 "Markets extend losses as banks, Reliance weigh")
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(Updated at 1430 hrs)
Markets have reacted to the Budget and slipped around 1% in late noon deals. The Sensex dropped below the 19,000 mark to touch 18,934 - its lowest in three months. The index is now down 137 points at 19,014. NSE Nifty is down 35 points at 5,761.
Finance Minister P. Chidambaram presented one of the most highly anticipated Indian Budgets of recent years on Thursday, as the government looks to contain rising fiscal deficit and restore confidence in Asia's third-largest economy. He 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. He termed FDI as 'imperative'. Faced with huge fiscal deficit, the government has no choice but to rationalise expenditure, for which "battle against inflation must be fought at all fronts". The Securities Transaction Tax (STT) will be reduced on equity future, mutual fund and the Investor Protection Fund set up by depositories will be exempt from tax. Chidambaram said fiscal deficit will be 5.2 per cent in current year and 4.8 per cent in the next fiscal.
Elsewhere in Asia, however, markets remained strong with investors keying into comments from the head of the U.S. Federal Reserve emphasizing an ongoing commitment to monetary stimulus. Hang Sengm Shanghai Composite and Nikkei soared 2-3% each. The yen was defensive, with Japanese Prime Minister Shinzo Abe nominating Asian Development Bank President Haruhiko Kuroda as Bank of Japan governor, and academic Kikuo Iwata as one of the two deputy governors. Both are seen by markets to support Abe's call for unconventional reflationary stimulus measures, and that view has underpinned yen selling.
Back home, BSE FMCG index surged 1.3% to 5,768. Consumer durables and IT indices also remained in green. However, weakness was seen in capital goods, metal and banking shares. BSE capital goods index slipped 2% to 9,299. Oil & Gas index shed almost 2% at 8,621 after the FM promised that oil and gas exploration policy will be reviewed and moved from profit sharing to revenue sharing. He also assured that a policy on exploration of shale gas is on the anvil.
Coal India surged 2.7% at Rs 320 after the state-owned company invited bids from bankers and interested parties for acquiring coal assets overseas. ITC, TCS abd Wipro remained in green.
However, ICICI Bank and SBI accounted for a 77 points loss on the Sensex. This followed the Finance Minister's proposal to continue the interest subvention scheme for short-term crop loans. “The interest subvention scheme for short-term crop loans will be continued and a farmer who repays the loan on time will be able to get credit at 4% per annum,” the Finance Minister P. Chidambaram said in the Budget speech.
Chidambaram had the import duty raised from 75 to 100 per cent on luxury vehicles. Excise duty on SUVs has been increased to 30 per cent from 27 per cent but SUVs registered as taxis are exempted. The auto space has reacted to this news. Tata Motors shed 0.5% at Rs 285. Ashok Leyland was down 0.6%, Escorts and BEML also declined.
The import duty on set-top boxes has been raised from 5 to 10 per cent to safeguard interests of domestic producer. Dish TV shed 1% at Rs 65.40. Den Network tumbled 6%.
The duty free limit on gold has been raised to Rs 50,000 in case of male and Rs 100,000 in case of female. PC Jeweller crashed 6% to Rs 118. However, GItanjali Gems was up3%.
The Specific excise duty on cigarettes and cigars has been raised by 18 per cent. After slipping into the red, shares of ITC have gained 2% at Rs 301.
Among other losers were Jindal Steel, Tata Steel, Maruti Suzuki and Larsen & Toubro. Maruti Suzuki gets removed from the MSCI today. Market heavyweight - Reliance slipped 1.5% at Rs 818.
BSE market breadth turned negative. Out of 2,753 stocks traded, 1,647 shares declined while 987 shares advanced in late trades.