Tripped by fineprint

STOCKS REPORT

After the Budget induced high on Monday, the markets tripped on Tuesday on the 'fringe' tax issue.

Though the market was largely happy with the Union Budget, some concerns have cropped up after the fineprint was understood, brokers said.

Investors booked profits in blue chips after the Bombay Stock Exchange (BSE) Sensex hit an all-time high on Monday.

While the announcement of a cut in corporate tax and the emphasis on both rural and urban infrastructure development were taken as the positive steps in the Budget, some sector specific concerns could lead to portfolio churns, they added.

Opening in positive territory, the benchmark Bombay Stock Exchange (BSE) Sensex closed lower as investors booked profits at all levels. Technology, banking, oil and metal counters were among the biggest losers on the day.

Select FMCG and capital goods companies were in the limelight on Tuesday. In the BSE Sensex basket, 22 out of the 30 scrips closed lower. The breadth of the market was also negative, with losers outpacing gainers 16:9.

The BSE Sensex hit an all-time high of 6725.92 and a low of 6628.22 in intra-day trades before closing at 6651.08, down 62.78 points (0.94 per cent) from Monday's close.

Volumes were lower than on Monday in the cash segment of the bourses; the BSE reported a turnover of Rs 2,322.55 crore and the NSE reported a turnover of Rs 5,274.73 crore.

Kashyap Pujara, AVP at Sushil Stock Broking said, "Though some concerns in certain sectors such as oil and gas do exist, there are no major Budget concerns. It was the profit taking that dragged the market down on Tuesday. The fringe tax may play spoilsport in the near term."

But a Foreign broking firm in its post Budget review said, "The FY06 Budget did not provide the 'big-bang' that was expected from the 'dream-team'. The benefit of reduction in corporate tax rate has almost been fully negated by a rather cumbersome tax on 'fringe benefits'. Likewise reduced costs for capital investment (arising from cut in import duty on capital investment) will be offset by a cut in depreciation rate."

Satyam Computer was the biggest loser in the Sensex basket, down 4.10 per cent to close at Rs 394.50, followed by Wipro, down 3.33 per cent to Rs 675.85, Hindalco fell 3.14 per cent to Rs 1,350.70, Tata Power was down 3.05 per cent to Rs 395.45 and Zee Telefilms fell 3 per cent to Rs 137.60.

L&T was the biggest gainer in the Sensex basket, rising 4.66 per cent to close at Rs 1,136.30, followed by ITC, up 3.34 per cent to Rs 1,337.85, ONGC was up 1.49 per cent to Rs 864.45, HLL was up 1.42 per cent to Rs 146.05 and Bajaj Auto gained 1.16 per cent to Rs 1,045.30.

Foreign institutional investors were net buyers of Indian shares worth Rs 342.80 crore on Friday as per data from the Securities and Exchange Board of India website. Strong buying support from foreign funds has helped the market record gains.