Lackluster Budget dampen markets sentiment; Sensex tumbles below 18,900 mark

The much awaited Union Budget 2013-14 proved to be a depressing one for the stock markets in India with both the frontline indices clobbered out of shape, ending the session with a cut of over a percent. Though, Indian stock markets commenced the day on a promising note with a positive start but, got underpinned soon after the Finance Minster started divulging the details of Union Budget 2012-13. Just when it looked like the benchmark equity indices would spurt to higher levels sailing beyond the psychological 19,300 (Sensex) and 5,850 (Nifty) levels, sentiments got spooked after P Chidambaram said that current account deficit continues to be high due to excessive dependence on oil, coal and gold imports and slowdown in exports and that India does not have choice between welcoming and spurning foreign investment. Sentiments also got clobbered after the budget 2012-13 proposed increasing some corporate and individual taxes and after securities transaction tax was lowered but not eliminated.

Sentiments also remain dampened after shares of most of the frontline banking stocks including public and private sector edged lower on the bourses after the Finance Minister proposed to continue the interest subvention scheme for short-term crop loans. Scrips of State Bank of India, ICICI Bank, Punjab National Bank, Bank of Baroda, Axis Bank, Canara Bank and IDBI Bank all tumbled by 3-6 percent. Meanwhile, market registered highest-ever turnover at Rs 4.22 lakh crore breaching its previous record of Rs 4.16 lakh crore. This could be a combination of a lackluster Budget plus February F&O expiry.

Investor also shrugged off supportive global cues. European counters traded with traction in the early session on Thursday while, all the Asian counters ended in the green terrain tracking overnight cues from the Wall Street. US stocks had ended higher on Wednesday on upbeat economic data and the Federal Reserve chief’s commitment to lose the monetary policy.

Back home, both the key gauges ended near their intraday low as sentiments got dampened, with the power generation stocks tumbling after the Finance Minister P Chidambaram proposed to levy 2% customs duty on coal imports. Meanwhile, investors booked hefty profits in realty counters as stocks like HDIL, Unitech, D B Realty, Godrej Properties, Peninsula Land and Parsvnath Developers edged lower after the Finance Minister P Chidambaram proposed to levy TDS of 1 percent on the value of the transfer of immovable property where the consideration exceeds Rs 50 lakh.

Some pressure also came in from selling in Metal counters after the Finance Minister proposed to levy commodity transaction tax on non agri-commodities futures. Besides, carmakers too suffered major blow from the proposal of hiking the excise duty on SUV’s to 30 percent. However, the budget got good news for textile stocks as FM proposed Rs 2,400 crore for textile technology up-gradation. Additionally, Education stocks too hogged lime light after Chidambaram proposed to allocate Rs 65,877 crore to the industry; representing 17% hike from 2013.

The NSE’s 50-share broadly followed index Nifty tumbled by over hundred points to end below the psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex-- crumbled by about three hundred points to finish below the psychological 18,900 mark. Moreover, broader markets too butchered badly during the trade and ended the session with a massive cut of 1-2 percent.

The overall volumes stood above Rs 4.22 lakh crore, which remained on the higher side as compared to that on Wednesday. The market breadth remained in favor of declines as there were 857 shares on the gaining side against 1,973 shares on the losing side while 101 shares remain unchanged.

Finally, the BSE Sensex shaved off 290.87 points or 1.52% to settle at 18,861.54, while the CNX Nifty plunged by 103.85 points or 1.79% to end at 5,693.05.

The BSE Sensex touched a high and a low of 19,322.28 and 18,793.97, respectively. The BSE Mid cap index down by 2.46% and Small cap index was down by 1.97%.

The top gainers on the Sensex were, TCS up by 2.14%, Bharti Airtel up 0.62%, Tata Motors up 0.49%, Sun Pharma up 0.40% and Bajaj Auto up 0.35%, while SBI down by 5.80%, Tata Steel down by 4.04%, ICICI Bank down by 3.86%, Maruti Suzuki down by 3.74% and L&T down by 3.17% were the top losers on the index.

The top gainers on the BSE Sectoral space were, Consumer Durables (CD) up 0.85%, IT up 0.47% and TECk up 0.11%, while Power down 4.29%, Bankex down 3.59%, Capital Goods (CG) down 3.39%, Metal down 2.95% and PSU down 2.81% were the top losers on the sectoral space.

Meanwhile, with the level of bilateral trade and investment between India and Russia remaining below its potential, President Pranab Mukherjee has called upon the two countries to make concerted efforts to take their two-way trade to $20 billion by 2015.  Mukherjee, who met a parliamentary delegation from the Russian Federation on February 25, said that India-Russia ties were strong in diverse areas such as energy, defence, space, trade and economics, science and technology, culture and people-to-people ties, but the level of bilateral trade and investment, however, remained below potential.

He stated that Russia is a key partner and friend of India for many decades and that the India-Russia privileged strategic partnership was a unique and multi-dimensional relationship, characterized by stability and warmth. By adding further he said, that Russia remains a key priority for India's foreign policy and the India-Russia Strategic Partnership reflects its remarkable convergence of interests in bilateral spheres as well as on the global stage.

He said, ‘India would like to see greater parliamentary exchanges between our parliaments at all levels. Frequent exchanges between the federal legislatures of both the countries can add another dimension to our vibrant and dynamic relationship.’ Frequent exchanges between the federal legislatures of both the countries can add another dimension to our vibrant and dynamic relationship.

Even, the leader of the Russian parliamentary delegation, Matvienko said that India would remain a reliable and true friend of Russia, and the bilateral relations between these two countries had stood the test of time.

The CNX Nifty touched a high and a low of 5,849.90 and 5,671.90 respectively. 

The top gainers on the Nifty were TCS up by 2.53%, Bharti Airtel up 1.01%, Bajaj Auto up 0.96%, HCL Tech up 0.71% and Kotak Bank up by 0.69%.

On the flip side, the top losers of the index were, Reliance Infra down by 9.44%, SBI down by 5.08%, Ranbaxy down by 4.95%, Bank of Baroda down by 4.64% and IDFC down by 4.49%.

The European markets were trading in green, France’s CAC 40 up by 0.22%, United Kingdom’s FTSE 100 up by 0.16% and Germany’s DAX up by 0.50%.

Tracking Wall Street’s rally, Asian markets went home with strong gains, as head of European Central Bank consoled worries over the euro zone. Japan’s Nikkei ended higher as the yen sank on confirmation that Japan's government had put forward Haruhiko Kuroda to take over at the Bank of Japan. Chinese markets too closed higher, while the Hang Seng also ended in positive territory. However, bucking the trend, Indian equity markets missed the broad uptrend and slid lower on proposal of higher taxes on wealthy individuals in his annual budget.