Flat Budget flattens Indian market

By Ruchi Sanyal

Sensex Tanks 329 Pts, Investors Lose Rs 90,000cr Of Wealth

Dalal Street’s disappointment with the finance minister’s Interim Budget on Monday was succinctly summed up by an irate broker in just one sentence: ‘‘Things would have been better if there was no Interim Budget.’’

With a loss of Rs 90,000 crore and BSE sensex down 329 points at 9,305, investors on the Street suddenly realised that hopes that were built around a probable economic stimulus package remained just that—hopes.

On Monday, as finance minister Pranab Mukherjee stood up to present the budget, the sensex was marginally down and hardly showed any movement for the first 10 minutes of the speech. However, as it became clear that Mukherjee was more interested in talking about the coalition government’s achievements over the past five years and was unlikely to make any major announcements, investors rushed to press the sell button.

‘‘It was like a presentation of a report card where the student has failed miserably in the last year,’’ said Arun Kejriwal, director, KRIS, an investment advisory firm. By the time the budget speech was over, the index had lost 300 points and it lost further ground to finally settle near the day’s low of 9,279. ‘‘It was a 70-minute live telecast of the Congress-led government’s five-year track record,
in which there was zero takeaway for industry and the market,’’ said V K Sharma, head-research, Anagram Securities.

While lack of any economic stimulus did disappoint the market initially, what also unnerved investors was the minister’s indication that things in India could get worse and his admission that the fiscal deficit this financial year could be as high as 6% of the GDP, given the global financial crisis.

‘‘The admission of a 6% fiscal deficit is in line with market estimates, which always debated the 2.5% fiscal deficit number of the last budget,’’ said Amitabh Chakraborty, president-equities, Religare Capital Markets.

The market’s disappointment was reflected in the index falling by over 3%, with real estate, metal and infrastructure sectors bearing the brunt of the selling pressure.

Other than these three sectors, banking stocks were also hammered down as investors believe a worsening economic situation would also affect banks’ bottomlines. Given that the uncertainties of LS elections will take centrestage in the next few weeks, investors are unlikely to witness any revival in the market.