited
Subject : Clarification sought from Titan Company Ltd
The Exchange has sought clarification from Titan Company Ltd with respect to news article appearing on www.moneycontrol.com February 11, 2020 titled “Titan acquires HUG Innovations, launches smart watch”. The reply is awaited.

9.Scrip code : 542830
Name : Indian Railway Catering and Tourism Corporation Limited
Subject : Corporate Action-Board approves Dividend
Pursuant to Regulation 30 and 42 of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, this is hereby informed that the Board of Directors of the company at the Meeting held today i.e. Wednesday, February 12, 2020 have declared an interim dividend at the rate of Rs.10/- per share , which is 100% of paid up share capital. Further, the Board of Directors have also fixed Tuesday, February 25, 2020 as the record date for the purpose of payment of dividend. Interim Dividend shall be paid/ dispatched from 2nd March 2020 onwards.