The Hindu Business Line : Sensex sees biggest fall on Budget day in last 5 years

The Budget failed to enthuse market participants on a choppy day and the Sensex has shed close to 540.74 points to 12,938.09. It was the biggest fall since the May 18, 2006 correction and it was the lowest close since December 12, 2006.

This was the biggest fall on a Budget day in the past five years. The negative news started with the announcement of indirect tax and increase in excise duty on cement prices and followed by the extension of minimum alternate tax (MAT) for the IT sector.

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However, major players are paying to the tune of 12 per cent and worst to get affected by this might be the mid and small-cap software stocks. Marginal benefit in personal tax has not been received well along with increase in educational cess.

However, there was some recovery during mid-session but heavy selling during the final trading session pulled the markets down. However, the markets closed higher than the intra-day low of 12,800.91.The sentiment was extremely poor in the Sensex basket, only ITC managed to close in positive and the rest all shed between 1-8 per cent.

Mid and small-cap indices too shed 3.4 per cent and 3 per cent respectively. All the sectoral indices closed in red except the FMCG. Breadth of the markets reflected the bearish sentiment with 598 stocks advanced against 1900 shares declined. The broader markets Nifty shed 148.6 points to close at 3,745.3.

Sector Focus

Among the BSE sectoral indices, the IT sector bore the burnt of the market and shed 5.85 per cent. It faced a similar fate during the introduction of MAT for few years ago. HCL Technologies suffered the most, it shed 9.7 per cent followed by Satyam Computer, Wipro, MphasiS and Infosys Technologies.

The announcement of increase in customs duty by Rs 300 per tonne to be levied on export of iron ores and concentrates affected the sentiment of Sesa Goa and it shed 8.5 per cent followed by Sterlite Industries, Nalco, Tata Steel and Hindustan Zinc.

Banking stocks was among the major losers. Oriental Bank of Commerce lost 5.7 per cent followed by Punjab National Bank, UTI Bank, HDFC Bank and ICICI Bank.

Escorts led the pack of losers in auto space. Those followed suit were Ashok Leyland, Bajaj Auto, Tata Motors and TVS Motors. Hindustan Motors and Punjab Tractors were the ones to buck the overall market trend and closed in green.

Cement stocks shed values after the Finance Minister announced an increase in excise duty for producers selling 50 kg a bag for more than Rs 190 and simultaneously reduced the duty on companies selling less than Rs 190. ACC, Gujarat Ambuja Cements, Grasim Industries and Madras Cements were the worst affected in large cap space. All shed values between 5-7 per cent and in mid-cap space Shree Cements ended sharply by 10 per cent.