Sensex up 340 points on Budget proposal to cut corporate tax rate

Mumbai, PTI | Updated : 28 February 2015, 04:45 PM

Modi government’s first full-fledged budget triggered huge volatility in stock markets today with the benchmark Sensex finally ending 141.38 points higher on promise of lower corporate tax rates - logging the the first rise on a Budget day in four years.

The Sensex, which was trading with a gain of over 200 points before Finance Minister Arun Jaitley began his much-awaited Budget speech, swung between positive and negative terrain as he announced different measures. Soon after the budget speech ended, the bluechip index fell to the day’s lowest point of 28,882.02 -- down 338 points.

However, markets recovered from the lows and rose steadily in the last two hours of trading to end at 29,361.50 -- a net rise of 141.38 points or 0.48 per cent. Intra-day, it swung a massive 678 points. Yesterday, Sensex had gained 473 points after the Economic Survey.

In the previous three sessions on Budget 2014, 2013 and 2012, the Sensex had ended down.

The NSE Nifty also moved up by 57.25 points to close at 8,901.85, after hovering between 8,751.35 and 8941.10.

While participants today said they were initially disappointed on lack of big-bang reforms in Budget, sentiments were lifted after the announcement of cut in corporate tax by 5 per cent to 25 per cent over four years starting April 2016.  Besides, the proposal to defer applicability of General Anti-Avoidance Act (GAAR) by two years also boosted bying.

“I would rate the budget a 7 and a half on a scale of 10!  Though it is a fairly well balanced budget, market expectations were really sky rocketing before this day...It is not close to the Visionary document  that people have been talking about,” said Nitin Jain, CEO Retail Capital Markets & Global Asset Management, Edelweiss.

Stock broker Deepak Pahwa said: “No relief in securities transaction tax and hike in service tax to 14 per cent had a negative impact on market.”

Among Sensex constituents, Axis Bank topped the gainers by surging 8.1 per cent. Government’s initiative to bring in a Comprehensive Bankruptcy code for the ease of doing business by 2015-16 is a big welcome step from the banking sector perspective, said S Ravi, practicing chartered accountant.

Other major Sensex gainers were Tata Motors, ICICI Bank, Dr Reddy, Hindustan Unilever, Cipla, GAIL, Tata Steel, HDFC Bank, Infosys, RIL and M&M. They gained between 1-3 per cent.

However, cigarette major ITC fell 8 per cent following the Budget proposal to increase excise duty on cigarettes.

Stocks in banking, healthcare, auto, oil&gas and IT rose.

Meanwhile, foreigners bought shares worth a net Rs 1,957.10 crore yesterday. However, domestic institutions sold shares worth a net Rs 491.93 crore.

First Published: Saturday, February 28, 2015 10:04 AM

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