Even though a large section of market participants and experts have cheered the Budget 2015-16 as reform oriented and as one which provides a thrust to reviving the investment cycle, the Sensex movements over the past two trading sessions have not reflected that enthusiasm in any way.
The market’s reaction so far has been a sharp contrast to the responses that defining Budgets have received in the past. While Sensex rose by almost 7 per cent in the two days after Manmohan Singh’s (the then finance minister) 1991 Budget, when he announced a flurry of reforms including abolition of industrial licensing, opening up of foreign direct investment etc, they rose by about 25 per cent over two days following his next Budget in 1992.
Even in 1997 when P Chidambaram announced the end of deficit financing along with managerial and commercial autonomy for public sector undertakings, the markets surged by almost 13 per cent over the next two-day period.
Arun Jaitley’s Budget announcements on Saturday failed to generate similar reactions in terms of a rise in stock markets. In the past two trading sessions, the Sensex has gained a meagre 238.9 points or 0.8 per cent amidst strong volatility.
Market experts point that the muted response has been on account of their expectations for actions that resulted in short-term benefits.
“Government is playing the game for a test victory while the market probably expected a T20 spectacle,” said Nilesh Shah, EO, Kotak Mahindra AMC. He added, “The policy framework is being redesigned to transit India from command economy to co-operative federalism; from job seeker to job creator.”
The benchmark Sensex gained 97.64 points to end at 29,459.14 on Monday as capital goods, banking and power indices provided support. The capital goods index rose by 3.6 per cent followed by gains of 1.8 per cent and 1.5 per cent by banking and power indices, respectively.