MARKET WRAP: Sensex tanks 395 pts as Budget 2019 fails to cheer investors

All that happened in the markets on the Budget day

Domestic indices plummted on Friday as Modi government's Union Budget for 2019-20 failed to cheers investors. Even though the markets opened higher with the benchmark S&P BSE Sensex zooming past the 40,000 mark to hit 40,032, the index fell over 500 points from the highs. 

The S&P BSE Sensex closed 395 points, or 0.99 per cent, lower at 39,513 levels with the YES Bank, NTPC and Mahindra & Mahindra being the top laggards. The broader Nifty50 index tanked 136 points, or 1.14 levels, to end at 11,811 levels.

In the broader market, S&P BSE Mid-Cap ended 208 points, or 1.39 per cent, lower at 14,726 levels while the S&P BSE Small-Cap dipped 195 points, or 1.36 levels, to settle at 14,142 levels.

Sectorally, all the indices ended in the red except Nifty PSU bank and Nifty Bank index that gained after the finance minister announced that the government will pump in Rs 70,000 crore into public sector banks (PSBs) to strengthen them and enhance their lending capacity.

Metals, realty and auto counters were the biggest losers after the Budget proposed import duty hike for auto-parts, metals and other equipment used for manufacturing capital goods. Each index slipped over 3 per cent. PSU Bank index closed 0.18 per cent higher after gaining nearly 4 per cent intra-day on government's proposal to recapitalize banks.

GLOBAL MARKETS

Asian shares ended hugher in Friday. Japan's Nikkei closed 44 points or 0.2 per cent higher while South Korea's Kospi ended flat with a gain of 2 points or 0.09 per cent.

In the commodities market, Brent CrUde Futures were trading at $63.44 per barrel.

4:55 PM

EXPERT COMMENT | Views on ETFs by Sharekhan by BNP Paribas

“While we still wait for all the specifics, with the inclusion of ETFs, retail investors now have another investment option to enjoy tax deductions under section 80c through long-term investments in CPSEs. While this definitely makes investing in government-owned enterprises more attractive, as before, the investor will still need to make sure to evaluate all available investment options before investing. With so many existing options covered under section 80C, it may not lead to significant flows in these ETFs either. Hopefully going forward, the government will support the retail investor by increasing the deduction limit under section 80C," says Gautam Kalia, Head – Investment Solutions, Sharekhan by BNP Paribas.

4:41 PM

EXPERT COMMENT | Arun Thukral, MD & CEO, Axis Securities

The 2019 budget had lots of expectation built up, this being the first budget of the new Government which had returned with a resounding mandate. Though the FM did not disappoint by continuing with the borrowing and deficit targets set in the interim budget to contain the fisc, the immediate steps needed to energize the economy were missing. The diversification of government borrowings with an increased share of sovereign external debt in external currencies was a welcome move. This move was cheered by the bond markets as this would in-turn help to reduce the crowding out of private borrowings and reduce the cost of funds for India Inc. There was not much relief for the middle-class in the budget. Additional cess of Rs. 1 on petrol & diesel acted as a dampener. However, focus on education, through the new education policy, and infrastructure development to elevate the living conditions across society. Overall, the budget ended up as just another event. I would rate it as 6 on a scale of 10.

4:39 PM

BUDGET REACTION | Views on IT sector by Edelweiss Securities

The Government of India announced the full-fledged union budget for FY19–20 today (after the interim one before the elections). We believe the following announcements may have a negative impact on the IT sector: 1) increase in minimum public shareholding in listed companies to 35%, from 25% currently; and 2) proposal to levy a 20% tax on share buybacks. Only few IT companies have public shareholding of less than 35% – including TCS (promoter holding: 72%), Wipro (73.4%), and LTI,LTTS (75%) – and are accordingly ‘vulnerable’. While the proposed tax on share buybacks is negative prima facie, we reckon there is little scope for major market value erosion for companies under our coverage. Maintain ‘BUY’ on Infosys, HCL Tech and TechM, and ‘HOLD’ on ‘TCS’ and ‘Wipro’.

4:01 PM

MARKET COMMENT :: Rohit Singre, Senior Technical Analyst - LKP Securities

The index opened higher but was unable to manage around highs and showed strong profit-booking post budget and closed the week at 11,811 with gains of 0.19 per cent forming grave stone doji kind of candle pattern on weekly chart suggesting indecision in the markets. Now, the index has good support near 11,725-11,640 zone any break below 11,640 zone we may see more pressure, resistance for the index is coming near 11,900-11,890 zone. Nifty Bank closed the week at 31,476 zone with gains of 1.20 per cent and formed shooting star kind of candle pattern on weekly chart. The index has an immediate support near 31,300-31,100 zone and resistance is coming near 31,660-31,790 zone. 

3:53 PM

Sectoral gainers and losers on NSE

3:52 PM

Top gainers and losers on S&P BSE Sensex

3:37 PM

Market at close

The S&P BSE Sensex ended at 39,513, down 395 points while the broader Nifty50 index settled at 11,811, down 136 points.

3:23 PM

Nifty IT index dips 2% as govt proposes to extend buyback tax to listed cos

Shares of information technology (IT) companies were under pressure with Tata Consultancy Services (TCS), Infosys, Wipro and HCL Technologies down nearly 5 per cent on the National Stock Exchange (NSE) on Friday in intra-day trade, after Finance Minister Nirmala Sitharaman proposed to extend the buyback tax at 20 percent to listed companies as well. At 02:33 pm, Nifty IT index was down 2.5 per cent, as compared to a 0.88 per cent decline in the benchmark Nifty 50 index. READ MORE

3:20 PM

BUDGET 2019 | Rs 12,000 cr additional revenue gain from hike in surcharge on income tax: Revenue Secretary

3:19 PM

BUDGET 2019 REACTION :: Mustafa Nadeem, CEO, Epic Research

The budget in the overall scenario seems very balanced at this point in time. The increase in holding of up to 35% in listing companies is going to improve depth as well as make various listed companies available to retail participants. It will also attract foreign investment. Secondly, the additional 1.5 lakh exemption for homeowners on interest paid is a welcome move.

This may have long term benefits for space as well as buyers and owners. We believe another good move that is seen in the budget is to focus on spending in infra and construction space. Opening up various routes for foreign investment and further easing the routes will bring in more long term investment in this space. The massive investment of 100 lakh crore for the next five years will boost the space and bring in more demand which has seen a slump in the last few months.

With that, The rural boost of 1.95 cr houses is certainly going to improve demand for space like steel and aluminum, cement and its allied space. The reduction in tax for companies up to 400 cr is a welcome move but it could have been increased. We believe the only problem is with a 3.3% fiscal deficit number. In the current scenario with GDP projection at 7% it may see some variation. The PSU space is certainly a gainer with an increase in the limit to sectoral limit and a further 70k boost for PSU bank space will make select PSU banks a lucrative play.   

3:15 PM

Market check

3:14 PM

BUDGET 2019 | Govt has a comprehensively thought-out solution for NBFCs: Nirmala Sitharaman

-- NBFCs are important componenet of financial sector 

3:13 PM

EXPERT VIEW | Nikhil Kamath, Co-Founder & Chief Investment Officer, Zerodha

Union Budget 2019 was largely a non-event, especially from a financial markets perspective. The reforms we expected on STT did not come through. STT continues to remain the largest deterrent in price discovery, jobbers, and short term day traders make the markets deeper and significantly reduce impact costs. STT is a hindrance to this populous making it harder for them to thrive.

 

Personal income tax largely remained unchanged, an increase in the surcharge for those having an income of above five cr is par for the course. To discourage the practice of making business payments in cash, a 2% tax to be levied on cash withdrawal exceeding Rs 1 crore in a year from a bank account. This makes sense too and can be considered as positive.

 

Reduction in the corporate tax rate is also positive. All in all, it was a status quo budget where no seminal reforms came through.

3:12 PM

BUDGET 2019 | FM Sitharaman says, budget focuses on making urban living better

3:11 PM

BUDGET REACTION | Views on Banking Sector by ICRA

"The higher-than-expected capital support to the public sector banks in FY20 reiterates the GOI’s intent to bring them out of PCA and also provide with growth capital. The proposed high levels of GOI serviced bonds remains a dampner though the GOI’s intention to raise part of its borrowing programme and expectations of meeting the fiscal deficit targets should help cool the yields in the domestic market. An early implementation and clarity on the contours of the proposed partial credit enhancement by the GOI for pools bought by public sector banks from NBFCs would aid the liquidity flow to the currently beleaguered sector," says Karthik Srinivasan, Senior VP and Group Head - Financial Sector Ratings, ICRA.