Sensex swings wildly...Skyrockets then softens

The highly volatile Indian markets ended the day with decent gains after the Finance Minister presented his sixth Union Budget in the Lok Sabha today. Though the Budget fell short on several expectations, there weren't too many nasty proposals. Overall, the Budget was greeted with cheers by markets, corporates and analysts alike.



The Benchmark Indian stock indices trended upwards in the first half of the day. However, they ended way off day’s high as profit booking set in post the Budget, dragging the NSE Nifty below 5350.

It was a highly volatile trading session, with the Nifty swinging over 180 points intraday and the BSE Sensex oscillating over 550 points between its intraday highs and intraday lows.

Barring the BSE Pharma index, all the other sectoral indices ended with smart gains. FMCG, PSU, Realty and Capital Goods indices were among the major gainers.

In the broader market, the BSE Mid-Cap and the BSE Small-Cap index ended with modest gains, adding 0.3% each.

"Union Budget 2011-12 was a mildly populist one and largely attempted to tame inflation and rein in the fiscal deficit. The stock market reaction has been positive only because equities had factored in heavy pessimism like rise in excise duty, service tax rate and a bigger market borrowing figure. The key positives from the Budget, in our opinion, were maintaining excise duty rate, addressing agriculture sector, warehousing issues and attempt to resolve infrastructure financing issues. Big positive surprise was allowing foreign investors to invest in MF after meeting KYC requirements for equity schemes and no duty hike for tobacco. Major negatives include no FDI liberalisation in multi-brand retail as was widely anticipated and application of MAT for SEZs.

While revenue side budget estimates for 2011-12 seem to be in place, it appears that subsidies and expenditure side have been somewhat understated. It will be tough to achieve a 4.6% fiscal deficit figure unless non-tax revenues like disinvestment surpass budgeted figures and an amnesty scheme to bring black money back is introduced. A 4.9% fiscal deficit number looks more achievable. Overall a marginally positive budget, largely along expected lines", says Amar Ambani, Head of Research (India Private Clients) - IIFL.

The BSE Sensex gained 122 points to end at 17,823 and the NSE Nifty gained by 30 points to close at 5,333.

The European markets were trading mixed, the FTSE index was down 0.8%, CAC index was flat and DAX index also was flat.

Outside the frontline indices, the big gainers in the broader market were TVS Motors, P&G, Central Bank, IDFC and IOB. On the other hand, losers included Glenmark, BGR Energy, Jain Irrigation and Educomp.