Terming the budget as populist and aimed to woo voters ahead of general elections due by May, analysts said it had nothing in store for corporate India.
“It was a disappointing session for the market as nothing emerged from interim budget. Traders were expecting seven year tax holiday for gas producers but it didn’t happen. Reduction in corporate tax also didn’t materialise. These were the major setbacks. There is a possibility of weakness in energy stocks Reliance Industries, Cairn and ONGC and GAIL but broad based weakness is not expected. We expect the market to be subdued for next two-three sessions and then it will start following global markets,” said Satish Kannav, senior analyst, Arihant Capital Markets.
What emerged as a worry from acting Finance Minister Pranab Mukherjee’s budget was the expected rise in fiscal deficit to 6 percent of GDP in 2008-09 from a planned 2.5 per cent. This could keep away foreign investors, already wary of emerging markets.
Mukherjee projected a fiscal deficit of 5.5 per cent in 2009-10 but hinted at a rise as government spending may jump later this year to shield the economy from a global slump and stem job losses.
The Bombay Stock Exchange’s Sensex ended at 9,305.45, down 329.29 points or 3.42 points. The index fell to a low of 9,279.10 from a high of 9,637.04.
National Stock Exchange’s Nifty lost 3.39 per cent or 99.85 points to 2848.50, falling from a high of 2953.20. The low was 2839.10.
Secondline stocks were equally affected, with the BSE Midcap Index ending 2.93 per cent lower and BSE Smallcap Index losing 2.1 per cent.
“As long as the market holds support at 2850/9300-9400 (Nifty/Sensex), strong hands will absorb the selling and will help to remain aligned with global markets. Weak hands created shorts at higher levels on temptations but it will be wise to wait for the next two sessions to ascertain whether the market has actually entered a downturn,” Kannav added.
Sectorwise, BSE Metal Index, down 4.75 per cent, was the worst hit, followed by BSE Realty down 4.58 per cent, BSE Bankex down 4.58 per cent and BSE Capital Goods down 4.55 per cent.
Jaiprakash Associates (-7.88%), Reliance Infrastructure (-6.35%), ICICI Bank (-5.79%), Reliance Communications (-5.78%) and Larsen & Toubro (-4.96%) were the major Sensex losers.
I T C, up 0.95 per cent, was the only Sensex gainer.
Elsewhere, European stocks were in the red tracking Asian peers while US stock markets are shut for President’s Day.
Courtesy: economictimes.indiatimes.com
