Sensex sheds 143 points after disappointing budget

The market gave a thumbs down to finance minister Yashwant Sinha’s Union Budget by shedding close to 4% today. Following the disappointing budget and fresh incidents of violence in Gujarat, investors rushed to sell, pulling down the BSE 30-share Sensitive Index (Sensex) by 143.34 points to 3,562.31.

The NSE S & P CNX Nifty Index also lost 47.15 points to end at 1,142.05.

The mood in the investment community was affected following the announcement by the finance minister that all dividends in the hands of recipients will be taxable. Selling pressure was seen almost across-the-board. Losses were relatively narrow in the defensive sector stocks.

Of the 1,417 issues traded on BSE today, declines outnumbered advances with 1,053 gainers against 276 losers. 88 issues remained unchanged.

While the budget turned out to be a damp squib, fresh incidents of violence in Gujarat also affected the sentiment of the market in afternoon trades.

An indefinite curfew was imposed in Ahmedabad on Thursday as violence erupted in the city during the VHP-sponsored Gujarat bandh called to protest Wednesday's attack on the Sabarmati Express at Godhra, which left 58 dead and 43 injured.

State Bank of India (Rs 227.80) hit the 10% lower limit of the circuit breaker after the finance minister announced a lower-than-expected cut in rate on government-administered savings schemes in the budget. The FM said the administered interest rates would now be benchmarked to the average annual yields of government securities of equivalent maturities in the secondary market. As a result, most administered rates are being reduced by 50 basis points from 1 March 2002. Over 63.28 lakh SBI shares were traded on BSE today.

ICICI (down 8.99% to Rs 57.70) also ended lower on selling pressure.

PSU pivotals Bhel (down 9.67% to Rs 168.15), MTNL (down 8.33% to Rs 147.95) and HPCL (down 1.43% to Rs 286.20) lost ground after the high expectations were belied by the targeted mop up of Rs 12,000 crore for FY 2002-03 as against market expectations that the FM would set a target of at least Rs 16,000 crore from disinvestment. The FM has estimated the current year (FY 2002)’s receipts from PSU divestment at Rs 5,000 crore.

Tech pivotals Satyam Computer (down 9.66% to Rs 267.55), HCL Tech (down 7.11% to Rs 261.40) and Infosys Tech (down 7.92% to Rs 3,530.25) lost ground after the finance minister’s proposal to tax 10% of the profit from export earnings.

Media major Zee Telefilms (down 5.10% to Rs 144.15) ended lower, coming off from the day’s high of Rs 156.75 on profit booking at higher levels. The stock shed nearly 5% on Wednesday amid contrary advices by research houses. While Merrill Lynch recommended a strong `buy’ for the media major, CSFB downgraded the stock to `sell’ from `hold’.

Cement pivotals L & T (down 6.13% to Rs 191.55), Grasim (down 6.07% to Rs 191.55), ACC (down 5.85% to Rs 163.50) and Gujarat Ambuja Cements (down 3.50% to Rs 238.50) lost ground following the FM`s announcement to cut customs duty on cement and clinker from 25% to 20% in a bid to check domestic prices.

Heavyweight pivotals Reliance Industries (down 5.33% to Rs 307.45) and Reliance Petroleum (down 4.15% to Rs 28.85) also contributed to the losses in the Sensex.

After remaining in positive zone for the better part of the session, pharma pivotals Cipla (down 4.36% to Rs 1,005.45), Ranbaxy Labs (down 3.14% to Rs 819.45), Dr Reddy’s Labs (down 2.70% to Rs 1,052.15) and GlaxoSmithKline (down 0.48% to Rs 339.95) ended in the red on selling pressure in the latter half of the session.

ITC (up 2.21% to Rs 746.60) ended in positive zone, recovering from the day’s low of Rs 702 after the cigarette sector was spared from fresh excise duty.

Hindustan Lever bounced back from an intra-day low of Rs 240 to Rs 252.40 before settling at Rs 249.80, up 1.34% over its previous close on fresh buying interest.

Tata Tea (up 1.51% to Rs 178.60) ended with gains after the FM reduced excise duty on tea to Re 1 per Kg from Rs 2, and the customs duty on imports was hiked to 100% from the existing 70%.

Bharat Electronics (down 10.63% to Rs 135) ended deep in the red, having come off from the day’s high of Rs 166.40 after the increase in budgetary defence allocations fell short of market expectations. The government hiked the defence spending by 4.8% to around Rs 65,000 crore for the next financial year against the expectations of a Rs 80,000 crore outlay.

While RCF (Rs 9.85) hit the 20% lower limit of the circuit breaker, other non-Sensex PSUs like Bharat Earth Movers (down 18.97% to Rs 44.85), Engineers India (down 16.09% to Rs 158.75), Neveli Lignite (down 14.22% to Rs 19.90) and Dredging Corp of India (down 13.33% to Rs 176.50) lost over 10% each.

IDBI (up 0.55% to Rs 18.40) was one of the few scrips to end in the positive zone after the FM said the term-lending institution will be corporatised to give it more freedom to conduct its operations.

Banking sector stocks IFCI (down 13.33% to Rs 3.90), Nedungadi Bank (down 13.10% to Rs 36.50), IndusInd Bank (down 12.62% to Rs 14.20), Federal Bank (down 12.20% to Rs 72.20), Bank of India (down 12.20% to Rs 20.15), Global Trust Bank (down 10.71% to Rs 22.50) and J & K Bank (down 9.64% to Rs 67) ended in negative zone on massive selling pressure.

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