 "Budget fails to lift markets, back to global cues say experts")
The Union Budget failed to lift the stock markets with benchmark indices ending near their 21-month lows. The government's promise to stick to the fiscal deficit target helped the bond and the currency markets. However, unexpected taxes, such as one on domestic crude oil or dividend distribution, hurt stock prices. Like any budget day, the stock prices saw huge gyrations and the Sensex swung in the range of nearly 850 points touching a low of 22,495 and a high of 23,343.
The benchmark Sensex finally ended 0.66 per cent, or 152.3 points lower at 23,002, while the Nifty-50 lost 0.61 per cent, or 42.7 points to close at 6,987. Shares of ONGC plunged 10 per cent on government's decision to levy 20 per cent cess on domestically produced crude oil. Maruti Suzuki fell 5 per cent on the proposal to levy infrastructure cess between 1-4 per cent on cars.
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"The market performance was tepid as the Budget announcements were normal and not path-breaking. There is not much the Budget can do that can prop up our markets in the near term. The market will once again be guided by what is happening globally," said Shankar Sharma, vice-chairman and joint managing director at First Global.
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Weakness in the global markets, particularly China which fell 4.6 per cent, also weighed on investor sentiment on Monday.
"It would be too optimistic to say that the Budget would result in major turnaround in equity market sentiment. The volatility will continue driven by events in China and US. However, the commitment to macro stability and fiscal discipline will make our markets stronger," said Leo Puri, managing director, UTI Mutual Fund.
Finance Minister Arun Jaitley's promise to stick to the fiscal deficit targets of 3.9 per cent in FY16 and 3.5 per cent in FY17 sparked a rally in the bond prices with yields on the 10-year benchmark government security softening as much as 15 basis points to end at 7.62 per cent. The rupee ended at 68.42 against previous close of 68.63 against the dollar.
The softening of yields raised hopes of interest rate cut by the Reserve Bank of India (RBI), stoking rally in banking shares. ICICI Bank gained nearly 3 per cent, while SBI and HDFC Bank added nearly 1.5 per cent each. Most public sector banks, however, came off sharply from their day's highs after Rs 25,000 crore recapitalisation figure announced by the government disappointed market.
"The Budget was better than what the market had expected. An important event risk is out of the way and once again our markets will be guided by global markets. The fiscal discipline in the budget has provided has raised hopes of rate cut. The stability in the bond and currency market might but an end to India's recent underperformance," said Dharmesh Mehta, MD & CEO, Axis Capital.
Indian markets having come off 11 per cent so far this year is one of the worst-performing markets globally. The benchmark Sensex ended February with losses of 7.6 per cent, its worst monthly setback since November 2011.
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Overseas investors sold shares worth over Rs 2,000 crore, while domestic investors net-bought shares worth Rs 1,445 crore on Monday, provisional data showed.
The cash market turnover on Monday at Rs 29,483 crore on both the exchanges was nearly 50 per cent higher than this year's daily average turnover. Similarly, the turnover in the derivatives segment was 27 per cent more at Rs 389,042 crore.
