Sensex tanks on lack of budget support

The interim budget today (February 16) failed to enthuse the stock market and analysts believe the government fell short of investor expectations as the benchmark index Sensex plunged over 300 points.

The 30-share index Sensex dropped by as many as 343 points to an intra-day low of 9,291.15 points in afternoon trade as investors' hopes were dashed with the Government failing to announce major sops for any sector.

Analysts believe that unnecessary expectations had been built up before the announcement, which are dashed after Finance Minister Pranab Mukherjee presented the interim budget for 2009-10.

"Euphoria was built up in the market last week ... but the government took a conservative approach, and has presented an interim statement. It did not want to expand its fiscal deficit by announcing any further fiscal stimulus," SMC Global Vice-President Rajesh Jain said.

The first and second stimulus could not give any concrete direction to the market and post this interim budget there is likely to be lacklustre movements in the market, Jain added.

"We term the budget a disaster; instead of bringing cheers for (the) common man, they have rather exercised caution saying that the next government will have to live with a high fiscal deficit," Arun Kejriwal, director, Kejriwal Research and Investment Services, said.

Sensex firms were trading in the red with major losers Jaiprakash Associates, Reliance Infrastructure, Reliance Communications and ICICI Bank falling between four and nine per cent in afternoon trade.

Ashika Stock Brokers Research Head Paras Bothra said, "The announcements in the interim budget have been discounted in advance and the rise in estimated fiscal deficit and lanned expenditure indicates a tough year ahead in FY 2009-10."

Jaiprakash Associates plunged as much as nine per cent in intra-day trade to Rs 69.10, while Reliance Comm and Reliance Industries were trading down up to five per cent on the BSE in afternoon trade.

The market, which was on a pre-budget rally in the past two weeks, has come to its previous levels and is likely to continue downward for the next two weeks, Kejriwal added.

The National Stock Exchange benchmark index Nifty was trading down 79 points at 2,868 in afternoon trade.
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