Will the dust settle on Budget?
The bulls were completely taken out as markets witnessed blood bath on the D-Street. Sluggish cues from International markets compelled the key indices to open with a negative bias. The indices further dropped tremendously after Finance Minister P Chidambaram announced a tax increase on dividends distribution from 12.5% to 15% in his budget proposal. The markets witnessed wild gyrations throughout the day as benchmark Sensex swung nearly 500 points and NSE Nifty swung over 200 points. The Cement, Construction and Technology stocks were the major losers dragging the benchmark index to hit a low of 12800.1. Finally, the 30-share benchmark Sensex slumped 540 points to close at 12938. NSE Nifty fell 148 points to close at 3745.
Technology index was the major loser and lost 4.65%. Others like Bank, Auto and Metal followed suit each falling over 3.5% each. Gujarat Ambuja, Satyam Computer and Wipro were the major losers among the 50-scrip’s of NSE Nifty. However, ITC, GAIL and Colgate were among the major gainers.
Hindustan Motors paced ahead by 6% to Rs40 after the automaker announced that it would develop a software township and an auto parts complex on surplus land around its factory in the eastern state of West Bengal. The scrip touched an intra-day high of Rs43 and a low of Rs35 and recorded volumes of over 68,00,000 shares on NSE.
Educational stocks were also on the receiving end. The Government proposed to increase the allocation for school education by about 35%. In 2007-08, an amount of Rs231.42bn has been allocated as against Rs171.33bn in 2006-07. Educomp Solutions ended flat at Rs900. However Aptech lost over 3% to Rs213 and NIIT slipped by 3.7%to Rs669.
Technology stocks also slipped heavily after the government said it will extend a minimum alternate tax on software companies that enjoyed tax exemptions. Heavy weights like Satyam Computer, Wipro and Infosys were among the major losers. Polaris plunged by over 12% to Rs174, Moser Baer lost by over 10% to Rs329 and HCL-Tech declined over 9% to Rs600 were the major losers among the Mid-Cap stocks.
Metal stocks lost their shine. National Aluminum lost nearly by 6% to Rs210, Tata Steel was down by 5.7% to Rs442, SAIL slipped nearly 5% to Rs108, Hindalco declined 3.1% to Rs139 and Sterlite Industries lost over 6% to Rs469.
Auto stocks were in reverse gear. Maruti plunged over 5% to Rs841, Tata Motors was down by 5% to Rs782, M&M slipped 4.3% to Rs811 and Bajaj Auto lost 4% to Rs2618.
However, FMCG index was the only gainer and gained 0.48%. Frontline stock ITC rose 4% to Rs171 after the government announced that it would increase the excise tax it levies on cigarettes by 5% in its budget for the year starting April 1, Marico rose over 2% to Rs60 and Colgate added 0.75 to Rs322.