The Hindu Business Line : ‘Market had built too much of expectations’

Mumbai, July 7 The huge fall in the stock market was a spontaneous reaction to the Budget proposals, which has something for everyone, said market players.

The Government is determined on inclusive growth, indicated by its focus on social and rural growth, they said.

“Budget 2009 can be termed as a big spending one with social and rural focus. With opening remarks by Mr Pranab Mukherjee that a single Budget speech cannot solve all problems, one could guess that the Minister was going to disappoint the large expectations built in stock prices,” said Mr Nirmal Jain, Chairman and Managing Director, India Infoline.

According to Mr Devesh Kumar, Managing Director, Centrum Broking, “The market had built too much of expectation, which has now been corrected.

“If one looks at the market movement on Friday, the upswing only took place in the last two hours of trading. This shows that the market had built up great expectations from the Budget. People wanted a solution to all issues, which were not addressed by the Finance Minister.”

Mr Jain said: “No sector was a major beneficiary from the Budget. Overall, the stock market expectations were not met, resulting in an 850-plus-point fall of the Sensex.”

Mr Manish Bhandari, Vice-President & Portfolio Manager-Equity, ING Investment Management, said: “Capital market participants are a bit disappointed as they were expecting huge investment-led spending for revival in economic growth as well as a road map for fiscal prudence.”

Mr Kishor Oswal, CMD, CNI Research Ltd, said: “Overall there is not much negative and market has corrected only because there were larger expectations. We strongly believe that the market will recover and start its rally after the fine prints of non-planned revenue is analysed.

“The biggest plus for capital markets is that there is no change in capital gains tax. No change in STT is a disappointment but certainly not to have a major impact on the market.”