JOIN USDissapointing the market, the FM gave thrust to infrastructure spend, raised income tax exemption limit, scrapped FBT and CTT, while hiking MAT (minimum alternative tax) rates to 15 per cent.
Sentiment down
Investor sentiment in Dalal Street was let down badly with no big bang announcement on economic reforms in the Budget 2009-10 that resulted in sell-off on the bourses accompanied by heavy volumes. Key indices, Sensex at Bombay Stock Exchange closed at 14,043, down 870 points , while the index in intra-day trade fell below the psychological 14,000 level but it soon regained that level. Similarly, Nifty at National Stock Exchange closed at 4166 which is down 259 points.
BSE Midcap Index was down 5.15 per cent and BSE Smallcap Index declined 4.41 per cent. Apparently, investors were disappointed with the Budget not having any roadmap to increase FDI investment in insurance nor any decontrol of fuel prices.
Volatility was immense through out the day and a sell-off gripped the market later after FM set higher fiscal deficit target. FM on his part defended his budget saying the market’s reaction was a result of “over expectation,” and there was enough scope outside the budget to usher in reforms.
Commenting, HDFC Chairman Deepak Parekh said the market has taken the budget negatively. “I think market has not understood the budget, I am reasonably happy with the budget. I think it’s given a roadmap and the Finance Minister very rightly said that one budget is not cure for all problems. He is talking of a roadmap of at least getting back to the 9 per cent gross domestic product (GDP) growth. He has put much more emphasis on infrastructure…… I do not see any reason for being negative.”
Kotak Mahindra Bank’s Executive Vice Chairman & Managing Director said: “We have got to look at it in balance. The problem is, very often markets are consistently looking for steroids and are not ready to take medicines, which over the medium-term will be more useful.” Meanwhile, credit rating agencies have allayed the fears of an immediate rating downgrade saying the budget deficit of 6.8 per cent of GDP was on the expected lines. The market breadth was weak in contrast to a strong breadth in early trade. On BSE, 543 shares rose as compared with 2,009 scrips that plunged while 62 shares remained static. As far as the Sensex pack goes, 28 stocks fell and two scrips rose.