Market gives up post budget gains

Investors were jittery on Monday on the back of political instability and rising crude oil prices. The Sensex plunged more than 400 points in intraday trade - gave up post budget gains - as the talks between UPA allies DMK and the Congress over seat-sharing for forthcoming elections in Tamil Nadu failed over the weekend.

The Dravida Munnettra Kazhagam (DMK) leader TR Balu said its six ministers would submit their resignations on Monday. But DMK, which has 18 seats in the Lok Sabha would give issue-based support to the UPA government.

Experts believe that moving out by DMK party leaders from the Cabinet will not have a major impact on the UPA government while a rise in crude oil prices will create panic in markets.

Rising crude oil prices remained a major concern for global markets due to political tensions in Libya. Government troops seeking to dislodge rebels from Libya's coast advanced on an oil town on Monday amid accelerating humanitarian efforts to prevent worsening civilians suffering and a mass refugee exodus, reports CNBC-TV18 quoting Reuters.

Witnesses said government forces advanced on the rebel-held oil port of Ras Lanuf 600 km (400 miles), east of Tripoli in a counter-attack that forced residents to flee and rebels to hide their weapons in the desert.

Crude oil was trading at USD 106.17 a barrel on the NYMEX, up 1.7% and the London brent crude was trading above the USD 116.5 a barrel.

Vikas Khemani, Executive VP & Head - Institutional Equities, Edelweiss Securities, feels that the post-budget political scenario, which was completely unexpected, has hurt the market sentiments along with mounting crude oil prices, which have become a major concern and a challenge for the Indian market since a couple of weeks.

However, the benchmarks showed a bit of recovery in the last one hour of trade on the buzz that there might be some patch up between both parties and UPA may come out with better solutions soon.

Most of the states go into election, there would be some amount of political turmoil but Khemani does not expect that DMK will pull out of the support. "In my opinion, it does not change anything from a central government perspective. I don