Budget fails to bring cheers on Street

Mumbai: The BSE benchmark Sensex ended in negative terrain for the fourth straight week as investors remained unimpressed by the Union Budget proposals which they though were aimed at tax mopping and may add to inflation despite reduction of cash reserve ratio (CRR) by RBI last week.

Finance Minister Pranab Mukherjee increased service tax and excise duty to 12 per cent from 10 per cent, which will make cars, fridges, two- wheelers, ACs and washing machines costly in Budget for 2012-13 on Friday. Besides, a higher fiscal deficit of 5.9 per cent for the current fiscal overshadowed several positives, including lower income tax and strong indications of more economic reforms.

The hike in the cess created a negative impact on oil explorers like ONGC, Cairn and RIL. Investors also remained unimpressed with the proposal to reduce the Securities Transaction Tax (STT), as they were expecting it to be removed totally. STT, introduced in 2004, is levied on the sale and purchase of equities CNI Research CMD Kishor P Ostwal said, "STT reduction is no impressive as delivery volumes are not there in market."

The 30-share Sensex resumed the week higher at 17,772.10 and hovered in a wide range of 18,040.69 and 17,426.58 before ending on Friday at 17,466.20, a net loss of 37.04 points, or 0.21 per cent, from its last close. The key index has dropped by 823.15 points, or 4.50 per cent, in the last four weeks.

The NSE 50-share Nifty also moved down by 15.65 points, or 0.29 per cent, to finish at 5,317.90. It has declined by 246.40 points, of 4.42 per cent, in the last four weeks. Interest rate sensitive realty and banking stocks fell as RBI kept its policy interest rate, the repo, unchanged at 8.5 per cent in mid-quarter review of the monetary policy on March 15.

Meanwhile, the Economic Survey, presented by Finance Minister in the Lok Sabha, pegged the GDP growth at 6.9 per cent in 2011-12. The slowdown is mainly due to weakening industrial growth. The Reserve Bank (RBI) last week announced a reduction of 75 basis points in banks` cash reserve ratio (CRR) requirement to ease liquidity situation in the banking system.

Industrial production grew 6.8 per cent in January 2012 from a year earlier, sharply higher than a revised 2.5 per cent rise in December 2011, helped by a strong rebound in manufacturing output. Inflation rose to 6.95 per cent in February because of sharp increase in food prices, especially vegetables and protein-based items.

Among the major indices, the BSE-Consumer Durable fell by 2.20 pct, the BSE-Realty by 1.52 pct, the BSE-Teck by 1.46 pct, the BSE-PSU by 1.42 pct, the BSE-Healthcare by 1.35 pct, the BSE-Power by 1.16 pct, the BSE-Oil&Gas by 1.14 pct and the BSE-IT dropped by 1.03 pct.

However, the BSE-FMCG shot up by 2.94 pct, the BSE-IPO by 1.89 pct and the BSE-Auto rose by 1.35 pct. Major losers from the sensex pack were Sunpharma (4.36 pct), DLF (3.68 pct), Bharti Airtel (3.51 pct), ONGC (3.37 pct), TCS (3.32 pct), HDFC Bank (2.89 pct), Cipla (1.89 pct), Bhel (1.77 pct) and Bajaj Auto (1.58 pct).

However, Gail firmed up by 5.24 pct, Hindalco (4.27 pct), ITC (3.74 pct), Tata Power (2.85 pct), Tata Motors (2.68 pct), Hero Motoco (2.37 pct) and Coal India (2.20 pct). The total turnover at BSE and NSE rose to Rs 15,706.25 crore and Rs 70,560.33 cr respectively from the last weekend`s level of Rs 11,633.53 cr and Rs Rs 51,549.71 cr.