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Budget fails to cheer stock markets

MUMBAI: The ‘welfare budget’, which ensured growth and continuity, failed to evoke a positive response from stock markets as the Bombay Stock Exchange (BSE) benchmark Sensex crashed by 869.65 points or 5.83 per cent on Monday, led by banking stocks, a record fall on budget-day.

While declaring that this Government got its mandate for inclusive growth and continuity, Finance Minister Pranab Mukherjee stressed on the need to return to 9 per cent growth. He also emphasised the urgency in achieving more than 4 per cent growth in agriculture. Education, agriculture and rural development got major budget allocations. The market, which was awaiting to hear a lot on privatisation announcements, got stunned by the eulogy of the Finance Minister in his budget speech on nationalisation of banks and other financial institutions 40 years back by the then Prime Minister Indira Gandhi. The biggest casualty was banking stocks with a loss of 8.17 per cent on the BSE and 8.19 per cent on the National Stock Exchange (NSE).

The 30-share Sensex closed at 14043.40 with a loss of 869.65 points. A broader 50-share NSE Nifty also lost 258.55 points or 5.84 per cent to close at 4165.70. Presenting the budget in the backdrop of global recession, Mr. Mukherjee knew more governmental spending was a necessity than before and he took a major portion of his budget speech to emphasise on rural growth and public spending with a stress on broadening inclusive growth agenda. Social — higher allocation targeting bottom pyramid of urban and rural India — and infrastructure sectors were given higher thrust to revert to higher growth, the ambitious 9 per cent. Total expenditure crossed Rs. 10 lakh crore for the first time. Many sectors in the economy are expected to reap the benefit in future.

“Budget may not have lived up to the market expectations but it is too much to expect from the new Government to pack all policy announcements in a budget that was prepared in just about a month,” said Sanjay Sinha, CEO, DBS Cholamandalam Asset Management.

“The budget is balanced in favour of growth at the cost fiscal discipline. There’s a lot of focus on infrastructure spending, employment generation and push to provide more money in the hands of the consumers,” said Motilal Oswal, Chairman and Managing Director of Motilal Oswal Financial Services.

PTI reports:

The rupee tumbled in tandem with the domestic stock market and ended 65 paise weaker against the dollar at a nearly two-week low of 48.54/56 on Monday on fears about capital outflows from equity markets after the presentation of the Union Budget. . It closed at 47.89/91 last Friday. Stable at the outset, the domestic currency later fell sharply in line with the slide in equity markets.

The rupee resumed weak at 47.94/96 from its previous close of 47.89/91 and moved in the range of 47.85-48.58 before closing at 48.54/56. Global oil prices traded around $64 a barrel in Asian trade.

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