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Budget 2015: Sensex gains 141 pts, Nifty reclaims 8900; ITC sinks 9%

16:30

Nasrin Sultana
The News International Team

What a wild swing! The market swung along some 678 points intraday, with some late buying that saved the day. After a lot of volatility, the Nifty ended at a month-high closing level. The 50-share index closed up 57.25 points or 0.6 percent at 8901.85 while the Sensex was up 141.38 points or 0.5 percent at 29361.50. About 1241 shares advanced, 1494 shares declined.

Investors had pinned a lot of hope for more reforms in the Budget 2015 presented by Finance Minister Arun Jaitley and enthusiastic trading took the Sensex up almost 400 points in early trade. The Nifty, too, climbed the 8900-level peak much before the FM’s Budget proposal speech. However, things did not remain so rosy as soon the FM announced some excise duty hikes.

An excise duty hike by 15 percent for cigarettes took a toll on index heavyweight ITC, knocking off some 9 percent intraday. Not only that, the government has also proposed an excise duty raise by 25 percent for 65mm cigarettes and on tobacco increased to Rs 70/kg from Rs 60/kg.

The market soon started to spiral down falling almost 200-points as a knee-jerk reaction as investors seemed to be looking for more big bang announcements from the Modi government’s first full year Budget. However, aggressive buying in banks, pharma, oil & gas, auto and IT stocks brought the market back to green with the Nifty reclaiming 8900-level.

The government’s decision to defer the much-dreaded General Anti-Avoidance Rules (GAAR) by two years gave much relief to foreign investors which was when market started to turn green after the knee-jerk negative reaction to Budget proposals. GAAR was earlier purposed to kick-start from April 1, 2015.

Market experts see it to be a well-balanced Budget and expect it to give some legs to the rally on Monday. Adrian Mowat of JPMorgan feels there is a lot in this Budget the people will like and as Modi was highlighting it is about giving us clarity over the next four years. Ramesh Damani, Member, BSE also agrees that it may not be a big bang Budget but it seems like a big bold Budget. “I would give the Finance Minister high marks for restructuring the corporate tax rates doing away with the wealth tax,” he said in an interview to CNBC-TV18.

However, Ajay Srivastava, CEO of Dimensions Consulting warns that the market will be correcting a little bit definitely in the next seven days or so because there are a lot of expectations built around a couple of sectors that has come down. “We will start to see impact of company valuations and fundamentals coming to the market more than liquidity. Expectations are over, the reality is now when the new cost comes to hit the real estate, infrastructure companies what happens to their earnings dynamics and that will be a negative,” he said.

Meanwhile, Jaitley pegged fiscal deficit for 2015-16 at 3.9 percent of GDP and proposed to lower it to 3 percent by 2017-18, a year later than planned earlier. Unveiling the roadmap for fiscal consolidation while presenting the Budget 2015-16, he said the 3 percent fiscal deficit target will now be achieved in three years.  He also said that Current Account Deficit (CAD) will be less than 1.3 percent of GDP.

Gainers & losers

Such a volatile when an index heavyweight like ITC ended the day with a steep lose of 8 percent, Axis Bank gained a whopping 9 percent.

Late bloom in banking stocks took Bank Nifty up over 3 percent at close. HDFC Bank, SBI, ICICI Bank and Kotak Mahindra gained 1-5 percent each. BHEL, NTPC, Hindalco and HDFC were laggards in the Sensex. Among the midcap stocks, HMT, PC Jeweller, Chambal Fertiliser, Punj Lloyd and Rallis India were top performers.
 

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