High fiscal deficit weighs on market

Markets ended over 1% down on Friday amid a volatile trading session as high fiscal deficit forecast of 5.1% of the gross domestic product (GDP) for 2012-13 weighed on market sentiment.

The Sensex ended down 209 points or 1.2% at 17,466 and the Nifty ended down 63 points or 1.2% at 5,318.

On the global front, Asian markets ended mixed with Shanghai Composite and Nikkei gaining and rest of the markets in the region ending in negative terrain. European markets were trading with marginal gains.

As regards the capital markets, the government today lowered the securities transaction tax (STT) to 0.1%, a move that will bring down costs of equity transactions.

In the personal tax section, the Finance Minister has raised the exemption limit from Rs 1.8 lakh to Rs 2 lakh. Further, Income from Rs 2-5 lakh - tax will be 10%; income from Rs 5-10 lakh - tax will be 20%; and above Rs 10 lakh - tax of 30 % he said.

Top losers on the Sensex were oil and gas shares with index heavyweight Reliance Industries leading the fall on concerns of falling natural gas output from it KG-D6 field. ONGC fell sharply after the Finance Minister proposed a cess on crude oil. The Finance Minister has revised the cess on crude petroleum oil produced in India to Rs 4,500 per metric tonne.

Among other Sensex shares, capital goods majors L&T and BHEL both ended over 3% down. Bank shares such as SBO and ICICI Bank which had firmed up on the back of encouraging GDP growth forecast of 7.6% for 2012-13 witnessed profit taking in late trades to end lower.

Auto shares have firmed up after no announcement of excise duty on diesel cars. However, standard excise duty rate was increased from 10% to 12%, which was on expected lines and duty on large cars was raised from 22% to 27%. M&M rose 2.7% and Maruti Suzuki gained 0.5%.

I-T-C was the top Sensex gainer up 3.6% after the Finance Minister proposed to reduce customs duty on cigarettes in Union Budget which was on expected lines.

Among other shares,Standard Chartered IDR ended up 20% at Rs 94.20 on IDR fungibility announcement.  Standard Chartered has benefited from the Indian Depository Receipts (IDR) fungibility announced by the FM. This allows arbitrage between Indian listed company and its foreign parent.

Shares of textile companies have rallied on the bourses after the Finance Minister Pranab Mukherjee proposed different sops for the textile industry, especially the weaving sector. Suryavanshi Spinning Mills rallied 16%, followed by RSMW and Filatex India (up 10% each), Priyadharshini Spinning Mills (up 8%), Welspun India (up 7%) and Amarjothi Textiles (up 6%) on the Bombay Stock Exchange.

The Finance Minister proposed to fully exempt automatic shuttle-less looms from basic customs duty of 5%. Similarly, full exemption from basic duty is being accorded to automatic silk reeling and processing machinery as well as its parts. It is also proposed to restrict these exemptions and the existing concessional rate of basic customs duty of 5% only to new textile machinery. Second-hand machinery would now attract basic duty of 7.5%.

The broader market also ended weak with the Mid-cap index ending down 0.7% and the small-cap index down 1.1%. The market breadth on the BSE also ended weak with 1,801 declines and 1,044 advances.