By IANS,
Mumbai : In its worst performance in recent weeks, a key index of the Indian equities markets ended trade Monday nearly 870 points down from its last closing figure, as investors blamed lack of policy announcements and increase in minimum alternate tax on corporates for the negative reaction.
The benchmark index of the Bombay Stock Exchange (BSE), the Sensex, which opened at 14,962.12 points, closed at 14,043.4 points – 869.65 points or 5.83 percent lower than Friday’s close.
At one point, it had slipped by more than 900 points.
“The stock markets have voted on the tax budget presented today. However, I believe that this fall could be attributed partially to the markets having run up on the back of disproportionate expectations,” said chief executive of KPMG India Russell Parera.
Similarly, the S&P CNX Nifty of the National Stock Exchange (NSE) ended the day 5.84 percent down to 4,165.7 points.
Broader market indices also closed in the red, with the BSE midcap index ending 5.17 percent down, and the BSE smallcap index closing 4.5 percent lower than its previous close.
“The budget proved to be a low-on-deliverance affair and this was magnified on account of the huge expectations that the market had built from it,” said Angel Broking chairman and managing director Dinesh Thakkar.
“Amongst the many shortfalls in the budget, it was silent on the timeline for tackling the fiscal deficit position of the country,” added Thakkar.
Of the 13 sectoral indices on the BSE, those for banking, realty and capital goods took a real hit. Only FMCG stocks ended in the green, driven primarily by rise in the ITC scrip.
The market breadth was negative with about 551 stocks advancing, 2,020 declining and 62 remaining unchanged.
Terming it as more of a knee-jerk reaction, experts were also of the opinion that the markets will bounce back as the government was not expected to rely only on the budget to make policy changes and would bring in appropriate changes during the course of its tenure.
“A number of expected policy initiatives like insurance liberalisation and disinvestment will likely end up as announcements during the year as the various ministries seek to deliver on their governance agenda,” said Parera.
There were only two gainers among the 30 scrip Sensex: ITC, up 3.13 percent at Rs.197.80 and Hindustan Unilever, up 0.99 percent at Rs.275.90.
Among the losers were Reliance Infra, down 12.47 percent at Rs.1,131.05; ICICI Bank, down 10.09 percent at Rs.678; Jaiprakash Associates, down 9.93 percent at Rs.193.10; and Tata Steel, down 9.55 percent at Rs.396.45.
“Overall, while the budget did not stand true to all of market expectations, we expect that the government’s efforts will continue outside the budget also and will help improve corporate India’s earnings. We expect the stock market to reflect this improvement in earnings,” said Thakkar.
In other European markets, a key British index, the FTSE 100 was ruling in the negative terrain, down 54.64 points at 4,181.64 points while its French peer CAC 40 was down by 55.55 points and was at 3,063.96 points.