Equity benchmarks fell for third consecutive session Thursday with the Nifty ending February F&O expiry at fresh 52-week closing low post Railway Budget that is likely to miss FY16 target.
The 30-share BSE Sensex ended below 23000-mark, down 112.93 points to 22976 and the 50-share NSE Nifty closed below 7000 level, down 48.10 points to 6970.60 on correction in banks, infra and IT stocks. The broader markets also caught in bear grip with the BSE Midcap and Smallcap indices falling 1.1 percent and 0.9 percent, respectively.
Experts expect the market to be volatile in near term as they feel the Union Budget, which will be presented on February 29, may not be big driver. On Railway Budget, they say reforms are on track but FY16 target is likely to be missed.
Sahaj Agrawal of Kotak Securities says he expects Nifty to hold its support of 6800-6850 and bounce back to test 7250/7400 levels in March series, adding breach of 6800 will invite significant selling pressure and further caution in the markets.
On Union Budget, Sanjay Dutt of Quantum Securities says even if Finance Minister Arun Jaitley relaxes the fiscal deficit target it won’t be looked at negatively. The Budget will be taken positively if the FM indicates aggressive government spending to boost investment cycle.
The market continued to see sharp correction in 2016 as it ended the February series with 6 percent loss, in addition to 6.6 percent loss in January series, tracking non-performing assets concerns, lack of reforms boost and oil volatility. Banks caused major selling pressure in series with the Bank Nifty losing 12 percent and Nifty PSU Bank down 15.4 percent.
Railway Minister Suresh Prabhu has announced growth-oriented Railway Budget for 2016-17 with increasing capex to Rs 1.21 lakh crore (from Rs 1 lakh crore 2015-16) and promising huge investments for technology & infrastructure upgradation despite likely disappointing revenue growth in FY16. Railways in FY16 will have to bear an additional burden of about Rs 32,000 crore on account of the 7th Pay Commission, though Prabhu expects savings of Rs 8,720 crore that will offset shortfall in revenue this fiscal year.
More focus on rapid enhancement in commissioning of broad gauge lines, increased outlay for railway electrification by 50 percent YoY in FY17, announcement of 3 new dedicated freight corridors, emphasis on port connectivity, CCTVs on 311 railway stations etc were key highlights of the Budget. Prabhu did not increase passenger tariff and freight rate this year.
Zicom Electronic Security, KEC International, Gateway Distriparks and Container Corporation reacted positively to Railway Budget, gaining 3-5 percent.
Banking, capital goods and select technology remained under pressure while metals outperformed the broader markets.
Infosys, Larsen & Toubro, ICICI Bank, Tata Motors, SBI, Maruti Suzuki and Tata Motors dropped 1-3 percent while HDFC, Sun Pharma, ONGC and Hindalco Industries gained 1-3 percent.
Coal India rose over a percent as the government is working to increase coal production by the company to 1,000 million tonne in the next four years through the use of latest environment-friendly technology.
In broader space, Dishman Pharma rallied 5 percent on board approval for bonus issue (1:1) and selling effluent treatment plants to subsidiary CAIL on slump sale basis.
Smartlink Network surged 20 percent ahead of board meet on February 29 to consider buy-back of equity shares. IVRCL was up 5 percent as joint lenders forum approved strategic debt restructuring (SDR) conversion package of the company.
The market breadth was negative as about two shares declined for every share advancing on the BSE.
On the global front, European markets gained 1-2 percent (at 16 hours IST) while Asian markets ended mixed with Shanghai tanking 6.4 percent and Nikkei rising 1.4 percent.