Markets gave a big thumbs-down to budget as the benchmark Sensex tanked over 900 points, which analysts said was triggered by Finance Minister Pranab Mukherjee's pegging higher fiscal deficit for 2009-10.
"The Budget proved to be a low-on-deliverance affair and this was magnified on account of the huge expectations that the market had built from it."
"Budget is silent on the timeline for tackling the fiscal deficit position of the country, and the reforms process announcements expected from it which would have aided in handling the fiscal situation of the government," Angel Broking CMD Dinesh Thakkar said.
"Bond markets would have to grapple with a higher than expected gross borrowing programme of Rs 4,50,000 crore. There is an expectation that all the extra borrowing will be front ended and completed in the remaining three months of the first half when the liquidity is good," added ICICI Securities Primary Dealership MD & CEO B Prasanna.
The BSE Sensex, which plummeted over 950 points in intra- day trade, finally settled 869 points down at 14,043 points.
Analysts stated that the budget failed to cheer the market as it did not talk of reforms, which the market participants were expecting since the UPA government returned to power.
Avinash Gupta, Assistant Vice-President Research Equity, Bonanza Portfolio said, "The budget failed to deliver on expectations as market in its optimism had failed to realize the ground reality. The budget suggests that the economic recovery is still fragile and accordingly Finance Minister has retained sops provided earlier to keep the growth going."
Finance Minister Pranab Mukherjee while announcing the budget today said the government will come back to the path of fiscal consolidation at the earliest.
The Centre's fiscal deficit is estimated to widen to 6.8 per cent of GDP in the current fiscal against a meager 2.5 per cent projected a year ago.
Unicon Financial CEO G Nagpal said, "The market was disappointed on concerns of the source of funds which the government has allocated to the infrastructure sector. Market participants had expected some kind of policy roadmap as to how the government would fight the fiscal deficit but there was no clarity on that front."
The budget has not given any timeline for containing the fiscal deficit and allowed the fiscal deficit to slip in the current fiscal," Gupta added. Further, Nagpal said Indian markets had been better placed than its global peers in the past two to three trading sessions. A correction was inevitable and today's Budget acted as a double whammy for the market.
Leading brokerage firm Sharekhan Research head Gaurav Dua said, "The Budget has fallen short of high market expectations. The street has reacted negatively to issues such as projected fiscal deficit of 6.8 per cent and more importantly there is no roadmap to bring it down."
Further, there is no mention of reforms in petroleum and insurance sector and absence of focus on aggressively pushing ahead the disinvestment programme, Dua added.
Another brokerage firm Prabhudas Lilladher Managing Director Dilip Bhat said, "The stock markets have pronounced the judgement very unambiguously with a 6 per cent fall in worries of consequences of huge fiscal deficits and also the perception that the status quo budget lacks the vision to take the economy further."
The Finance Minister said, "While retaining at least 51 per cent government equity in our enterprises, I propose to encourage people's participation in out disinvestment programme." He, however, added that the PSUs such as banks and insurance companies would remain in the public sector.
"Overall there is not much negative and the market has corrected only because there were larger expectations. We strongly believe that market will recover," CNI Research CMD Kishore Ostwal said.
