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Markets unhappy with Chidambaram's Budget
By siliconindia staff writer
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Thursday, 08 July 2004, 19:30 IST
NEW DELHI: The markets plunged after Union Finance Minster P ChidambaramÂ’s presentation of the Union Budget 2004-05 in Parliament on Thursday.
After a Budget that was largely dubbed as pro-poor, the Sensex closed 112.13 points down at 9,843.84. The NSE Nifty fell 48.65 points to 1,518.15.
The markets witnessed volatile trading even as Union Finance Minister P Chidamabaram announced a slew of pro-poor measures in Parliament.
The Sensex, which had opened on a positive note, even crossed the 5,000-mark but then fell 1.2 per cent by 12:40 pm as the Budget proposed a slew of excise duty hikes.
By 2 pm, the Sensex was down 62.47 points at 4,898.69 while the Nifty was 25 points down at 1,541.60.
With ChidambaramÂ’s proposals to raise the FDI ceiling in telecom, insurance and civil aviation sectors, the Sensex crossed the 5,000-mark by noon to touch 5,004.17. On June 9, the Sensex had stood at 5000.59 points.
But the increase in excise duty on steel from eight per cent to 12 per cent and hike in service tax across the board from eight to 10 per cent saw the markets paring the earlier gains with the Sensex falling to 4,855. Tisco, SAIL and Jindal Steel all ended in negative territory.
Metal stocks too traded lower following an increase in peak excise rates for non-ferrous metals.
Shipping shares gained after after the Budget announced that shipping companies will have the option to pay either tonnage tax or normal corporate tax. Shipping Corporation of India surged before settling down at a marginal high of 0.98 per cent at Rs 107.95. Great Eastern Shipping climbed 0.59 per cent to close at Rs 137.40.
Fertiliser scrips also witnessed a surge after Chidambaram announced a hike in rural credit allocation but profit booking in the last hour of trade dragged them into negative terrirory. Indo-Gulf, down 7.23 per cent at Rs 94.25, Madras Fertiliser, down 5.89 per cent at Rs 13.75, Gujarat Narmada, down 6.33 per cent at Rs 47.35, and GSFC, down 8.73 per cent at Rs 53.45 all saw their earlier gains being negated.
Telecom scrips also rose after the FDI cap on telecom was raised from 49 per cent to 74 per cent. Bharti Televentures, after zooming to an intra-day high of Rs 165.40, settled down with a gain of 2.27 per cent at s 148.55. MTNL, which also surged after the FMÂ’s announcement, however, ended down 4.67 per cent at Rs 129.60.
Phone equipment maker ITI zoomed 19.95 per cent to close at Rs 15.57 after the Finance Minister proposed a Rs 518-crore restructuring package for the loss-making PSU.
Shares of tractor companies also rose after a 100 per cent exemption on customs duty tractors and a number of concessions on excise duty for agriculture. Escorts, Eicher, Punmjab Tractors and Mahindra & Mahindra all ended higher.
Auto pivotals, though, were trading in negative territory despite Chidambaram giving 150 per cent exemption on in-house research and development.
Meanwhile, the rupee also rose to end at Rs 45.73 against the dollar in comparison to Rs 45.95 on Wednesday.