Budget upsets the market; Industry reacts strongly

By siliconindia   |   Tuesday, 07 July 2009, 00:45 IST   |    2 Comments
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Budget upsets the market; Industry reacts strongly
Bangalore: After staying positive after opening on the budget day, the markets went into the red once Finance Minister Pranab Mukherjee presented the budget in the parliament. The market sentiment was affected by the budget outcome and the Sensex ended the day at 14043.40 points plunging by 869.65 points. The disappointment in the market is reflected in the reactions by some of the market players. "The market had huge expectations from the budget. Therefore post the 17 percent rise in one day post the election results, the markets are now correcting in line with the operating fundamentals," says Saurabh Nanavati, Chief Executive Officer, Religare Mutual Fund. Financial expert Udayan Mukherjee said moneycontrol.com that markets were spooked mainly because of two reasons. One, the fact that fiscal deficit is seen at 6.8 percent versus 6.2 percent in the interim budget. And secondly, the hike in Minimum Alternate Tax (MAT) to 15 percent from 10 percent. There is nothing on fuel policy and there is nothing on FDI. These were things that the market was expecting some kind of announcement on and that has not come. According to Mukherjee, there has been nothing on the banking sector, insurance, and even on housing finance sops. Stocks like HDFC, ICICI Bank, SBI are the ones which have taken a key knock post budget. Many of the sectors which had gone up like education, aviation, real estate hoping for sops have got knocked back, so stocks like NIIT and Unitech have sold off quite a bit post budget. Ramesh Damani a member of Bombay Stock Exchange (BSE) says, "I think we were looking for the three Ds--disinvestment, decontrolling and deregulation and I was disappointed. There was no vision; there was no intellectual architecture from this budget." Vallabh Bhanshali of Enam Securities, told CNBC-TV18, it was a great stimulation budget. "I think it is a politically shrewd budget. I want to compliment the finance minister for the pragmatism that he has shown." Though, Gaurav Dua, Head Research of Sharekhan is also disappointed with the budget, but he feels, specific measures to enhance investment in infrastructure and boost domestic consumption through lower tax burden is a good move. Overall, the focus continues to remain on stimulating economic growth in spite of further deterioration on fiscal front, adds Dua.

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