The Hindu Business Line : Sensex follows Budget-eve trend, closes flat; Survey fails to enthuse

The benchmark indices closed flat on Thursday, the eve of the Union Budget. The market appears to be not too impressed by the economic report card presented in Parliament, which said that achieving 9 per cent growth would be challenging.

Foreign institutional investors were net sellers, while the domestic investors were buyers.

The Sensex closed flat for the second day in a row almost unchanged at 17,824 points; it had closed just 20 points up. The Nifty closed 16 points up, at 5,285.

Budget eve typically sees the indices close flat or lower, as the market is in a wait-and-watch or a cautious mode, said analysts.

In 2005, the Sensex rose by just 4.5 points to close at 6,569; in 2006, the Sensex rose just 00.79 per cent; while in 2007, it fell 1.24 per cent the day before Budget Day.

The Economic Survey 2008 pegged the GDP growth at 8.75 per cent for fiscal 2007-08, lower than the 9-per cent plus growth witnessed during the last fiscal.

“There are fears that the Budget will be too populist. This may hurt some sectors like PSU banks, depending on proposals on agricultural loans and so on,” said Mr Satish Ramanathan, Head of Equities, Sundaram BNP Paribas Mutual Fund.

“On the other hand, there are expectations of consumer spending going up following a possible raise in the personal income-tax exemption slab and the provisions of the Sixth Pay Commission .”

Auto, FMCG scrips up

This expectation lifted the scrips in the auto and FMCG counters. BSE FMCG index gained 1.70 per cent and BSE Auto 1.18 per cent.

The metal index also gained 1.98 per cent.

However, seven out of the 13 sectoral indices closed in the red in response to the Economic Survey which said, “Maintaining growth rate at nine per cent will be a challenge and raising it to two digits will be an even greater one.” A picture of lower growth prospects also had a negative impact on the Realty index, which suffered a loss of 1.47 per cent, the maximum among indices.

Losers outnumbered gainers in the market with 1,444 BSE scrips declining, against 1,276 advancing.

The intra-day movement too, was quite subdued with the Sensex fluctuating between a high of 17,921 and a low of 17,690.

While FIIs sold shares worth Rs 809 crore, DII bought shares worth Rs 732.38 crore as per the combined provisional data from the BSE and the NSE.

More Stories on : Stock Markets | Budget | Outlook

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page