The benchmark indices successfully navigated their way through choppy waters and Thursday's pounding to end with marginal gains ahead of the annual budget on Monday. The Sensex oscillated in a range of a more than 300 points as the gains triggered by an upbeat economic survey were nullified by an insipid railway budget presented by Mamata Banerjee, before ending at 17700, higher by 68 points and the Nifty shut shop at 5303, up 40 points. There was divergence on the broader market front, though; the midcap index ended at 6353, lower by 14 points and the smallcap index ended at 7789, down 24 points. Geopolitical concerns, among other things, had spooked the BSE benchmark by more than 500 points in Thursday's session.
Earlier in the day, the Economic Survey for financial year ending March 2011 forecast a strong economic growth of 8.75%-9.25% for the year ending March 2012. The GDP is expected to grow at a rapid pace in the next two years and agriculture is set to rise at 5.4% in FY11. The fiscal deficit for 2010-11, the Survey says, will be 4.8% of the gross domestic product or GDP, much lower than Mukherjee' Budget estimate of 5.5%. The Economic Survey also spoke about introducing the Direct Tax Code (DTC) in April 2012.
However, the railway budget was populist at best. Mamata Banerjee ignored the mounting deficit of the railay behemoth and instead, chose to pander to electoral considerations with an eye on the upcoming assembly elections in West Bengal. The populist measures announced by the minister included the introduction of 56 new trains in FY-12 and a target of adding 700 km of rail line annually compared to the current 150 km.
On the global front, oil eased below $111 as leading world exporter Saudi Arabia sought to assure key importers that it would fill any supply shortfall left by beleaguered fellow OPEC member Libya, soothing fears over a disruption in supplies that had carried prices to a 2-1/2-year high a day earlier. And Asian stocks nudged higher as a result. Hang Seng and Straits Times spurted by nearly 2% each, while the Nikkei, Seoul and Taian indices added in the region of a percent each. And the European markets also had a positive opening, with the FTSE, CAC and DAX gaining in the region of about half a percent each.
Meanwhile, the finance minister Pranab Mukherjee said the markets need not worry over global oil price uncertainty and indicated that Monday's Budget may ease taxes and rationalise subsidies to cushion the impact of surging global oil prices.
The banking index gained more than a percent after the Economic Survey proposed to consider separate licences for basic and full banking services. ICICI Bank spurted by 3.5% at Rs 987 and SBI jumped by 2% at Rs 2583. The other banking players, including Canara Bank, Axis Bank, Bank of Baroda, Bank of India, State Bank of India, Union Bank of India, IDBI Bank and Punjab National Bank, gained in the region of a percent each.
Infrastructure stocks rose on expectations of increased orders as the annual economic survey stressed on infrastructure development. GMR Infrastructure, IVRCL Infrastructure, Gammon Infrastructure Projects and Lanco rose in the region of 1-5% each.
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On the other hand, the ADAG stocks had a weak session of trade. RCom cracked by 5.4% at Rs 87, Reliance Infra slumped by 4.5% at Rs 638 and Reliance Power lost 1.6% at Rs 109.
And railway related stocks faced huge selling pressure today after the announcement of Rail Budget. Titagarh Wagons, Kalindee Rail Nirman and Hind Rectifiers were down more than 10% each, Texmaco and Stone India fell 8% each and Kernax Microsystems and Bharat Earth Movers Ltd dipped by 5% and 3% respectively.
MphasiS tanked 28% at Rs 448 after its consolidated net profit dipped by 16% to Rs 227 crore in the quarter ended January 31, 2011, compared to Rs 268 crore in the corresponding quarter of the previous year. And Unitech lost 2.3% at Rs 33 after plunging more than 9% earlier in the day on reports that the Central Bureau of Investigation (CBI) questioned senior Tata director R K Krishna Kumar on the group's alleged links to the 2G scam. Krishnakumar is the chairman of Tata Realty and Infrastructure, which had invested Rs 1,600 crore in Unitech.
The market breadth was weak. Out of 2962 stocks traded on the BSE, there were 1273 advancing stocks as against 1589 declines.