Sensex rises 97 pts post interim Budget; private banks lead

Moneycontrol Bureau

The last interim Budget of UPA II presented by finance minister P Chidambaram could not rejoice the market on Monday. Barring few positive takeaways like better-than-expected fiscal deficit and cut in excise duty for auto sector, there was no major announcement made by P Chidambaram.

The Sensex rose 97.24 points to close at 20,464.06 while the Nifty advanced 24.95 points to 6,073.30 that held the 6,050 level throughout the session today.

Going forward, experts believe the market is going to be rangebound at least till the general elections that may be in May 2014. In case of Tuesday's trade, they see the Nifty moving in a range of 6000-6100.

“I believe that the general elections over the coming 2-3 months are likely to take centre-stage for equity markets and their outcome would be crucial for determining market direction,” Dinesh Thakkar, chairman and managing director, Angel Broking said.

Finance minister P Chidambaram said the fiscal deficit for FY14 would be contained at 4.6 percent of GDP that was better than street expectations of 4.8 percent. He expects 4.1 percent for FY14 and 3.6 percent for FY16, which is on the hopes of higher GDP growth and tax revenue.

He expects gross tax revenue to rise 19.4 percent Y-o-Y in FY15 as against 11.8 percent in FY14. According to him, the gross market borrowing for FY14 is expected to be at Rs 5.97 lakh crore that too was better than forecast of Rs 6-6.4 lakh crore.

FM has kept direct tax unchanged but cut indirect tax on select sectors. He reduced excise duty from 12 percent to 10 percent on capital goods and consumer durables.

In case of small cars, motor cycles, scooters and commercial vehicles, the excise duty was cut from 12 percent to 8 percent and in case of small utility vehicles that cut to 24 percent from 30 percent. For large and mid-segment cars, excise was cut from 27/24 percent to 24/20 percent. Even he exempted loading, unloading, packing, storage and warehousing of rice from service tax.

Populist steps in the Budget were increase in agriculture credit and moratorium for education loan interest payment.

Private banking and financials stocks were the lead gainers today as analysts still believe these stocks are better than PSU banks. Country’s largest lender ICICI Bank was up 2 percent while HDFC and HDFC Bank climbed over a percent.

However, State Bank of India remained under pressure on asset quality concerns. The capital infusion of Rs 11,200 crore in PSU banks for FY15 is not sufficient, experts feel.

Mahindra and Mahindra jumped nearly 3 percent and Maruti was up over a percent on cut in excise duty.

Tata Power topped the buying list, rising nearly 5 percent after Arvind Kejriwal resigned as chief minister of Delhi on Friday. NTPC was up over a percent.

However, shares of Reliance Industries, Coal India and Hindalco Industries lost over a percent.

BHEL slipped 0.5 percent. Chidambaram said the divestment in the company will take place in FY14.

Meanwhile, jewellery stocks like PC Jeweller, Titan Company declined 1-3 percent as there no announcement in the Budget for reduction of gold import duty.