Sensex crashes by 152 pts in post-budget session

While sensex spurted by 107.99 points to 3,794.38 in the pre-budget session, the index fell by 151.70 to 3642.68 in the post-budget session. This means Sensex suffered a net loss of 43 pointswhen compared to the closing figure on last Friday.

"The bull rally was before the budget announcement. After the budget, market felt it was let down," said a BSE director. "The budget will not kick-start the economy. It is to be seen whether industrial demand will pick up. Besides, there are not many measures to revive the capital market," he said.

Many leading scrips fell on selling pressure. The volume of business was thin and there was general lack of buying interest.

Despite various announcements for the seconday market, the first ever budget presented by finance minister Yashwant Sinha received a cold response on the Bombay Stock Exchange. Leading BSE brokers attributed the subdued trend to the general disappointment among the marketmen for not considering share buy-back scheme.

BSE president J C Parekh was of the view that there are not many sops for capital market in the general budget and hence the market reacted negatively. Nikhil Vakharia of Kanchanlal and Sons said, "Overall the budget isgood, and it had not much impact of the nuclear tests conducted by India."

BSE executive director R C Mathur said, "The budget had nothing to cheer up the investor, which had resulted in the fall." There were no incentives to bring savings into the capital market nor were there any changes to capital gains tax, he said adding though the role of the capital market was recognised, there were no strong measures to revive it.

The Bombay Chamber of Commerce and Industry (BCCI), however, felt that it was a natural correction to the market which had over-exposed itself. The National Association of Small Investors (NASI) described the union budget as "disappointing" in the absence of measures to safeguard the interests of small investors.

A R Barwe, managing director of SBI Capital Markets Ltd (SBI Caps), said the government’s decision to bring down its holding in non-strategic public sector units (PSUs) and securitisation of state electricity boards’ dues to National Thermal Power Corporation (NTPC) and CoalIndia Ltd (CIL) would generate some activity in the capital markets.

Many experts welcomed permission for provident fund investment in securities. "Provident fund (PF) being allowed to invest in private securities would give impetus to the infrastructure sector as PF would subscribe to bonds floated specifically for the sector," Barwe said. Ajay Srinivasan, managing director of Prudential-ICICI Mutual Fund, said the budget is quite positive on the infrastructure front.