A clutch of tax proposals in the Budget 2016 gave the market some anxious moments as the benchmark Sensex today reeled under heavy losses but recovered just in time to end lower by over 152 points on some buying support from domestic institutions.
Sentiment was hit mainly by a proposal for a higher dividend distribution tax on those earning more and a one on raising securities transaction tax in some categories.
Jaitley proposed 10 per cent tax on dividends above Rs 10 lakh and raising securities transaction tax (STT) to 0.05 per cent from 0.017 per cent.
Putting all speculation to rest, Finance Minister Arun Jaitley today chose to play safe and opted for fiscal prudence by proposing to keep the deficit at 3.5 per cent of GDP in 2016-17.
There were sharp fluctuations throughout though, with the market swinging as much as close to 850 points. Intra-day, it tanked nearly 660 points.
Soon after, buzz of a rate cut by RBI grew louder and helped improve sentiment.
The 50-share Nifty cracked below the 7,000-level.
A senior Finance Ministry functionary said the Budget can not be dictated by the markets.
"It is high time the North Block stopped looking at markets to see whether the Budget is good or bad," he added.
The BSE Sensex started on a higher note and ended at 23,002, a fall of 152.30 points, or 0.66 per cent.
On the Budget day in 2015, the Sensex had gained 141.38 points.
The NSE Nifty ended at 6,987.05, down 42.70 points, or 0.61 per cent. It hovered between 7,094.60 and 6,825.80.
"In the near term, the setbacks are PSU banks' recapitalisation of Rs 25,000 crore is below estimate, hike in STT for F&O options, DDT for HNIs, no reduction in tax for corporates and no draft about introduction of GST," said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.
Auto companies saw selling pressure and fell up to 4.88 per cent after Jaitley proposed to levy an infrastructure cess of up to 4 per cent on various categories of vehicles. Major losers were Maruti Suzuki, Tata Motors and M&M.
Cigarette stocks, led by ITC, too reeled, plunging by up to 8 per cent as excise duty on various tobacco products other than beedi was raised by about 10-15 per cent in the Budget.
Mood got a lift after a budgetary allocation of nearly Rs 36,000 crore for the farm sector and a higher credit target aimed at doubling farmer incomes in five years.
In the agriculture segment, Kaveri Seed Company and Rallies gained big, but Jain Irrigation and Monsanto India succumbed to profit-booking and ended lower.
Besides, the government's plan to defer implementation of the General Anti-Avoidance Rule (GAAR) from April 1, 2017 had a positive impact, they said.
Among Sensex losers, ONGC, BHEL, Infosys, L&T, Axis Bank, HUL, Wipro, Adani Ports, Sun Pharma, Cipla, TCS, Asian Paints, NTPC and Coal India fell by up to 9.72 per cent.
As many as 20 out of the 30-share Sensex pack lost while 10 led by ICICI, HDFC Bank, RIL, Lupin and HDFC rose.
Among BSE sectoral indices, infrastructure fell by 2.12 per cent, followed by IT 2.11 per cent and technology 2 per cent, while capital goods tripped 1.99 per cent, consumer durables 1.75 per cent and oil and gas 1.50 per cent.
Other Asian indices ended in the negative zone while Europe was trading lower.
The mid-cap and small-cap threw up a mixed trend, with the
former inching up 0.03 per cent and the latter edging lower by 0.07 per cent.
The Sensex and Nifty have fallen 6,359.50 points, or 21.65 per cent, and 1,914.80 points, or 21.51 per cent, respectively since the previous Budget of 2015-16.
IDBI Bank surged 5.03 per cent after Jaitley in his Budget speech said the government will look at reducing stake in the lender.
Foreign portfolio investors (FPIs) sold shares worth net Rs 695.37 crore last Friday, according to provisional data of the stock exchanges.
The market breadth remained negative as 1,398 stocks ended lower and 1,085 closed higher while 156 went flat.
The total turnover went up sharply to Rs 4,656.10 crore, from Rs 1,923.55 crore last Friday.
