Sensex plunges 518 points in volatile trading
Investors gave thumbs down to the first railway budget of the Narendra Modi Government as the S&P BSE Sensex plunged by 517.97 points or 1.98 per cent on Tuesday.
In a highly volatile trading, the benchmark index closed at 25582.11, after touching a high of 26190.44 and a low of 25495.04. The fall was sharp in mid- and small-cap stocks as they dipped by 3.63 per cent and 4.19 per cent, respectively. Among other broad-based indices, BSE-100 fell by 2.50 per cent, BSE-200 by 2.56 per cent and BSE-500 lost 2.64 per cent.
On the National Stock Exchange (NSE), the 50-share Nifty closed at 7623.20 with a fall of 163.95 points or 2.11 per cent.
“After a record opening, the markets slipped on profit-booking. Near to closing session, the markets witnessed more sell-off led by heavy weight stocks such as L&T, ICICI Bank and Reliance. The markets saw a highest percentage fall since September 2013. Now market participants are waiting for the Union Budget, which is expected to give cues for the future trend,” said Alex Mathews, Head Research, Geojit BNP Paribas Financial Services.
Mr. Mathews said all sectors ended in the red, realty and power sectors being the major losers which closed down around 7.16 per cent and 6.37 per cent, respectively. DLF and BHEL were the major losers, closing down around 8.53 per cent and 8.21 per cent, respectively.
Chairman of the Mahindra Group, Anand Mahindra, meanwhile, tweeted that he was “bemused by market reaction to the railway budget: a focus on efficiency, transparency, service quality and a measured approach to expenditure.”
“One Take away from the railway budget is that the Rail Minister emphasised on the profitability and viability of the railways to operate going ahead. The budget was about operationalising Rs.5-lakh crore worth of old legacy projects which were languishing as no focus was there on execution of these projects. It was this absence of big bang announcement that led to a sharp correction in equity markets with rail stocks down double digits and broad markets also taking it to the chin,” said Ritesh Jain, Chief Investment Officer, Tata Asset Management.
However, Mr. Jain said “we believe the rail budget was a step in right direction and foundation has been laid for efficiency from the existing assets.”Rupee rebounds
Meanwhile, the rupee rebounded at the inter-bank foreign exchange market on Tuesday to close at 59.78 a dollar. It opened at 59.95 , up 6 paise from the previous day’s close of 60.01 and touched an intra-day high of 59.68.
“Selling of dollars by exporters may be the reason for the appreciation in early trade,” said Kiran Kumar Kavikondala, Director & CEO, WealthRays Securities.
During the second half, said Mr. Kavikondala, “some depreciation was seen in the market due to profit booking by foreign investors.” The dollar index was 0.07 per cent indicating some strength in dollar which in turn will put pressure on rupee.