The markets gave a resounding thumbs-up to the much anticipated annual budget by galloping by more than 4% in a volatile week of trade. The Sensex swung in a range of around 1000 points between a high of 18,736 and a low of 17,718 before ending at 18,486, higher by 785 points or 4.4% in a holiday-truncated week following the Mahashivratri holiday on Wednesday. The Nifty moved in a range of 300 points, from a low of 5309 to a high of 5608 before eventually registering weekly gains of 235 points at 5539. The midcap index ended at 6592, higher by 3.7% and the smallcap index ended at 7998, up 2.6%.
This was a reassuring Budget from the Manmohan Singh government as it maintained the focus on the social sector and infrastructure while simultaneously seeking to keep a tight lease on spending by way of reducing the fiscal deficit target for the year ending March 2012 (fiscal deficit target of 4.6% for the year ended March 2012 as against 5.1% for FY11) and unveiling a lower-than-expected net borrowing programme.
The markets yo-yoed more than 600 points on Budget day as participants sought to make sense of Pranab Mukherjee's Budget proposals before ending with gains of about a percent. But as the fine print became clearer, the Sensex registered its biggest single-day gain in 21-months on the day after the mega-economic event, catapulting by as much as 623 points. From thereon, it was a just a matter of consolidating the gains and the benchmark indices proved true to the task. In the process, the benchmark indices turned a Nelson's eye to the not-so-enthusing cues from the global front, with crude oil back the 100 mark on account of the continued strife in Libya and dire prognosis for other oil-rich Middle-Eastern countries such as Saudi Arabia.
There was good news on the macro-economic front as well. The GDP rose by 8.2% for the December 2010 quarter as against 7.3% in the corresponding period of the previous year, but slowed down from the previous quarter's figures of 8.9%. The mining sector growth stood at 6% vs 5.2% on a y-o-y basis and the farm sector growth shot up to 8.9% vs -1.6% during the period, while the construction sector declined marginally to 8% from 8.3%.
And food inflation declined by more than one percentage point to 10.39% for the week ended February 19, led by a drop in the prices of onions, potatoes and pulses. Food inflation stood at 11.49% in the previous reporting week and 21.62% in the corresponding period a year ago. According to data released by the government, prices of potatoes declined by 12.66% year-on-year, while pulses fell by 5.02%, onions by 3.64% and wheat by 2.06%.
The BSE auto index spurted by 8% at 8919, banking index soared by 5% at 1244 and the FMCG index jumped 6% at 3508 during the week.
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Auto stocks received a boost as the government left the excise tax unchanged in its budget proposals. And a sterling set of sales numbers only added to the cheer surrounding the suto counters. M&M soared by 13.6% at Rs 676 to top the gainers list on the BSE and the auto index. Maruti Suzuki surged 12.2% at Rs 1313 after total vehicle sales rose 15.5% to 1.11 lakh units in February 2011 over February 2010. And Bajaj Auto advanced 7.2% at Rs 1377 as total sales rose 21.7% to 3.26 lakh units in February 2011 over February 2010. Tata Motors and Hero Honda Motors were the other significant gainers in the auto space.
Banking pivotals rose due to the renewed trust on financial sector reforms, signified by the Union Cabinet's clearance to the Banking Regulation (Amendment) Bill 2011, which will now be placed for parliament's approval. HDFC galloped by 8.7% at Rs 681, HDFC Bank soared by 8.4% at Rs 2218 and SBI jumped by 4.5% at Rs 2700.
In the FMCG space, ITC soared by 10.4% to Rs 156 in the absence of an excise duty hike on cigarettes and other tobacco products. Hindustan Unilever also followed suit, gaining 2.6% at Rs 286.
The only two losers on the BSE were Reliance Infra (lower by 4.9% at Rs 606) and Bharti Airtel (down 0.7% at Rs 326).
In the midcap space, Bajaj Finserv zoomed by 28% at Rs 544, Essar Shipping soared by 26% at Rs 89 and Deccan Chronicle jumped by 20% at Rs 72. Gujarat Gas, Sadbhav Engineering and Triveni Engineering were the other significant gainers.
And in the smallcap space, Vindhya Tele strengthened by 28% at Rs 262, JB Chemicals gained 25% at Rs 138 and KRBL added 25% at Rs 29.