Disappointment from the interim general budget for 2009-2010 pulled the market sharply lower in early afternoon trade. The BSE 30-share Sensex was down 300 points, or 3.11%. Weakness in Asian stocks also weighed on the domestic bourses.
There was no sector-specific tax sops for the industry hit by the global economic slowdown in the interim budget. No changes were made in direct or indirect taxes. The stock market was expecting government to offer tax sops and sector-specific stimulus package for the economy in the interim budget.
External Affairs Minister Pranab Mukherjee who is currently holding the charge of Finance Ministry, started off the speech by pointing out that the United Progressive Alliance had succeeded in implementing the promises outlined in the Common Minimum Programme (CMP). The GDP grew from 7.5% in 2004-05 to 9.7% in 06-07 and clocked 9% growth in 2007-08. Per capita income increased 7.4% per annum during the UPA government's tenure. The government relaxed Fiscal Responsibility Budget Management (FRBM) targets to counter global economic slowdown.
The government has extended interest rate subsidy scheme on exports for some sectors till 30 September 2009 from 31 March 2009. The government will provide interest rate subsidy to farmers in 2009-2010.
The fiscal deficit is estimated at 6% GDP in 2008-09. The revenue deficit is seen at 4.4% of GDP in 2008-09.
Most Asia-pacific markets were trading lower today, 16 February 2009, after data showed Japan's economy shrank at an annual 12.7% last quarter, the most since the 1974 oil shock, as recessions in the US and Europe triggered a record drop in exports. Key benchmark indices in Japan, Hong Kong, South Korea, Taiwan and Singapore were down by between 0.03% and 1.45%. However, China's Shanghai Composite index rose 2.45%.
US markets ended lower on Friday, 13 February 2009 as persistent worries about the banking sector tempered news the Obama administration was set to announce on Wednesday, 18 February 2009, a plan to stem home foreclosures. US markets will be closed today, 16 February 2009 for President's Day holiday.
The Dow Jones industrial average fell 82.35 points, or 1.04%, to 7,850.41, the Standard & Poor`s 500 index slipped 8.35 points, or 1%, to 826.84, and the Nasdaq Composite index dipped 7.35 points, or 0.48% to 1,534.36.
US President Barack Obama would sign into law the American Economic Recovery and Reinvestment Act in Denver on Tuesday, 17 February 2009. The bill, popular as economic stimulus package, was passed by the US Congress on Friday, 13 February 2009 after weeks of intense deliberations. The bill makes available to the Obama Administration $789 billion to revive and recover the US economy by funding projects, offering bailout packages to sinking companies and making investments in infrastructure projects.
Meanwhile, the Group of Seven finance chiefs vowed to tackle a "severe" economic downturn that will persist for most of 2009 without spelling out new steps to do so. The G-7's finance ministers and central bankers said in a statement released after talks in Rome on Saturday, 14 February 2009 that they were working to restore confidence in markets and revive the world economy. They predicted the full effect of individual rescue packages will "build over time."
At 12:25 IST, the BSE 30-share Sensex was down 300 points, or 3.11%, to 9,334.71. The Sensex opened 2.3 points higher at 9,637.04, also its day's high. At the day's low of 9,311.65, the Sensex lost 323.09 points in early afternoon trade.
The S&P CNX Nifty dropped 72.35 points, or 2.45%, to 2,876
The market breadth, indicating the overall health of the market, was negative on BSE with 1176 shares declining as compared to 861 that advanced. A total of 67 shares remained unchanged. The market breadth was strong in opening trade.
BSE clocked a turnover of Rs 1357 crore by 12:25 IST as compared to Rs 798 crore by 11:25 IST.
Grasim was the lone gainer from the 30-member Sensex pack. The diversified firm gained 0.53% to Rs 1377.
Reliance Infrastructure (down 5.32%), ICICI Bank (down 4.71%) and Ranbaxy Laboratories (down 2.97%), edged lower from the Sensex pack.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 4.21% to Rs 1333 on profit booking. The stock advanced 28.68% in a month to Rs 1390.95 on 13 February 2009.
India's second largest cellular services provider by sales Reliance Communication (RCom) slumped 5.64% to Rs 171.40. The company reportedly entered into a Rs 50 crore deal with US-based Ditech Networks to deploy the latter's voice enhancement solution on its recently unveiled GSM network.
Banking shares extended early fall on weak sentiment for financial sector stocks globally. The new US bank rescue plan that would potentially cost $2 trillion was greeted unceremoniously by investors last week, frustrated by the lack of detail, especially with regard to how the banks' illiquid assets will be valued.
India's second largest private sector bank by net profit HDFC Bank lost 3.32% as its ADR slipped 2.5% on Friday, 13 February 2009. India's largest private sector bank by net profit ICICI Bank declined 4.89% on a 1.85% slide in its ADR on Friday, 13 February 2009. India's largest bank in terms of assets and branch network State Bank of India fell 3.27% to Rs 1176.10.
Metal stocks declined as there was no changes in import duty in the interim budget. Tata Steel (down 1.83%), Sterlite Industries (down 3.45%), National Aluminium Company (down 3.70%), Sail (down 3.14%), Hindalco (down 1.86%), and Sesa Goa (down 2.46%), slipped.
A section of the market was expecting increase in import duties on metals to protect the domestic industry from cheap imports
Realty shares overturned in the absence of any tax sops for the housing sector in interim budget. India's largest real estate firm by market capitalisation DLF lost 4.11% to Rs 154, off day's high of Rs 167.70.
Parsvnath Developers (down 1.26%), Omaxe (down 0.88%), Indiabulls Real Estate (down 7.52%), and HDIL (down 5.24%), slipped after a strong start.
Shares of companies associated with Indian Railways declined on profit booking, after surging earlier on hopes of favorable announcements in the interim rail budget on 13 February 2009.
Container Corporation of India (down 0.80%), BEML (down 1.83%), Titagarh Wagons (down 5.10%), Kalindee Rail Nirman Engineers (down 6.53%), Texmaco (up 7.78%), and Kernex Microsystems (down 9.37%) declined.
Bartronics India jumped 11% to Rs 85.25 after the company said it secured a project from the Municipal Corporation of Delhi for setting up 2000 kiosks. The company announced the new order win on Saturday, 14 February 2009.
Jain Irrigation Systems rose 1.96% to Rs 383.15 on signing a pact with National Bank for Agriculture and Rural Development for village development programme in Maharashtra. The company made this announcement on Saturday, 14 February 2009.